INDIGO AGREES TO BE TAKEN PRIVATE BY TRILOGY AT $2.50 PER SHARE

Indigo enters into definitive agreement at increased offer price relative to initial proposal

Shareholders will receive $2.50 per share in cash, representing a premium of approximately 69% over Indigo's unaffected closing price of $1.48 per share on the TSX on February 1, 2024 and a premium of approximately 56% over Indigo's 20-day VWAP on such date

Transaction provides immediate and certain cash value to Minority Shareholders of Indigo

TORONTO, April 2, 2024 /CNW/ - Indigo Books & Music Inc. (TSX: IDG) ("Indigo" or the "Company"), Canada's leading book and lifestyle retailer, announced today that, based on the unanimous recommendation of an independent committee of the board of directors of the Company (the "Special Committee"), it has entered into an arrangement agreement (the "Arrangement Agreement") with Trilogy Investments L.P. ("TILP") and Trilogy Retail Holdings Inc. ("TRHI", and together with TILP, "Trilogy") whereby TILP will acquire all of the issued and outstanding common shares of the Company that Trilogy, its affiliates and joint actors do not currently own (the "Minority Shares") for $2.50 in cash per share (the "Transaction"), subject to approval by the holders of Minority Shares (the "Minority Shareholders") and other customary closing conditions. Trilogy, together with its affiliates and joint actors, currently owns an aggregate of 16,774,665 common shares of the Company, representing approximately 60.6% of the issued and outstanding common shares as of the date hereof. TILP and TRHI are controlled by Mr. Gerald W. Schwartz, a member of the board of directors of the Company (the "Board").

Today's announcement is the culmination of negotiations that took place following the public announcement on February 1, 2024 of Trilogy's non-binding proposal to acquire the Minority Shares (the "Initial Proposal").

The purchase price of $2.50 per share reflects a 69% premium to Indigo's closing price of $1.48 per share on the Toronto Stock Exchange (the "TSX") on February 1, 2024, being the last trading day prior to the public announcement of the Initial Proposal, a 56% premium to the 20 business day volume weighted average price for Indigo's common shares on the TSX and an 11% increase in the consideration as compared to the Initial Proposal of $2.25 per share. The cash premium transaction will provide Minority Shareholders with immediate and certain value that is expected to be higher than that realizable in the foreseeable future.

Markus Dohle, Chair of the Board and Chair of the Special Committee, stated, "Following careful consideration of a wide variety of factors and negotiations with Trilogy that resulted in a material increase to the price first offered to minority shareholders of Indigo, the Special Committee has determined that the Transaction is in the best interests of Indigo and its minority shareholders."

Mr. Dohle added, "Since its inception, Indigo has established itself as a cherished Canadian brand with an important leadership role in the Canadian publishing and bookselling industries. We believe that this transaction will provide minority shareholders with a substantial premium for their shares following some challenging years for the business, while also ensuring a strong future for Indigo with full ownership by a team that has demonstrated a deep commitment to Indigo's mission." 

Special Committee and Board Approval

The Special Committee was established by the Board to consider the Initial Proposal, as well as other alternatives available to the Company and, if it deemed advisable, negotiate with Trilogy. Following a comprehensive evaluation of the Initial Proposal and negotiations between the Special Committee and Trilogy on price and other terms of the Transaction, the Special Committee unanimously recommended that the Board approve the Transaction. The Board (excluding conflicted directors), having received the unanimous recommendation of the Special Committee, unanimously determined that the Transaction is in the best interests of the Company and fair to the Minority Shareholders and recommends that Minority Shareholders vote in favour of the Transaction at the special meeting of shareholders to be held to approve the Transaction.

Formal Valuation and Fairness Opinion

In connection with its review of the Transaction, the Special Committee retained BMO Capital Markets ("BMO") as its independent valuator and financial advisor and requested that BMO prepare a formal valuation in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. BMO delivered an oral opinion to the Special Committee that, as of April 2, 2024, and based on BMO's analysis and subject to the assumptions, limitations and qualifications to be set forth in BMO's written valuation, the fair market value of the common shares of the Company is in the range of $1.90 to $2.90 per common share. BMO also delivered an oral opinion to the Special Committee that, as of April 2, 2024, and subject to the assumptions, limitations and qualifications to be set forth in BMO's written fairness opinion, the consideration to be received by the Minority Shareholders is fair, from a financial point of view, to such Minority Shareholders.

Transaction Details

The Transaction is to be effected by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario). The consummation of the Transaction is subject to a number of conditions customary to transactions of this nature, including, among others: (i) the approval of at least two-thirds of votes cast by the Company's shareholders (including Trilogy, its affiliates and joint actors) at a special meeting of shareholders; (ii) the approval of a simple majority of the votes cast by Minority Shareholders at such meeting; and (iii) court approval. Completion of the Transaction is not subject to any financing condition.

The Company expects to hold the special meeting of shareholders to consider and to vote on the Transaction in May 2024. If approved at the meeting, the Transaction is expected to close in June 2024, subject to court approval and other customary closing conditions. Following closing of the Transaction, the common shares of the Company are expected to be delisted from the TSX.

Further details regarding the terms and conditions of the Transaction are set out in the Arrangement Agreement, which will be publicly filed by the Company under its issuer profile on SEDAR+ at www.sedarplus.ca. Additional information regarding the terms of the Arrangement Agreement, the background of the Transaction and the independent valuation and fairness opinions will be provided in the information circular for the special meeting of shareholders, which will also be filed by the Company under its issuer profile on SEDAR+ at www.sedarplus.ca.

