Hiku Brands Announces Mailing of Meeting Materials with Respect to Acquisition by Canopy Growth Corporation

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TORONTO, Aug. 3, 2018 /CNW/ - Hiku Brands Company Ltd. (CSE: HIKU) ("Hiku" or the "Company"), is pleased to announce the mailing of materials for a special meeting (the "Meeting") of shareholders of the Company (the "Shareholders") in connection with the previously announced arrangement agreement (the "Arrangement Agreement") entered into with Canopy Growth Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC), pursuant to which Canopy Growth has agreed to acquire all of the issued and outstanding shares of Hiku (the "Arrangement"). An information circular dated July 27, 2018 (the "Circular") and related voting materials (collectively, the "Meeting Materials") are also available for download on Hiku's SEDAR profile at www.sedar.com. The Circular and a letter to Shareholders is also available for download at https://www.hiku.com/investor-relations. Shareholders as of the record date of July 24, 2018 will have the right to vote by proxy or in person at the Meeting to be held on August 30, 2018 at 421 Cawston Avenue, Kelowna, British Columbia V1Y 6Z1 at 10:00 a.m. (Kelowna time). Your vote is very important and you are encouraged to take the time to read the circular and vote prior to the voting deadline of August 28, 2018 at 10:00 a.m. (Vancouver Time).

At the Meeting, Shareholders will be asked to consider and to vote upon the Arrangement, pursuant to which Canopy Growth will acquire all of the issued and outstanding shares of Hiku. Under the terms of the Arrangement, Shareholders of Hiku will receive 0.046 of a common share of Canopy Growth for each share of Hiku held (the "Consideration").

The Meeting Materials include, among other things, details concerning the Arrangement, the reasons for the recommendation described below, the risks associated with the Arrangement, the requirements for the Arrangement to become effective, voting procedures at the Meeting and other related matters.

Certain reasons for and benefits of the Arrangement include:

• Significant Premium to the Shareholders: The Consideration represents a premium of 33% based on the 20-day volume weighted average prices of the common shares of Canopy Growth (the "Canopy Shares") and the common shares of Hiku (the "Hiku Shares") as of July 9, 2018 (the day prior to the announcement of the Arrangement), and a premium of 21% based on the closing prices of the Canopy Shares on the TSX and the Hiku Shares on the CSE on July 9, 2018. By receiving this premium, the Shareholders will receive an immediate benefit while being able to participate in the value added propositions of being a shareholder of Canopy Growth.
  
  
• Continued Participation by Hiku Shareholders: The Shareholders, through their ownership of Canopy Shares, will have the opportunity to participate in the global growth of Canopy Growth and will benefit from the enhanced growth prospects of the combined company. The Arrangement will provide substantial infrastructure and operational support to accelerate Hiku's growth strategy, future product development and innovation, together with Canopy Growth and its global partners. This includes an integration and expansion opportunity with respect to retail stores in provinces where direct consumer sales will be permitted pursuant to the Cannabis Act (Canada), including a pipeline of growth opportunities.
  
  
• Benefits to Owning Canopy Shares: The Arrangement will provide the Shareholders with ownership in a leading diversified global cannabis company and market leader with distinct brands and an award-winning product portfolio that spans federally legal markets around the globe in both medical and recreational segments. The Arrangement strengthens the diversity and range of Canopy Growth's brands in its portfolio and improves access to multiple demographic segments. The Arrangement creates the opportunity to leverage a combined portfolio of established brands through each party's respective retail stores across the country and thereby generate incremental opportunities with distributors.
  
  
• Experienced Management Team: Hiku will have the benefit of leveraging the expertise of Canopy Growth's current board and management team. Canopy Growth is a leading diversified global cannabis company and market leader. It is expected that the Shareholders will also continue to benefit from Hiku's strong management team, which brings best-in-class retail, design and marketing experience, which are well aligned with and further supplements Canopy Growth's existing strategy and operations.
  
