Chapters Online to Merge with Indigo

Chapters Online Inc. (COL) agreed to merge with Indigo Books & Music Inc. (formerly Chapters Inc.) on July 26, 2001. The merger will be completed by way of a three-corner amalgamation, by which Indigo will acquire the approximately 30 per cent of the COL common shares that it does not already own. As a result, COL will become a wholly owned subsidiary of Indigo.

Pursuant to the merger, COL shareholders, other than Indigo, will receive one Indigo common share for every 7.14 outstanding COL common shares held by them. The Sequoia group of funds, holder of approximately 12 per cent of the outstanding COL common shares, have agreed to support the merger. It is expected that the COL shareholders will vote on the merger in October 2001. Griffiths McBurney & Partners are acting as the financial advisors to the independent committee of the board of directors of COL. The COL independent committee was initially established to consider a takeover bid proposed by Chapters Inc. (which has since become Indigo) in December 2000 at a time when Chapters Inc. was fending off a bid for control by Trilogy Retail Enterprises L.P. Trilogy was subsequently successful in its bid for control of Chapters Inc. and Chapters Inc. and Indigo merged their operations effective August 14, 2001.

Indigo is represented by Torys, including Peter Jewett, Philip Brown, William Charnetski, Adam Armstrong and Jonathan Boulakia in the firm’s Toronto office, and Andrew Beck in the New York office. The COL independent committee has, since the beginning of the process, been represented by Jeff Barnes and Will Fung of Fraser Milner Casgrain LLP. Griffiths McBurney & Partners is represented by Francesca Guolo and Bob Vaux of Goodmans LLP.