SUN GRO AGREES TO FRIENDLY TAKEOVER BY IKO FOR $6.60 PER SHARE IN CASH

VANCOUVER, Jan. 16 /CNW/ -- 
Trading Symbol: The Toronto Stock Exchange - GRO


VANCOUVER, Jan. 16 /CNW/ - Sun Gro Horticulture Inc., formerly Sun Gro
 Horticulture Income Fund ("Sun Gro"), today announced that it has
 entered into a support agreement (the "Support Agreement") with IKO
 Enterprises Ltd. ("IKO"), a privately-held Canadian manufacturing and
 distribution company with operations throughout North America and
 Europe. Pursuant to the Support Agreement, IKO has agreed, subject to
 certain conditions, to make an offer to acquire all of the issued and
 outstanding common shares of Sun Gro, other than shares held by IKO and
 its affiliates and joint actors, for a price per share of C$6.60 in
 cash (the "Offer"). IKO and its affiliates and joint actors currently
 own or control approximately 19% of Sun Gro's outstanding shares.


The C$6.60 cash price per share under the Offer represents a premium of
 56% over the volume-weighted average trading price for Sun Gro units
 for the 20 days prior to September 7, 2010, the date that Sun Gro
 announced its intention to form a Special Committee and seek strategic
 alternatives, and a 28% premium over the 20-day volume-weighted average
 trading price prior to the date of this announcement.


The Offer will be effected by way of a takeover bid. Full details of the
 Offer will be contained in a formal offer and takeover bid circular,
 which is expected to be mailed to Sun Gro shareholders before February
 2011. The transaction is expected to close in March 2011. The Offer
 will be subject to certain customary conditions, including a condition
 that the number of shares tendered into the Offer and not withdrawn,
 together with the shares held by IKO and its affiliates and joint
 actors, equals at least 66 2/3% of the total number of outstanding Sun
 Gro shares.


The proposed sale of Sun Gro to IKO follows the formal review of
 strategic alternatives commenced by Sun Gro in September 2010 in order
 to enhance shareholder value. "We are satisfied that the transaction
 with IKO results in the best value available to our shareholders," said
 Mitch Weaver, President and CEO of Sun Gro and a member of its Board of
 Directors (the "Board"). The Board has unanimously determined that the
 Offer is fair to Sun Gro shareholders and is in the best interests of
 Sun Gro and its shareholders.  Accordingly, the Board recommends that
 shareholders tender their shares to the Offer. The Board has received
 an opinion from Blair Franklin Capital Partners Inc. that the
 consideration to be received under the Offer is fair, from a financial
 point of view, to Sun Gro shareholders, other than IKO and its
 affiliates and joint actors ("Fairness Opinion"). All members of the
 Board intend to tender all shares that they own to the Offer. A copy of
 the Fairness Opinion, the factors considered by the Board and the
 Special Committee of the Board in recommending that holders of Sun Gro
 shares tender their shares to the Offer and other relevant background
 material will be included in the directors' circular that will be sent
 to Sun Gro shareholders concurrently with IKO's formal offer and
 takeover bid circular.


The Support Agreement provides for customary deal protections, including
 a non-solicitation covenant by Sun Gro, a five business day right for
 IKO to match any superior proposal received by Sun Gro and payment by
 Sun Gro to IKO of a termination fee of approximately C$5.15 million if
 the Offer is not completed in specified circumstances. The Offer is not
 subject to a financing condition. A copy of the Support Agreement and,
 once mailed, a copy of the  takeover bid circular and directors'
 circular and certain related documents will be available on SEDAR at www.sedar.com.


Speaking on behalf of IKO, Derek Fee, Manager of Corporate
 Communications said, "We are very pleased to be increasing our
 ownership interest in Sun Gro and look forward to building on this
 outstanding company's more than 80 years of leadership and innovation
 in the growing media industry."


