Mr. Michael Andlauer reports

ANDLAUER HEALTHCARE GROUP TO BE ACQUIRED BY UPS

Andlauer Healthcare Group Inc. has entered into a definitive arrangement agreement with affiliates of United Parcel Service (UPS), under which UPS has agreed to acquire Andlauer Healthcare Group via an all-cash transaction that values Andlauer Healthcare Group at an equity value of approximately $2.2-billion ($1.6-billion (U.S.)).

All of the issued and outstanding multiple voting shares and subordinate voting shares of the company will be acquired for $55 per share in cash, which represents a 31.1-per-cent premium to the last closing price prior to the announcement of the transaction and a premium of 38.4 per cent to the 30-day volume-weighted average trading price on the Toronto Stock Exchange (TSX) on April 23, 2025, the last trading day prior to the announcement of the transaction.

The transaction is supported by Michael Andlauer, chief executive officer of Andlauer Healthcare Group and the indirect holder of 53.2 per cent of Andlauer Healthcare Group's outstanding shares and 82 per cent of the votes entitled to be cast to approve the transaction.

"I look forward to working with UPS to leverage its logistics capabilities to enhance AHG's specialized transportation and health care logistics services to our clients," said Mr. Andlauer. "I am also excited that AHG employees will continue to have opportunities to grow and that UPS shares our cultural values."

"This substantial investment in Canada by UPS is a testament to the outstanding business that Michael and his leadership team have built with focus and care for AHG's employees and customers since 1991," said Peter Jelley, chair of Andlauer Healthcare Group's board. "This transaction, with its significant cash premium, provides meaningful and immediate value to shareholders while also finding an exceptional partner in UPS that shares our passion and focus on service quality that ensures the safe and efficient movement of health care products."

"New, complex treatments are coming to market quicker than ever before, driving better patient outcomes and increased global demand for specialized logistics services," said Kate Gutmann, UPS executive vice-president and president of international, health care and supply-chain solutions. "We are excited to add AHG's expertise, culture and capabilities to UPS Healthcare's commitment to excellence. This acquisition strengthens our ability to meet growing customer need for integrated, end-to-end cold chain solutions around the world."

UPS values the expertise, experience and record of Andlauer Healthcare Group's management team and employees. Following the close of the transaction, Mr. Andlauer will lead UPS Canada Healthcare and Andlauer Healthcare Group to expand the businesses' specialized capabilities and meet the needs of health care customers.

UPS has been a trusted partner to Canadian customers since 1975 and has a strong record of investment in Canada. UPS's Canadian operations encompass approximately 13,500 Canadian employees with facilities across Canada. This transaction represents UPS's continued commitment to invest in Canada.

Transaction details

The transaction, which was unanimously approved by the board of directors of Andlauer Healthcare Group, after receiving a unanimous recommendation from a special committee of independent directors, is to be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) and will require approval of two-thirds of the votes cast by holders of multiple voting shares and subordinate voting shares, voting as a single class, at a special meeting of the holders of multiple voting shares and subordinate voting shares. The special meeting is expected to be held in June, 2025.

The arrangement agreement includes customary terms and conditions, including a non-solicitation covenant on the part of Andlauer Healthcare Group, which is subject to fiduciary-out provisions that would enable Andlauer Healthcare Group to enter into a definitive agreement with respect to an unsolicited proposal that constitutes a superior proposal (as defined in the arrangement agreement) in certain circumstances, subject to UPS having a right to match any superior proposal. A termination fee of $66-million would be payable by Andlauer Healthcare Group to UPS in certain circumstances, including if Andlauer Healthcare Group terminates the arrangement agreement pursuant to the fiduciary-out provisions. A reverse termination fee of $110-million is payable by UPS to Andlauer Healthcare Group if the transaction is not completed in certain circumstances, including where certain of the required regulatory approvals are not received.

Mr. Andlauer and Andlauer Management Group Inc., the company's largest shareholder, and each of the company's other directors and officers have entered into voting and support agreements, pursuant to which they have agreed, subject to the terms thereof, to support and vote all of their shares in favour of the transaction. Consequently, holders of approximately 2.6 per cent of the subordinate voting shares and holders of 100 per cent of the multiple voting shares, representing approximately 82.4 per cent of the total voting power attached to all of the shares, have agreed to vote their shares in favour of the transaction. All voting and support agreements terminate automatically upon termination of the arrangement agreement.