Voting and Support Agreements

All independent directors and senior officers of the Company have entered into voting and support agreements to vote their Minority Shares in favour of the Transaction, subject to certain customary exceptions.

Advisors

Blake, Cassels & Graydon LLP is acting as legal counsel to the Special Committee. BMO has been retained by the Special Committee as independent valuator and financial advisor.

Torys LLP is acting as legal counsel to Indigo.

Osler, Hoskin & Harcourt LLP is acting as legal counsel to Trilogy.

Required Early Warning Report Information

TRHI beneficially owns, or exercises control or direction over, 7,761,739 common shares, representing approximately 28% of the issued and outstanding common shares, and TILP beneficially owns, or exercises control or direction over, 7,740,235 common shares, representing approximately 28% of the issued and outstanding common shares, as of the date hereof.

Trilogy beneficially owns, or exercises control or direction over, an aggregate of 15,501,974 common shares of the Company, representing approximately 56% of the issued and outstanding common shares as of the date hereof.

Trilogy, together with its affiliates and joint actors, beneficially owns, or exercises control or direction over, an aggregate of 16,774,665 common shares of the Company, representing approximately 60.6% of the issued and outstanding common shares as of the date hereof.

Upon completion of the Transaction, Trilogy intends to cause Indigo's common shares to cease to be listed on the TSX and to cause Indigo to apply to cease to be a reporting issuer under applicable Canadian securities laws, and to otherwise terminate Indigo's public reporting requirements.

An early warning report will be filed in accordance with applicable securities laws and will be available on Indigo's SEDAR+ profile at www.sedarplus.ca. To obtain a copy of the early warning report, please contact Trilogy, 161 Bay Street, 49th Floor, Toronto, ON, M5J 2S1, Attention: Lori Shapiro, 416-362-7711.

Indigo's head office is located at 620 King Street West, Suite 400, Toronto, ON, M5V 1M6.

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG). Indigo is Canada's leading book and lifestyle retailer. The Company operates retail stores in all ten provinces and one territory in Canada, and also has retail operations in the United States through a wholly-owned subsidiary, operating one retail store in Short Hills, New Jersey. Retail operations are seamlessly integrated with the Company's digital channels, including the www.indigo.ca website and the mobile applications, which are extensions of the physical stores and offer customers an expanded assortment of book titles, along with a meaningfully curated assortment of general merchandise. Indigo believes in real books, in living life fully and generously, in being kind to each other and that stories – big and little – connect us.

The Company supports a separate registered charity, called the Indigo Love of Reading Foundation (the "Foundation"), which is committed to addressing educational inequality, and more specifically, the literacy crisis in Canada. The Foundation provides resources including new books and learning materials, training and year-round curation support to help ensure teachers, education staff, school administrators and other key stakeholders have the tools they need to promote literacy in their communities. With the support of the Company, its customers, employees, and suppliers, the Foundation has committed over $35.0 million to more than 1,000,000 students across Canada since 2004.

To learn more about Indigo, please visit the "Our Company" section at indigo.ca.

For further information, please contact:
Madison Downey
Public Relations
[e-mail].

Forward-Looking Statements

This press release contains statements that are "forward-looking information" within the meaning of applicable Canadian securities legislation. Some of the forward- looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words "anticipate", "expect", "believe", "intend", "estimate", "target", "project", "should", "could", "may", "will" and other similar expressions are intended to identify forward-looking statements. Forward–looking statements include, among other things, statements with respect to the Transaction, including the expected timing of the shareholder meeting and closing and various other steps to be completed in connection with the Transaction, and other statements that are not historical facts.

There can be no assurance that the Transaction will ultimately be completed or that other forward-looking statements contained herein will prove to be accurate. These statements are "forward-looking" because they are based on our current expectations about the markets we operate in and on various estimates and assumptions, including assumptions regarding the ability to complete the Transaction on the contemplated terms, that the conditions precedent to closing of the Transaction can be satisfied, and assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company operates.

Actual events or results may differ materially from those anticipated in these forward-looking statements if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. Among the factors that could cause actual results to differ materially from those described or projected herein include, but are not limited to, the following, many of which are beyond the Company's control: (a) the possibility that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all due to a failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and court approvals and other conditions of closing necessary to complete the Transaction or for other reasons; (b) the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; (c) risks relating to the retention of key personnel during the interim period; (d) the possibility of litigation relating to the Transaction; (e) risks related to the diversion of management's attention from the Company's ongoing business operations; (f) general economic, market or business conditions, which include geopolitical events such as war, acts of terrorism, and civil disorder and the adverse impacts of inflationary pressures; (g) ongoing impacts from the ransomware attack; (h) the future impacts and government response to the COVID-19 pandemic, including any impact to online and/or retail operations of the Company; (h) competitive actions by other companies; (i) changes in laws or regulations; and (j) other risks inherent to the Company's business and/or factors beyond its control which could have a material adverse effect on the Company or the ability to consummate the Transaction.

You will find a more detailed assessment of these risks, uncertainties and other risks that could cause actual events or results to materially differ from our current expectations in the filings and reports that the Company makes with the Canadian Securities Administrators, including in the Company's annual information form dated June 27, 2023 and available on the Company's issuer profile on SEDAR+ at www.sedarplus.ca, as well as other filings and reports that the Company may make from time to time. As a result of such risks, we cannot guarantee that any given forward-looking statement will materialize. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements and estimates, which speak only as of the date hereof. We assume no obligation to update any forward-looking statement contained in this press release even if new information becomes available, as a result of future events or for any other reason, unless required by applicable securities laws and regulations.

SOURCE Indigo Books & Music Inc.

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