April 15, 2001
The Board of Directors
X.X. Xxxxxx Holdings, Inc.
000 X. Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Dear Members of the Board:
We understand that X.X. Xxxxxx Holdings, Inc. (the "Company"), Xxxxxxxx
Xxxxx Group PLC ("Parent"), and Xxxxxxxx Xxxxx Acquisition Corporation, a wholly
owned subsidiary of Parent ("Purchaser"), have entered into an Agreement and
Plan of Merger dated as of April 15 (the "Agreement"), pursuant to which
(i) Parent will cause Purchaser to commence a cash tender offer (the "Tender
Offer") to purchase all of the outstanding shares of Common Stock, par value
$0.01 per share, of the Company (the "Common Stock") at a purchase price of
$13.50 per share (the "Tender Offer Price"), and (ii) Purchaser will
subsequently merge with and into the Company (the "Merger", and together with
the Tender Offer, the "Transaction") pursuant to which each outstanding share of
Common Stock will be converted into the right to receive cash in the amount of
the Tender Offer Price.
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of shares of Common Stock of the Tender Offer Price
pursuant to the Agreement. In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical business and financial information relating
to the Company;
(iii) Reviewed various financial forecasts and other data provided to us by
the Company relating to its business;
(iv) Held discussions with members of the senior management of the Company
with respect to its business and prospects and its strategic
objectives;
(v) Reviewed public information with respect to certain other companies in
lines of businesses we believe to be generally comparable to the
businesses of the Company;
(vi) Reviewed the financial terms of certain business combinations involving
companies in lines of business we believe to be generally comparable to
the business of the Company;
(vii) Reviewed the historical stock prices and trading volumes of the Common
Stock; and
(viii) Conducted such other financial studies, analyses and investigations as
we deemed appropriate.
In conducting our analysis and in arriving at our opinion expressed herein,
we have relied upon the accuracy and completeness of the foregoing information,
and have not assumed any responsibility for any independent verification of such
information or any independent valuation or appraisal of any of the assets or
liabilities of the Company, including the pending litigation involving the
Company and Parent and any of Parent's officers or employees, or concerning the
solvency or fair value of the Company. With respect to financial forecasts, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of management of the Company as
to the future financial performance of the Company. We assume no responsibility
for and express no view as to such forecasts or the assumptions on which they
are based. Our opinion does not address the relative merits of the Transaction
as compared to any alternative business transaction that might be available to
the Company.
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Further, our opinion is necessarily based on accounting standards and on
economic, monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof. In addition, we express
no view with respect to any litigation between the Company and Parent or any of
Parent's officers or employees.
In rendering our opinion, we have assumed that the Transaction will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company and that obtaining any necessary
regulatory approvals for the Transaction will not have an adverse effect on the
Company.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Transaction and will receive a fee for our services a
substantial portion of which is payable upon consummation of the Transaction.
Lazard Freres & Co. LLC provides a full range of financial advisory and security
services and, in the course of our trading and market making activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or Parent for our own account and for the account of
customers.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and its consideration of the Transaction. The
opinion is not intended to and does not constitute a recommendation to any
stockholder of the Company as to whether such holder should tender his or her
shares of Common Stock in the Tender Offer or whether such holder should vote to
approve the Merger, as the case may be. It is understood that this letter may
not be disclosed or otherwise referred to without our prior consent, except as
may otherwise be required by law or by a court of competent jurisdiction.
Based on and subject to the foregoing, we are of the opinion that as of the
date hereof the Tender Offer Price to be received by the holders of Common Stock
pursuant to the Agreement is fair to such holders from a financial point of
view.
Very truly yours,
LAZARD FRERES & CO. LLC
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Managing Director
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