Mr. Jean Ayas reports

DIALOGUE TO BE ACQUIRED BY SUN LIFE

Dialogue Health Technologies Inc. has entered into a definitive arrangement agreement with Sun Life Financial Inc., pursuant to which Sun Life will indirectly acquire all of the issued and outstanding common shares of the company, other than those owned by Sun Life Assurance Company of Canada (SLA) and certain common shares owned by members of Dialogue management, for $5.15 in cash per common share.

The consideration represents a premium of approximately 43.1 per cent to the closing price of the common shares on the Toronto Stock Exchange on July 25, 2023, and a premium of approximately 59.4 per cent to the 20-day volume-weighted average trading price of the common shares on the TSX as at the same date. The consideration is also above the 52-week-high closing price of the common shares on the TSX as at July 25, 2023. The consideration implies an equity value for Dialogue of approximately $365-million, as calculated on a fully diluted basis.

The transaction emerged from a strategic review process undertaken by the company. The process and negotiation of the transaction with Sun Life were supervised by a committee of independent directors. The transaction has been approved unanimously by the board of directors of Dialogue (with interested and non-independent directors abstaining from voting) following the unanimous recommendation of the strategic committee. Both the board and the strategic committee determined, after receiving financial and legal advice, that the transaction is in the best interests of the company and is fair, from a financial point of view, to Dialogue shareholders (other than SLA and the rolling shareholders).

The acquisition of Dialogue by Sun Life is highly complementary and beneficial to the two organizations as they share a purpose of helping Canadians live healthier lives. As the premier integrated health platform in Canada, with a distinctive management team and entrepreneurial culture, Dialogue will fit naturally as a core strategic pillar of Sun Life Canada. Importantly, Dialogue will continue to execute its strategic plan and grow its business. Furthermore, Dialogue will continue to provide a premium service to all its customers and distribution partners, each of which will continue to have access to Dialogue's services and capabilities, and will benefit from the continued innovation resulting from the combined strengths of both organizations.

"In recent years, Dialogue has developed a strong relationship with Sun Life. This transaction represents an attractive opportunity for the company's stakeholders. As a stand-alone entity backed by Sun Life, Dialogue will have more resources to deliver on our mission of helping people improve their health and well-being and the flexibility to continue to deliver on our mission by leveraging the respective strengths of both organizations. We are enthusiastic about the prospects of this next chapter in Dialogue's history," said Cherif Habib, chief executive officer of Dialogue.

"This is a natural step forward in Sun Life's relationship with Dialogue, having first invested in the company in 2020 and subsequently expanding our relationship as a large shareholder and partner. Sun Life has a high regard for the exceptional organization that the team at Dialogue has built. We are excited to work alongside its employees to continue developing the company. Dialogue and Sun Life are perfectly aligned in our commitment to provide innovative digital solutions to support the health care needs of Canadians. We look forward to collaborating with Dialogue in the years ahead to unlock more innovative solutions to empower Canadians on their health journey," said Jacques Goulet, president of Sun Life Canada.

"It's been an honour to be part of the Dialogue story since it was conceived as the first company in our venture builder, Diagram. Today is another exciting milestone for this innovative Montreal, Que., and Canada success story that now has over 900 employees and practitioners and is available to over six million Canadians," said Paul Desmarais III, chairman and chief executive officer of Sagard and outgoing chairman of Dialogue. "I am proud of the positive impact Dialogue has had in improving access to health care and modernizing the B2B [business to business] health care space.

Dialogue will maintain its head office in Montreal, Que., and will continue to operate as a stand-alone entity of Sun Life Canada, with oversight from a new board of directors comprising senior executives from Sun Life and Dialogue. The transaction is not subject to any financing condition and is expected to close in the fourth quarter of 2023, subject to obtaining the required shareholder, court and regulatory approvals, and the satisfaction of other customary closing conditions.