Blair Franklin Capital Partners Inc. is acting as exclusive financial
 advisor to Sun Gro, and Borden Ladner Gervais LLP is acting as legal
 counsel. Bennett Jones LLP and the Law Firm of Norman H. Winter are
 acting as legal counsel to IKO.


In addition, in connection with its conversion to a corporation, Sun Gro
 announces that it adopted a shareholder rights plan (the "Plan")
 effective January 1, 2011 on the same substantive terms as the
 unitholder rights plan previously adopted by Sun Gro Horticulture
 Income Fund and described in the press release dated September 7, 2010.
 Under the Plan, the Board authorized the issuance of one share purchase
 right with respect to each share of Sun Gro outstanding as of January
 1, 2011. The Plan is subject to TSX acceptance, and is scheduled to
 expire on March 7, 2011 unless approved by shareholders prior to that
 date. A full copy of the rights plan will be available at www.sedar.com. 


About IKO


The IKO group of companies is a global leader in the manufacture and
 supply of commercial and residential roofing, waterproofing, and
 insulation board products. Founded in Calgary, Alberta in 1951, the
 family owned business has grown to include more than 20 manufacturing
 plants and 3000 employees worldwide.  


About Sun Gro 


Sun Gro is the largest producer and distributor of peat and bark-based
 growing mixes to professional plant growers in the US and Canada. It is
 also North America's largest producer and distributor of sphagnum peat
 moss, with approximately 65,000 acres of peat bogs under lease. Sun Gro
 sells its professional products primarily to greenhouse, nursery and
 specialty crop growers. The company also sells peat moss and potting
 mixes to retail customers, either by way of private label partnerships
 or under its own brand names. In addition, Sun Gro sells sand-based
 mixes to golf course developers and landscapers. The company's North
 America-wide production network now comprises 12 Canadian plants and 13
 US plants.


Forward-Looking Statements 


Certain statements contained in this news release are forward-looking
 statements and information within the meaning of applicable Canadian
 securities legislation (collectively "forward-looking statements"),
 including statements relating to the expected timing of mailing of the
 Offer and the closing thereof, and any other statements that are not
 historical facts. The terms "expected", "will" and "intend to", and
 similar terms and phrases are intended to identify these
 forward-looking statements. Such forward-looking statements involve
 known and unknown risks, uncertainties and other factors that may cause
 the actual results to differ materially from those implied by these
 forward-looking statements, including, but not limited to: IKO's
 ability to complete the Offer in the time period contemplated, if at
 all, which is dependent upon the parties' ability to comply with the
 closing conditions to the transaction, some of which are beyond the
 control of Sun Gro and IKO; general economic conditions; the state of
 the capital markets; foreign currency and exchange risk; performance of
 the market sectors that Sun Gro serves; and other risks detailed from
 time to time in Sun Gro's filings with Canadian provincial securities
 regulators. These factors should be considered carefully, and readers
 should not place undue reliance on forward-looking statements made by
 Sun Gro or IKO.


Although Sun Gro believes that the expectations reflected by the
 forward-looking statements presented in this release are reasonable,
 the forward-looking statements have been based on assumptions and
 factors concerning future events that may prove to be inaccurate. Those
 assumptions and factors are based on information currently available to
 Sun Gro. Any forward-looking statement speaks only as of the date on
 which such statement is made, and, except as required by applicable
 law, Sun Gro undertakes no obligation to update any forward-looking
 statement to reflect events or circumstances after the date on which
 such statement is made or to reflect the occurrence of unanticipated
 events. 


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pBradley A. Wiensbr/ Vice-President, Finance and CFO br/ Sun Gro Horticulture Inc.br/ Tel: [phone]br/ Email: a href="mailto:[e-mail]"[e-mail]/abr/ Website: a href="http://www.sungro.com"www.sungro.com/a/p pDerek Feebr/ Manager - Corporate Communicationsbr/ IKObr/ Tel: [phone]br/ Email: a href="mailto:[e-mail]"[e-mail]/abr/ Website: a href="http://www.iko.com"www.iko.com/a/p

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