EXHIBIT (A)(4)
September 30, 1998
CONFIDENTIAL
Board of Directors
Carnegie Group, Inc.
Five PPG Place
Pittsburgh, PA 15222
Dear Members of the Board:
We understand that Carnegie Group, Inc. ("Carnegie" or the "Company"),
Logica Inc. and Logica Acquisition Corp. ("Logica"), a wholly-owned subsidiary
of Logica Inc., have entered into an Agreement and Plan of Merger (the
"Agreement") pursuant to which Logica will offer to purchase (the "Offer") all
of the outstanding shares of Carnegie common stock, $.01 par value ("Carnegie
Common Stock"), for $5.00 cash per share (the "Consideration") and
subsequently merge with and into Carnegie (the "Merger"). Pursuant to the
Merger, each issued and outstanding share of Carnegie not acquired in the
Offer will be converted into the right to receive an amount of cash equal to
the Consideration. The terms and conditions of the above described Offer and
Merger (together the "Transaction") are more fully detailed in the Agreement.
You have requested our opinion as to whether the Consideration to be
received by Carnegie shareholders in the Transaction is fair, from a financial
point of view, to Carnegie shareholders.
Updata Capital, Inc. ("Updata") focuses on providing merger and acquisition
advisory services to information technology ("IT") companies. In this
capacity, we are continually engaged in valuing such businesses, and we
maintain an extensive database of IT mergers and acquisitions for comparative
purposes. We are currently acting as financial advisor to Carnegie's Board of
Directors and will receive a fee from Carnegie upon the successful conclusion
of the Transaction.
In rendering our opinion, we have among other things:
1. reviewed the terms of the Agreement dated September 30, 1998 furnished to
us by Xxxxxx, Xxxxx & Xxxxxxx, LLP on September 30, 1998;
2. reviewed Xxxxxxxx's annual reports and Forms 10-K for the fiscal years
ended December 31, 1997 and 1996, including the audited financial
statements included therein, and Carnegie's Form 10-Q for the three months
ended June 30, 1998, including the unaudited financial statements included
therein;
3. reviewed certain internal financial and operating information, including
certain projections, relating to Carnegie prepared by Carnegie management;
4. participated in discussions with Carnegie management concerning the
operations, business strategy, financial performance and prospects for
Xxxxxxxx;
5. reviewed the recent reported closing prices and trading activity for
Carnegie Common Stock;
6. compared certain aspects of the financial performance of Carnegie with
public companies we deemed comparable;
7. analyzed available information, both public and private, concerning other
mergers and acquisitions we believe to be comparable in whole or in part to
the Transaction;
Board of Directors Page 2
Carnegie Group, Inc. September 30, 1998
8. reviewed Logica's annual reports for the fiscal years ended June 30, 1997
and 1996, including the audited financial statements included therein, and
Xxxxxx's interim report for the six months ended December 31, 1997,
including the unaudited financial statements included therein;
9. reviewed the recent reported closing prices and trading activity for Logica
common stock;
10. discussed with Logica management its view of the strategic rationale for
the Transaction;
11. assisted in negotiations and discussions related to the Transaction among
Carnegie, Logica and their respective legal advisors; and
12. conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification,
on the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Xxxxxxxx.
With respect to the financial projections examined by us, we have assumed that
they were reasonably prepared and reflected the best available estimates and
good faith judgments of the management of Xxxxxxxx as to the future
performance of Xxxxxxxx. We have neither made nor obtained an independent
appraisal or valuation of any of Carnegie's assets.
Based upon and subject to the foregoing, we are of the opinion that the
Consideration to be received by Carnegie shareholders in the Transaction is
fair, from a financial point of view, to Carnegie shareholders.
For purposes of this opinion, we have assumed that Xxxxxxxx is not currently
involved in any material transaction other than the Transaction and those
activities undertaken in the ordinary course of conducting its business. Our
opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this opinion,
and any change in such conditions may impact this opinion.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Carnegie in
connection with its consideration of the Transaction and does not constitute a
recommendation to any Carnegie shareholder as to whether such shareholder
should tender its shares in the Offer or as to how such shareholder should
vote on the Merger. Updata does not believe that any person other than the
Board of Directors of Xxxxxxxx has the legal right under state law to rely on
this opinion, and, in the absence of any governing precedents, we would resist
any assertion otherwise by any such person. This opinion may not be published
or referred to, in whole or part, without our prior written permission, which
shall not be unreasonably withheld. Updata hereby consents to references to
and the inclusion of this opinion in its entirety in the Schedule 14D-9 to be
distributed to Carnegie shareholders in connection with the Transaction.
Sincerely,
/s/ Updata Capital, Inc.
Updata Capital, Inc.
