ANNEX B
[XXXX. BROWN LET. HD]
November 27, 1996
ElectroStar, Inc.
000 Xxxxx 000 Xxxx
Xxxxx, Xxxx 00000
Dear Sirs:
ElectroStar, Inc. (the "Company"), Tyco International Ltd. ("Buyer") and T3
Acquisition Corp., a Florida Corporation and a wholly-owned subsidiary of Buyer
(the "Merger Sub"), intend to enter into an Agreement and Plan of Merger dated
as of November 27, 1996 (the "Agreement"). Pursuant to the Agreement, Merger Sub
will commence a tender offer to purchase all outstanding shares of the common
stock, $0.01 par value per share ("Common Stock"), of the Company at a price of
$14.00 per share, net to the seller in cash. The Agreement also provides that
following such tender offer, Merger Sub will be merged with and into the Company
(the "Merger"), and that each share of Common Stock, other than shares of Common
Stock owned directly or indirectly by Buyer or the Company, will be converted
into the right to receive $14.00 in cash. You have requested our opinion as to
whether the consideration to be received by the holders of Common Stock pursuant
to the Agreement (the "Consideration") is fair, from a financial point of view,
to such holders.
Xxxx. Xxxxx & Sons Incorporated ("Xxxx. Xxxxx"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. We will receive a fee for rendering our opinion to the Board of
Directors. We were also the co-manager in the Company's December 1995 initial
public offering. Xxxx. Xxxxx maintains a market in the Common Stock of the
Company and regularly publishes research reports regarding the printed circuit
board industry and the businesses and securities of the Company and other
publicly owned companies in the printed circuit board industry. In the ordinary
course of business, Xxxx. Xxxxx may actively trade the securities of the Company
for our own account and the account of our customers and, accordingly, may at
any time hold a long or short position in securities of the Company.
In connection with this opinion, we have reviewed certain publicly available
financial information and other information concerning the Company and Buyer and
certain internal analyses and other information furnished to us by the Company.
We have also held discussions with the members of the senior management of the
Company regarding the business and prospects of the Company. In addition, we
have (i) reviewed the reported prices and trading activity for the common stock
of the Company, (ii) compared certain financial and stock market information for
the Company with similar information for certain other companies whose
securities are publicly traded, (iii) reviewed the financial terms of certain
recent business combinations, (iv) reviewed the terms of the Agreement and
certain related documents, and (v) performed such other studies and analyses and
considered such other factors as we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of the
Company, we have assumed that such information reflects the best currently
available judgments and estimates of the management of the Company as to the
likely future financial performance of the Company. In addition, we have not
made an independent evaluation or appraisal of the assets of the Company, nor
have we been furnished with any such evaluations or appraisals. Our opinion is
based on market, economic and other conditions as they exist and can be
evaluated as of the date of this letter.
[XXXX. BROWN LET. HD.]
B-1
In arriving at our opinion, we were not authorized to solicit on behalf of
the Company, and did not solicit on behalf of the Company, interest from any
party with respect to the acquisition of the Company or any of its assets, nor
did we have discussions or negotiate with Buyer in connection with the Merger.
We understand, however, that Trivest, Inc. on behalf of the Company, engaged in
a process pursuant to which a number of potential buyers have been contacted
regarding the potential sale of the Company.
We have been retained by the Board of Directors of the Company as financial
advisor solely for the purpose of rendering this opinion and accordingly, we
have not been requested to and have not provided any other services in
connection with the Merger.
Our opinion expressed herein was prepared for the use of the Board of
Directors of the Company and does not constitute a recommendation to the
Company's stockholders as to how they should vote with respect to the Merger. We
hereby consent, however, to the inclusion of this opinion as an exhibit to any
proxy statement distributed in connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Consideration is fair, from a financial point of view,
to the Company's stockholders.
Very truly yours,
[Xxxx. Xxxxx & Sons sig cut]
XXXX. BROWN & SONS INCORPORATED
B-2
