Distinction Group Inc.

Distinction Group Inc.

November 21, 2011 18:18 ET

Distinction Group Inc. Reaches Agreement to Take Corporation Private for a Cash Consideration of $4.50 per Share

MONTREAL, QUEBEC--(Marketwire - Nov. 21, 2011) - Distinction Group Inc. ("GDI" or the "Corporation") (TSX:GD), a Canadian leader in the facility services industry, has reached an agreement (the "Acquisition Agreement") to partner with Birch Hill Equity Partners ("Birch Hill"), pursuant to which all of the outstanding shares of the Corporation will be acquired by Birch Hill and GDI will be taken private for total consideration of approximately $153 million, or $4.50 per share in cash (the "Transaction").

In connection with the Transaction, GDI CEO Claude Bigras and Birch Hill will form a new partnership, with Mr. Bigras and the existing management team of GDI owning approximately 24% of the resulting Corporation.

"GDI has been pursuing an aggressive growth plan over the last several years, and have chosen Birch Hill as the partner that would best support our continued growth and goal of providing our customers with the most comprehensive suite of facility services coast to coast," Mr. Bigras said.

"The Transaction provides compelling value, certainty and liquidity to our shareholders while strengthening GDI's future growth prospects" said Jean-Guy Lambert, Chairman of GDI. "Our directors believe this is the best way to maximize value while providing the Corporation with partners who share our commitment to customers, employees and the markets we serve."

Mr. Bigras will continue as President and CEO of GDI, which will continue to be headquartered in Montreal. "I am proud of the growth our team has realized over the last few years, and very excited about our prospects for continued expansion with Birch Hill as our chosen financial partner," Mr. Bigras said.

Montreal-based GDI is a Canadian leader in the facility services industry, providing a range of industrial janitorial, mechanical maintenance and other services to the commercial real estate industry across the country.

"GDI is a Canadian success story with a proven management team. We look forward to working with Claude and his team to execute their ambitious growth plan," said David Samuel, a Partner at Birch Hill.

The Transaction will be effected by way of a statutory amalgamation requiring the approval of (i) two-thirds of the votes cast by holders of shares and (ii) a simple majority of the votes cast by shareholders other than Mr. Bigras and related parties. Further details of the Transaction will be described in the management proxy circular (the "Circular") to be mailed to shareholders of the Corporation for a meeting of shareholders of the Corporation to be held on or about December 28, 2011 (the "Meeting"). The Transaction is subject to customary conditions precedent.

The $4.50 per-share cash consideration represents a premium of 23,3% over the closing price of the shares on the Toronto Stock Exchange on November 21, 2011, the last day of trading prior to the public announcement of the Transaction and a premium of 35,1% over the volume-weighted average price of the shares in the last 60 days of trading.

The partnership with Birch Hill is the result of a strategic review process that began in the spring. The Transaction was considered at length by the board of directors of GDI (the "Board") and has been approved unanimously by the Board (with interested director abstaining) following the favourable recommendation of the independent committee of the Board (the "Independent Committee") and following consultation with the Corporation's financial and legal advisors. The Board concluded that the Transaction is fair to the Shareholders other than the interested shareholders (the "Public Shareholders"), is in the best interest of the Corporation and its Public Shareholders and has authorized the submission of the Transaction to shareholders of the Corporation for their approval at the Meeting. The members of the Independent Committee and the Board plan to vote all of their common shares in favour of the Transaction.

In making their respective determinations, the Board and the Independent Committee considered, among other things, a formal valuation (the "Formal Valuation") from RSM Richter Inc. ("RSM Richter") and a fairness opinion (the "Fairness Opinion") also from RSM Richter, to the effect that the price of $4.50 to be received by the shareholders under the Transaction is fair, from a financial point of view, to the Public Shareholders.

In connection with the Transaction, Claude Bigras, Jean-Louis Couturier and Réal Paré, who hold in aggregate 17,897,610 common shares or approximately 58,6% of the issued and outstanding common shares of the Corporation, have entered into voting support agreements with Birch Hill (the "Voting Support Agreements"), pursuant to which they have agreed to vote all of their common shares in favour of the Transaction, subject to the right to terminate the Voting Support Agreements in certain circumstances, including the termination of the Acquisition Agreement.

Pursuant to the Acquisition Agreement, the Corporation has agreed not to solicit competing acquisition proposals for the Corporation, subject to customary "fiduciary out" provisions which entitle the Corporation to consider and accept a superior proposal, subject to the right of Birch Hill to match the superior proposal, and the payment to Birch Hill of a termination fee of $4 million.

A copy of the Acquisition Agreement, the Voting Support Agreements, the Circular and certain related documents will be filed with the Canadian Securities Administrators and may be viewed in due course on SEDAR at www.sedar.com.

GMP Securities L.P. is acting as the Corporation's principal financial advisor and National Bank Financial is acting as financial advisor to Birch Hill.

Shareholders should consult their own tax and investment advisors with respect to the Transaction, details of which will be contained in the Circular.

About GDI (Distinction Group Inc.)

GDI is a Canadian leader in the facility services industry. Through its subsidiaries, GDI provides a range of industrial janitorial, mechanical maintenance and other related services to various segments of the commercial real estate industry across Canada.

Additional information on the Corporation can be found on the GDI website at www.gdiservices.ca and on the SEDAR website at www.sedar.com.

About Birch Hill Equity Partners

With $2 billion in capital under management, 19 partner companies and 29 fully realized investments since 1994; Birch Hill is the leader in long-term value creation in the Canadian mid-market. For more information about Birch Hill Equity Partners, please visit www.birchhillequity.com.

Forward-Looking Statements

This press release may contain certain "forward-looking statements". Forward-looking statements are subject to certain risks and uncertainties, many of which are beyond the Corporation's control. There can be no assurance that such statements will prove to be accurate. Consequently, actual results and future events may differ materially from those anticipated by such statements. Readers should not rely unduly on such forward-looking statements. The risks and uncertainties include, but are not limited to, the satisfaction of the conditions to consummate the Transaction, including the approval of the Transaction by the shareholders, the occurrence of any event, change or other circumstances that could give rise to termination of the Transaction, a delay in the consummation of the Transaction or failure to complete the Transaction for any other reason, the amount of the costs, fees, expenses and charges related to the Transaction, and the risks associated with general economic conditions. The forward-looking statements in this press release are made as of the date of this press release and, except as required by law, GDI disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information or future events.

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