EXHIBIT 99
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Xxxxxxx, Xxxxx & Co. | 00 Xxxxx Xxxxxx x Xxx Xxxx, Xxx Xxxx 00000
Tel: 000-000-0000
Xxxxxxx
Sachs
PERSONAL & CONFIDENTIAL
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August 26, 1999
Board of Directors
Recovery Engineering, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxx, XX 00000
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $0.01 per
share (the "Shares"), of Recovery Engineering, Inc. (the "Company") of the
$35.25 per Share in cash to be received by such holders in the Tender Offer and
the Merger (as defined below) pursuant to the Agreement and Plan of Merger,
dated as of August 26, 1999, among The Procter & Xxxxxx Company ("Parent"), an
indirect wholly-owned subsidiary of Parent, Xxxxxxx, Inc. ("Xxxxxxx"), and the
Company (the "Agreement"). Subject to the terms of the Agreement, Parent will
cause Xxxxxxx to commence a tender offer for all the Shares (the "Tender Offer")
at a price equal to $35.25 per Share in cash for each Share accepted. The
Agreement further provides that following purchase of the Shares pursuant to the
Tender Offer, Xxxxxxx shall be merged with and into the Company (the "Merger")
and each outstanding Share (other than Shares owned by Parent, the Company or
any of their subsidiaries) will be converted into the right to receive $35.25 in
cash.
Xxxxxxx, Xxxxx & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company, having acted as its financial advisor in connection with, and
having participated in certain of the negotiations leading to, the Agreement.
As the Board of Directors is aware, the Xxxxxxx Xxxxx Group, L.P. has an
investment in the Company in the form of the $15.0 million aggregate principal
amount 5% Convertible Notes due 2003, and Xx. Xxxxxx Xxxxxxxxx, a Vice President
of Xxxxxxx, Xxxxx & Co., is a director of the Company. In addition, we have
provided certain investment banking services to Parent from time to time,
including having acted as lead managing underwriter of the public offering of
the $750,000,000 aggregate principal amount of 5.25% Notes due 2003 of Parent in
September 1998, as lead managing underwriter of the public offering of the
$500,000,000 aggregate principal amount of 5.625% Notes due 2008 of Parent in
April 1998 and as lead managing underwriter of the public offering of
$75,000,000 aggregate principal amount of Floating Rate Notes due 2048 of Parent
in December 1998, and having acted as financial advisor to Parent in
numerous strategic
Recovery Engineering, Inc.
August 26, 1999
Page Two
transactions including the acquisition by Parent of Tambrands Inc. in July 1997,
the divestiture by Parent of the Xxxxxx Xxxxx business in January 1998 and the
pending acquisition by Parent of the Iams Company. In addition, we are
currently providing investment banking services to Parent and may continue to
provide investment banking services to Parent in the future. Xxxxxxx, Xxxxx &
Co. provides a full range of financial advisory and securities services and, in
the course of its normal trading activities, may from time to time effect
transactions and hold securities, including derivative securities, of the
Company or Parent for its own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Shareholders and Annual Reports on Form 10-K of the
Company for the five fiscal years ended January 3, 1999; certain interim reports
to shareholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its shareholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market information
for the Company with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the consumer brand industry specifically and in
other industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. Our advisory services and the opinion expressed herein
are provided for the information and assistance of the Board of Directors of the
Company in connection with its consideration of the transaction contemplated by
the Agreement and such opinion does not constitute a recommendation as to
whether or not any holder of Shares should tender such Shares in connection with
such transaction.
Recovery Engineering, Inc.
August 26, 1999
Page Three
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $35.25 per
Share in cash to be received by the holders of Shares in the Tender Offer and
the Merger is fair from a financial point of view to such holders.
Very truly yours,
/s/ Xxxxxxx Xxxxx & Co.
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XXXXXXX, XXXXX & CO.
