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EXHIBIT E
[XXXXX & COMPANY LETTERHEAD]
September 27, 1998
Board of Directors
Galoob Toys, Inc.
000 Xxxxxx Xxxxxxxxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Gentlemen:
We understand that Galoob Toys, Inc. ("Galoob") and Hasbro, Inc. ("Hasbro")
are considering entering into a Merger Agreement with terms substantially as set
forth in the draft dated September 27, 1998 (the "Merger Agreement") proposing
to effect a transaction as described in the Merger Agreement and related
documentation (the "Transaction").
Pursuant to an engagement letter dated February 9, 1998, you have asked us
to render our opinion as to the fairness of the Transaction from a financial
point of view to the shareholders of Galoob.
Xxxxx & Company Incorporated ("Xxxxx"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements and
related financings, bankruptcy reorganizations and similar recapitalizations,
negotiated underwritings, secondary distributions of listed and unlisted
securities, and valuations for corporate and other purposes.
As you know, Xxxxx has been engaged by Xxxxxx since February 9, 1998, to
render certain financial advisory services in connection with a potential sale
of Galoob. In connection with such engagement, Xxxxx will receive a fee upon
consummation of the Transaction.
Our opinion as expressed herein reflects and gives effect to information
concerning Galoob which we acquired during the course of this assignment,
including information provided by senior management in the course of a number of
discussions. We have not, however, conducted an independent appraisal of
Galoob's assets, or independently verified the information concerning Galoob's
operations or other data which we have considered in our review, and for the
purpose of expressing our opinion set forth herein, we have assumed that all
such information is accurate, complete and current.
In arriving at our conclusion, we have considered, among other factors we
deemed relevant, (i) the terms of the draft Merger Agreement and related
documentation (which prior to the delivery of this opinion has not been executed
by the parties); (ii) the nature of the operations and financial history of
Galoob, including discussions with senior management of Galoob of the business
and prospects of Galoob relating to, among other things, Xxxxxx's operating
budget and financial outlook; (iii) certain license agreements and other
material contracts of Galoob, including, but not limited to, the license
agreement dated October 14, 1997 between Xxxxx Licensing Ltd. and Galoob; (iv)
Galoob's filings with the Securities and Exchange Commission, including audited
and unaudited financial statements for Galoob; (v) certain publicly available
reports on Galoob independently prepared by various research analysts; (vi) the
historical trading information for the common stock of Galoob; (vii) certain
financial and stock market information for certain other companies in businesses
related to those of Galoob; (viii) certain financial information relating to
certain merger and acquisition transactions involving companies in businesses
related to those of Galoob; and (ix) certain publicly available information
relating to premiums paid in certain selected merger and acquisition
transactions. In addition to our review and analyses of the specific information
set forth above, our opinion herein reflects and gives effect to our assessment
of general economic, monetary, market and industry conditions existing as of the
date hereof as they may affect the business and prospects of Galoob.
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Board of Directors
September 27, 1998
Page 2
It is understood that this letter is for the information of the Board of
Directors of Galoob and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in any
filing made by Galoob or Hasbro with the Securities and Exchange Commission with
respect to the Transaction.
The opinion rendered herein does not constitute a recommendation to
shareholders of Xxxxxx as to whether to vote in favor of the Transaction or to
tender any or all of their shares in connection with the Transaction.
Based upon and subject to the foregoing, it is our opinion as of the date
hereof that the consideration to be received by the shareholders of Galoob in
connection with the Transaction is fair from a financial point of view.
Very truly yours,
XXXXX & COMPANY INCORPORATED
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
