In making its recommendation, the Board reviewed and considered the Offer with the benefit of advice from its legal and financial advisors, including a fairness opinion from its financial advisor, Origin Merchant Partners, which is described in more detail in the Directors’ Circular. As a result of the foregoing, the Board has determined that the Offer is fair, from a financial point of view, to Shareholders and in the best interests of Dealnet and the Shareholders. As described in more detail in Dealnet’s Directors’ Circular, the reasons for the unanimous recommendation of the Board include:

Significant Premium for Shareholders: The Offer Price represents a premium of 33% to the closing price of the Common Shares on the TSX Venture Exchange (the “TSX-V”) on August 21, 2020 (the last trading day prior to the announcement of the Offer), a premium of 52% to the 30-day volume weighted average price (“VWAP”) on the TSX-V for the period ending August 21, 2020, and a premium of 93% to the 90-day VWAP on the TSX-V for the period ending August 21, 2020.

Cash Provides Certainty of Value and Liquidity: The consideration under the Offer is all cash, which allows Shareholders to immediately realize value for all of their investment and provides certainty of value and immediate liquidity.

No Financing Condition: The Offer is not subject to any financing condition. The Offeror intends to fund the cash consideration for the Common Shares through available cash resources and has secured, on a firm, committed basis, all of the financing required to fund the cash consideration payable for the Common Shares. Shareholders benefit from removal of financing, market, regulatory, and execution risks.

Result of Extensive Strategic Review: The unanimous Board recommendation for the Offer is the result of a strategic review process carried out by Origin on behalf of the Company. The strategic review process was conducted from May 2020 to August 2020. Origin contacted 53 parties in connection with a potential acquisition transaction. Of the 53 parties contacted, 14 parties executed non-disclosure agreements and four bids were received in total. Of the four bids, three were en bloc bids and one was limited to the purchase of One Contact. The consideration under the Offer represents the highest offer price attained as a result of this extensive strategic review process.

Fairness Opinion: The Board has received an opinion from its financial advisor, Origin, to the effect that, as of the date of such opinion and based upon and subject to the assumptions, explanations and limitations and other matters described therein, the consideration payable under the Offer to Shareholders is fair, from a financial point of view, to Shareholders. The full text of the Fairness Opinion is attached as Appendix “B” to Dealnet’s Directors’ Circular. The Board recommends that Shareholders read the Fairness Opinion in its entirety.

Compelling Value Relative to Alternatives: The Board believes, after a thorough review and after receiving legal and financial advice, that the immediate cash value offered to Shareholders under the Offer is more favourable to Shareholders than the potential value that might have resulted from other alternatives reasonably available to the Company, including remaining as a stand-alone entity and pursuing the Company’s existing strategy, in each case taking into consideration the potential rewards, risks, timelines and uncertainties associated with those other alternatives. The Board assessed each reasonably available alternative (including maintaining the status quo) throughout the strategic review process and ultimately concluded that the Offer was the most favourable alternative to unlock value today for Shareholders.

Ability to Respond to Superior Proposals: The Board has reserved the ability to respond to unsolicited proposals that may deliver greater value to Shareholders than the Offer. The terms and conditions of the support agreement dated August 22, 2020, entered into between Dealnet and Simply Green Home Services Inc., and subsequently assigned to the Offeror (the “Support Agreement”) do not prevent an unsolicited third party from proposing or making a Superior Proposal (as such term is defined in the Support Agreement) or, provided Dealnet complies with the terms of the Support Agreement, preclude the Board from responding to, considering and acting on, a Superior Proposal. The Company is permitted to terminate the Support Agreement to accept, approve or recommend a Superior Proposal that is made and not matched by the Offeror provided that Dealnet pays the Offeror a termination amount of $2,250,000.

Likelihood of Completion: The Offer has a high likelihood of completion given the limited number of conditions necessary to take up and pay for Common Shares and the limited range of termination rights under the Support Agreement. In particular, the Offer is not subject to a financing condition. In light of the foregoing, the Board believes that the Offer is likely to be completed in accordance with its terms and within a reasonable time.

Arm’s Length Negotiations: Active, arm’s length negotiations between the Board and the Offeror resulted in the price of the Offer being increased multiple times during its negotiations with the Offeror and finally agreed upon at an amount considered to be fair, from a financial point of view, to Shareholders, based on the legal and financial advice received by the Board as confirmed in the Fairness Opinion, subject to the scope of review, assumptions and limitations and other matters described therein.

Lock-Up Agreements: Based on the reasons underpinning the Board’s recommendation, each of Dealnet’s directors and executive officers has entered into lock-up agreements with the Offeror pursuant to which they have agreed to, inter alia, support the Offer and to deposit all of their Common Shares under the Offer.

The Offer will be open for acceptance until 5:00 p.m. (Toronto time) on October 14, 2020 unless the Offer is withdrawn, varied or extended in accordance with the terms of the Support Agreement. Shareholders wishing to accept the Offer must take action to deposit their Common Shares prior to the Expiry Time. The Offer will be open for acceptance for a period of not less than 35 days. Successful completion of the Offer is conditional upon, amongst other things, more than 66⅔% of the Shares outstanding being validly deposited under the Offer prior to the Expiry Time.

Frequently Asked Questions

Simply Group Offer Contact Form

If you need assistance depositing your shares under the all-cash offer and require assistance, please enter your information in the form below or call 1-866-851-3214.

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