  
• Enhanced Liquidity and Capital Markets Profile: The Shareholders will benefit from an enhanced capital markets position through increased scale, which will facilitate greater access to capital in addition to increased liquidity. Canopy Growth is listed on both the Toronto Stock Exchange and the New York Stock Exchange. Canopy Shares are highly liquid with an average daily trading volume of approximately 5.3 million shares, representing approximately $202 million on a daily basis over the last three months prior to the Meeting record date of July 24, 2018. Further, Canopy Growth recently closed the issuance of convertible notes amounting to $600 million in gross proceeds. This capital and liquidity will support the combined company's continued expansion efforts.

The members of the board of directors of Hiku have UNANIMOUSLY determined to recommend to the Shareholders that they vote FOR the resolution approving the Arrangement (the "Arrangement Resolution"), after receiving legal and financial advice, including receipt of a fairness opinion from each of BMO Nesbitt Burns Inc. ("BMO Capital Markets"), as financial advisor to the Corporation, and INFOR Financial Inc., as independent financial advisor to the Corporation, which both state that, as of the date of such fairness opinions and based upon and subject to the assumptions, limitations and qualifications stated in such fairness opinions, the Consideration to be received by the Shareholders pursuant to the Arrangement is fair from a financial point of view to the Shareholders. All directors and senior officers of the Corporation, holdings Hiku Shares which represent approximately 31.86% of the issued and outstanding Hiku Shares as of the record date for the Meeting, have entered into voting support agreements with Canopy Growth and intend to vote in favour of the Arrangement Resolution. Subject to obtaining regulatory and court approval, and satisfying certain other conditions to the Arrangement, including the approval of Shareholders, it is expected that the Arrangement will be completed on or about September 5, 2018.

If you have any questions or require more information with regard to the procedures for voting or completing your proxy or voting instruction form, please contact Shorecrest Group Ltd., toll-free in North America at 1-888-637-5789 or at 1-647-931-7454 outside of North America, or by email at [email protected].

About Hiku

Hiku is focused on building a portfolio of engaging cannabis brands, unsurpassed retail experiences and handcrafted cannabis production. With a national retail footprint led by Tokyo Smoke, craft cannabis production through DOJA Cannabis Ltd.'s ACMPR licensed grow, and Van der Pop's female-focused educational platforms, Hiku houses an industry-leading portfolio that aims to set the bar for cannabis brands in Canada.

Hiku's wholly-owned subsidiary, DOJA Cannabis Ltd., is federally licensed to cultivate and sell cannabis pursuant to the ACMPR, owning two production facilities in the heart of British Columbia's Okanagan Valley. Hiku's wholly-owned subsidiary, TS Brandco Holdings Inc. ("Tokyo Smoke"), has been conditionally awarded one of four master retail licenses in Manitoba. Hiku also operates a network of retail stores selling coffee, clothing and curated accessories, across British Columbia, Alberta and Ontario.

Forward-looking statements

This news release contains statements that constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Hiku's actual results, performance or achievements, or developments in the industry to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur.

Forward-looking statements in this document include, among others, statements relating to Hiku's expectations with respect to the timing and outcome of the Arrangement, the anticipated benefits of the Arrangement to the parties and their respective security holders, the impact of the Arrangement and anticipated growth of the combined entity, the anticipated timing of the requisite approvals for the Arrangement (if at all) including court, regulatory, Competition Act, stock exchange and Shareholder approval, and the anticipated timing of the closing of the Arrangement. By their nature, forward-looking statements are based on the opinions and estimates of management at the date the information is made, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Hiku is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

There can be no assurance that the Arrangement will occur, or that it will occur on the terms and conditions contemplated in this news release. The Arrangement could be modified, restructured or terminated. Actual results could differ materially from those currently anticipated due to a number of factors and risks.

Completion of the Arrangement is subject to a number of conditions, including but not limited to, Toronto Stock Exchange and New York Stock Exchange approval. The Arrangement cannot close until the required shareholder, court and regulatory approval is obtained. There can be no assurance that the Arrangement will be completed as proposed or at all.

The Canadian Securities Exchange has not approved nor disapproved the contents of this news release.

SOURCE Hiku Brands Company Ltd.

Will Stewart, Vice President, Corporate Communications & Public Affairs, [email protected], 416-899-9422.