MMJ Receives an Offer to Acquire Its Investment in Embark Health

Specialist Investment Company, MMJ Group Holdings Limited (ASX: MMJ) (“MMJ"), wishes to advise that BevCanna Enterprises Inc.(CSE:BEV) (“BEV" or “BevCanna") has announced an offer (the Offer) to acquire 100% of Embark Health Inc. (“Embark"). MMJ's investment in Embark consists of shares and warrants with a current book value of CAD2.4m.

Subject to a review of the Offer documentation, MMJ expects that its share of the Initial Consideration (refer below) would approximate the current book value of MMJ's investment1.

In commenting on the transaction, MMJ's Chairman, Mr. Wall said “This proposed acquisition of Embark Health Inc. is beneficial for MMJ investors. It would allow MMJ to exit its investment at its book value and retain a share in the potential upside of the larger merged Bevcanna business."

MMJ was a foundation investor in Embark in July 2018 – the investment now comprises 3.697m common shares (approximately 12% shareholding) in Embark with warrants that provide the option for MMJ to acquire further Embark shares.

In 2018 MMJ was an early investor in Bevcanna and sold its investment following its initial public offering in 2019.

Details of the Offer are included in the attached announcement by Bevcanna to the Canadian Stock Exchange.

Under the terms of the Offer:

• Bevcanna would acquire all of the issued and outstanding shares of Embark (the “Shares") from its shareholders.
• Bevcanna will acquire the Shares in consideration for a purchase price of 46.7million Bevcanna shares2, plus potential future earn-outs, which will be subject to the adjustments (the “Purchase Price"). Bevcanna will satisfy the Purchase Price as follows:
  • a) The issuance of 46.7 common shares of Bevcanna to Embark Shareholders at closing (the “Initial Consideration").
  • b) A further amount upon earn-out milestones in respect of Embark's post-acquisition financial performance (the “Earn-Out") being achieved. At this point MMJ is not in a position to provide a reasonable estimate of the value of the Earn-Out.

MMJ has been advised that the issue of the Bevcanna Shares pursuant to the Initial Consideration will be completed following the satisfaction of all conditions in the acquisition agreement and on a date mutually agreeable to the parties. It is expected that the Offer would be completed by the end of 2021.

The Bevcanna Shares received by Embark Shareholders as part of the Initial Consideration, including MMJ, will be subject to voluntary resale restrictions, with 1/12th of the Bevcanna Shares received being released from the resale restriction on the last day of each month following closing of the Offer for a period of one year.

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