In connection with the transaction, Portag3 Ventures LP, Portag3 Ventures II Investments LP and WSC IV LP, collectively holding approximately 21.0 per cent of the outstanding common shares, and each of the directors and executive officers of the company have entered into voting and support agreements pursuant to which they have agreed to vote their common shares in favour of the transaction. Consequently, shareholders holding approximately 30.5 per cent of the common shares eligible to vote in the majority of the minority vote described below have agreed to vote in favour of the transaction.

Transaction rationale

The conclusions and recommendations of the strategic committee and the board have been based on a number of factors, including the following:

• Compelling value and immediate liquidity to shareholders: The all-cash consideration provides shareholders with certainty of value and immediate liquidity. The consideration to be received by shareholders pursuant to the transaction represents a 43.1-per-cent premium to the closing price of the common shares on the TSX on July 25, 2023, and a 59.4-per-cent premium to the 20-day volume-weighted average trading price of the common shares on the TSX as at July 25, 2023. The consideration to be received by shareholders pursuant to the transaction is also above the 52-week-high closing price of the common shares on the TSX as at July 25, 2023.
• Highest proposal following market check: The transaction is the result of a strategic review process undertaken by the company. With the assistance of its financial adviser and the oversight of the strategic committee, comprising independent directors, the company conducted a market check after the receipt of an initial proposal from Sun Life and contacted various potential financial and strategic purchasers across North America, following which the offer by Sun Life emerged as the highest proposal.
• Arrangement agreement terms: The terms of the agreement were negotiated with oversight and participation of the strategic committee and the assistance of Dialogue's external financial and legal advisers. Such terms are reasonable in the judgment of the strategic committee and the board and include a customary fiduciary-out provision that entitles the board to consider and, subject to certain conditions, including Sun Life's right to match and the payment of a reasonable termination fee, accept a superior proposal in certain circumstances.
• Fairness opinions: The strategic committee and the board received verbal fairness opinions from each of National Bank Financial Inc. and Scotia Capital Inc., which each concluded that, based upon and subject to the assumptions, limitations and qualifications set out in their respective opinions, as at the date hereof, the consideration to be received by the shareholders (other than SLA and the rolling shareholders) pursuant to the transaction is fair, from a financial point of view, to such shareholders. The fairness opinions will be included in the management information circular to be mailed to shareholders in connection with the special meeting of the shareholders to approve the transaction.
• Commitments to employees: Sun Life has agreed to certain covenants regarding employees of the company, including to honour and comply with the terms of all employment and other agreements with the company's employees. Both Sun Life and management of the company are committed to employee retention and well-being.

Minority vote and court approval

The transaction must be approved by two-thirds of the votes cast by shareholders, as well as a majority of the votes cast by shareholders other than SLA and the rolling shareholders in accordance with Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions), and by the Superior Court of Quebec, which will consider the fairness and reasonableness of the transaction to all shareholders.

Fairness opinions

In connection with their review and consideration of the transaction, the strategic committee engaged National Bank Financial as its financial adviser in respect of the transaction and Scotiabank as its independent financial adviser in respect of the transaction. Both National Bank Financial and Scotiabank provided a verbal opinion to the board and strategic committee that, as at the date hereof and based upon and subject to the assumptions, limitations and qualifications set out in their respective opinions, the consideration to be received by the shareholders (other than SLA and the rolling shareholders) pursuant to the transaction is fair, from a financial point of view, to such shareholders.

