Cossette updates on the $8.10 Mill Road transaction

    KOS (TSX)

QUÉBEC CITY, Dec. 2 /CNW Telbec/ - Cossette Inc. ("Cossette") announced today that the update to the management information circular in connection with the special general meeting of shareholders to be held on December 18, 2009 to consider the recently amended privatization transaction with Mill Road Capital, L.P. ("Mill Road") at an increased price of $8.10 in cash per share (the "$8.10 Mill Road Transaction") has been filed with the Canadian provincial securities regulatory authorities and will be mailed to shareholders shortly.

The update to the management information circular contains a recommendation to the shareholders of Cossette that they vote in favour of the $8.10 Mill Road Transaction. It is also recommended that they reject the $7.87 Amended Cosmos Offer and not tender their shares to the $7.87 Amended Cosmos Offer, particularly as Cosmos Capital is not obligated to take up and pay for any tendered shares since the $7.87 Amended Cosmos Offer is subject to a series of conditions including a due diligence condition that are solely in Cosmos' favour and which it may elect not to waive.

There is no need for shareholders to take any action with respect to the $7.87 Amended Cosmos Offer. However, if shareholders have already tendered shares to the $7.87 Amended Cosmos Offer, they should withdraw them in accordance with the withdrawal process that is described in the takeover bid circular of Cosmos Capital dated October 30, 2009.

The Board based its recommendation on the following reasons:

    -   Significant Premium. The all-cash consideration of $8.10 per share to
        be received by shareholders pursuant to the $8.10 Mill Road
        Transaction represents a premium of approximately 150% over the
        unaffected share price of $3.25 on July 17, 2009, being the last
        trading day prior to Cosmos announcing the Cosmos Proposal on July
        20, 2009.
    -   Extensive Strategic Review Process. Cossette conducted, with the
        assistance of its financial and legal advisors, a thorough review
        process to identify potential parties interested in acquiring all of
        the shares of Cossette or in participating in any other form of
        transaction with a view to maximizing value for all shareholders.
        Completion of the $8.10 Mill Road Transaction would bring an end to
        the over four month long review process, which is now becoming a
        priority in order to maintain stability.
    -   Fairness Opinion. RBC Capital Markets delivered to the Special
        Committee an opinion to the effect that, as of November 30, 2009, the
        consideration to be received pursuant to the $8.10 Mil Road
        Transaction is fair from a financial point of view to the Public
        Shareholders (excluding Cosmos).
    -   Reasonableness of the Merger Agreement. The terms and conditions of
        the merger agreement between Cossette and Mill Road dated November 9,
        2009 and as amended on November 30, 2009 (the "Amended Merger
        Agreement"), which were reviewed by the members of the Special
        Committee in consultation with its legal advisor, were determined to
        be fair and reasonable and were the result of arm's length
        negotiations between Cossette and Mill Road.
    -   Superior Proposals. Under the Amended Merger Agreement, the Board
        continues to retain the ability to consider a competing acquisition
        proposal not solicited by it which the Board believes, in the
        exercise of its fiduciary duties, represents, or could reasonably be
        expected to lead to, a superior proposal, and to terminate the
        Amended Merger Agreement in the event of such superior proposal,
        subject to Mill Road's right to match or be paid a termination fee of
        $4.5 million. In addition, the support and voting agreements between
        Mill Road and the Senior Executives terminate automatically in the
        event of the termination of the Amended Merger Agreement.
    -   All-Cash Consideration. The payment of cash under the $8.10 Mill Road
        Transaction will provide shareholders with immediate liquidity and
        certainty of value that is not subject to market fluctuations.
    -   No Further Due Diligence. The $8.10 Mill Road Transaction is not
        subject to further due diligence by Mill Road, contrary to the $7.87
        Amended Cosmos Offer.
    -   Support of the $8.10 Mill Road Transaction by the Senior Executives.
        The Senior Executives, who hold shares representing approximately 30%
        of the outstanding Shares, have each entered into a support and
        voting agreement pursuant to which they have agreed to vote their
        shares in favour of the former Mill Road transaction at a price of
        $7.87 per share. The support and voting agreements remain in full
        force and effect in connection with the $8.10 Mill Road Transaction.
    -   Interests of Other Stakeholders. The nature of a board supported,
        negotiated transaction such as the Mill Road Transaction, together
        with Mil Road's agreement that Cossette will comply with its
        obligations under its retention program and guarantee the performance
        of such obligations as part of the completion of the $8.10 Mil Road
        Transaction, should address the concerns of Cossette's employees and
        maintain stability and a high level of service at Cossette. In
        determining the best interests of all stakeholders of Cossette, the
        Board also took into account Cossette's long-term interests as a
        going-concern company, with its most valuable assets in its line of
        business being its employees and its relationships with clients.

BMO Capital Markets acted as exclusive financial advisor to Cossette throughout the Company's strategic review process.

About Cossette

Cossette Inc. offers a full range of leading-edge communication services to clients of all sizes, including some of the most prestigious brands in the world. A customer-driven organization built around highly specialized business units, Cossette also offers Convergent Communications(TM), a unique working method that brings added value to the client by integrating various services offered by the Group, including strategic planning and research, advertising, media buying and channel planning, sales promotion, direct response, database and direct marketing, customer relationship management, interactive marketing and technology solutions, public relations, organizational communication and change management, sponsorship and alliance marketing, branding and design, ethnic marketing, business-to-business communications (B2B practices) and print and video production. Cossette has approximately 1,437 employees and offices in Quebec City, Montreal, Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London and Shanghai.


For further information: For further information: Financial Analysts only: Martin Faucher, Vice-President and Chief Financial Officer, (418) 521-3784; Investors: Francis Trudeau, Director, Acquisitions and Investor Relations, (514) 282-4633; Media: Maxime Couture, Optimum Public Relations, (418) 521-3770; Source: Cossette, Inc.

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