In addition to shareholder approval, the completion of the transaction will be subject to court and regulatory approvals and clearances, as well as other customary closing conditions. The transaction is not subject to any financing condition. Subject to the satisfaction of such conditions, the transaction is expected to be completed in the second half of 2025.

Following the completion of the transaction, it is expected that the subordinate voting shares will be delisted from the TSX and that Andlauer Healthcare Group will cease to be a reporting issuer in all applicable Canadian jurisdictions.

Subject to financial results, capital requirements, available cash flow, corporate law requirements and any other factors that the board may consider relevant, it is the company's intention to continue to declare a 12-cent quarterly dividend on a continuing basis until the closing of the transaction.

As a result of the announcement of the transaction, the company's previously announced automatic share purchase plan established in connection with its normal course issuer bid announced on June 27, 2024, has terminated in accordance with its terms. The arrangement agreement restricts any further purchases under the company's normal course issuer bid, which will formally terminate on July 1, 2025.

Board and special committee recommendation

In arriving at its unanimous recommendation in favour of the transaction, the special committee considered several factors, including the opinion of CIBC Capital Markets that, as of the date thereof and subject to the assumptions, limitations and qualifications therein, the consideration to be received by the shareholders is fair, from a financial point of view, to such shareholders.

The board, based on the recommendation of the special committee and having also received CIBC Capital Markets' fairness opinion, has unanimously approved the transaction and determined the transaction is fair and reasonable to shareholders and in the best interest of the company, and unanimously recommends that shareholders vote in favour of the transaction.

Additional information and where to find it

Further details regarding the terms of the transaction are set out in the arrangement agreement, which will be publicly filed on Andlauer Healthcare Group's SEDAR+ profile. Additional information regarding the terms of the arrangement agreement, the background to the transaction, the rationale for the recommendations made by the special committee and the board, and how the shareholders can participate in and vote at the special meeting, along with a copy of the written fairness opinion of CIBC Capital Markets, will be provided in the management information circular that will be mailed to shareholders and filed on the company's SEDAR+ profile. Shareholders are urged to read these and other relevant materials when they become available.

Advisers

Goodmans LLP is acting as legal counsel to the company. Stikeman Elliott LLP and King & Spalding LLP are acting as legal advisers to UPS. CIBC Capital Markets is acting as financial adviser to the company, its board and the special committee. BofA Securities is acting as UPS's financial adviser in connection with the transaction.

Early warning disclosure

Andlauer Management Group, a private corporation owned and controlled by Mr. Andlauer, currently owns all of the 20,807,955 issued and outstanding multiple voting shares and 10,200 subordinate voting shares (representing less than 0.1 per cent of the issued and outstanding subordinate voting shares, 53.2 per cent of all issued and outstanding shares and 82 per cent of the voting power attached to all of the issued and outstanding shares). Following the completion of the transaction, Andlauer Management Group will not own any shares. A copy of the early warning report to be filed under National Instrument 62-103 by Andlauer Management Group in connection with the transaction will be available on the company's SEDAR+ profile. The head office of the company is located at 100 Vaughan Valley Blvd., Vaughan, Ont., L4H 3C5.

About Andlauer Healthcare Group

Andlauer Healthcare Group is a leading and growing supply-chain management company offering a robust platform of customized third party logistics (3PL) and specialized transportation solutions for the health care sector. The company's 3PL services include customized logistics, distribution and packaging solutions for health care manufacturers across Canada. Andlauer Healthcare Group's specialized transportation services in Canada, including air freight forwarding, ground transportation, dedicated delivery and last-mile services, provide a one-stop shop for clients' health care transportation needs. Through its complementary service offerings, available across a coast-to-coast distribution network, Andlauer Healthcare Group strives to accommodate the full range of its clients' specialized supply-chain needs on an integrated and efficient basis. The company also provides specialized ground transportation services, primarily to the health care sector, across the 48 contiguous U.S. states.

We seek Safe Harbor.