Neighbourly Pharmacy, a Canadian pharmacy-chain operator, experienced a decline in its shares on Monday due to a delay in finalizing a takeover deal with its majority owner, Persistence Capital Partners (PCP). The shares dropped by 8.6% to C$16.94 in morning trading, bringing the total year-to-date decline to 28%.
To allow PCP time to complete equity financing arrangements, Neighbourly extended the exclusivity date granted to its suitor from November 13 to January 15, 2024. This extension means that the anticipated deal closure with PCP will now take place by the end of March, instead of the previously expected final quarter of this year.
Under the terms of the proposed deal, a newly formed entity controlled by PCP will acquire all the shares of Neighbourly that it doesn’t already own for C$20.50 ($14.85) in cash per share. Currently, PCP holds slightly over 50% of Neighbourly’s issued and outstanding common shares.
In preparation for the transaction, PCP has secured commitments for a fully underwritten credit facility totaling C$650 million. Neighbourly anticipates using approximately C$450 million of this amount to finance the proposed deal.
Despite facing delays, Neighbourly remains committed to finalizing the takeover agreement with PCP.