Additional transaction details

The transaction is to be completed by way of a statutory plan of arrangement under the Canada Business Corporations Act and will constitute a business combination for purposes of MI 61-101. The transaction is subject to certain approvals at the meeting, including by (i) at least two-thirds of the votes cast by shareholders voting in person or by proxy, voting together as a single class; and (ii) a simple majority of the votes cast by shareholders (other than SLA and the rolling shareholders) voting in person or by proxy, voting together as a single class. For the purposes of the majority of the minority approval requirement under MI 61-101, the votes cast in respect of the transaction by the rolling shareholders and SLA, which hold, in the aggregate, approximately 31.3 per cent of the outstanding common shares, will be excluded. The parties are relying on the previous arm's-length negotiations exemption from the formal valuation requirements of MI 61-101, in Section 4.4(1)(b), on the basis that (i) the consideration per common share to be received by the shareholders (other than SLA and the rolling shareholders) under the transaction is at least equal in value to and is in the same form as the highest consideration agreed to with the supporting shareholders in arm's length negotiations in connection with the transaction, (ii) as at the date of the voting and support agreements, at least one of the supporting shareholders beneficially owned or exercised control or direction over, and agreed to sell, at least 10 per cent of the then-outstanding common shares, and at least one or more of the supporting shareholders exercised control or direction over, and agreed to sell, in the aggregate, at least 20 per cent of the then outstanding common shares not beneficially owned or over which control or direction is exercised by Sun Life and any persons acting jointly or in concert with Sun Life, (iii) Sun Life reasonably believes, after reasonable inquiry, that at the time of entering into the voting and support agreements, the supporting shareholders had full knowledge of and access to information concerning the company and its securities, and any factors peculiar to the supporting shareholders, including non-financial factors, that were considered relevant by the supporting shareholders in assessing the consideration did not have the effect of reducing the price that would otherwise have been considered acceptable by the supporting shareholders, (iv) at the time of entering into the voting and support agreements, Sun Life did not know of any material information in respect of Dialogue or the common shares that had not been generally disclosed, and that, if disclosed, could have reasonably been expected to increase the agreed consideration, and (v) since the time of entering into the voting and support agreements and as of the date hereof, Sun Life does not know, after reasonable inquiry, of any material information in respect of Dialogue or the common shares that has not been generally disclosed and could reasonably be expected to increase the value of the common shares.

The agreement includes representations, warranties and covenants, including customary provisions relating to non-solicitation and fiduciary-out provisions that entitle the board to consider and, subject to certain conditions, including Sun Life's right to match, accept a superior proposal. A termination fee of $12-million will be payable by Dialogue to Sun Life in certain circumstances, including if the company terminates the agreement to accept a superior proposal after Sun Life fails to exercise its match right.

The rolling shareholders have agreed to roll a portion of their common shares (including the common shares issuable on the exercise of incentive awards or subscribed for using the proceeds received therefrom) and maintain a minority interest in Dialogue following closing. The rollover shares will represent approximately 2.6 per cent of the issued and outstanding common shares immediately prior to the completion of the transaction.

Upon closing of the transaction, Sun Life intends to cause the common shares to be delisted from the TSX and to cause the company to submit an application to cease to be a reporting issuer under applicable Canadian securities laws.

Additional details regarding the terms and conditions of the transaction, the rationale for the recommendations made by the strategic committee and the board, and the fairness opinions, and how shareholders can participate in and vote at the meeting, will be set out in Dialogue's management information circular to be prepared and made available to shareholders in connection with the meeting. Copies of the agreement, the forms of voting and support agreements, the management information circular and proxy materials in respect of the meeting will be filed by the company under its profile on SEDAR.

Advisers

National Bank Financial is acting as exclusive financial adviser to Dialogue and financial adviser to the strategic committee and has provided a fairness opinion to Dialogue's board of directors and the strategic committee. Scotiabank is acting as independent financial adviser to the strategic committee and has provided a fairness opinion to the strategic committee. Osler, Hoskin & Harcourt LLP is acting as legal adviser to Dialogue. Stikeman Elliott LLP is acting as legal adviser to the rolling shareholders.

About Dialogue Health Technologies Inc.

Incorporated in 2016, Dialogue is Canada's premier virtual health care and wellness platform, providing affordable, on-demand access to quality care. Through its team of health professionals, it serves employers and organizations that have an interest in the health and well-being of their employees, members and their families.

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