Exhibit 99.4
November 2, 1998
The Board of Directors
AquaPenn Spring Water Company, Inc.
P.O. Box 938
Milesburg, PA 16853-0938
Dear Members of the Board:
We understand that AquaPenn Spring Water Company, Inc. (the "Company") and
Groupe Danone (the "Acquiror") and a wholly-owned subsidiary of Acquiror (the
"Merger Subsidiary") have entered into an Agreement dated November 2, 1998 (the
"Agreement"), pursuant to which the Acquiror will make a tender offer (the
"Offer") for any and all shares of the Company's common stock, no par value (the
"Shares"), at $ 13.00 per Share in cash. The Agreement also provides that,
following consummation of the Offer, Merger Subsidiary will be merged with and
into the Company in a transaction (the "Merger") in which each remaining Share
will be converted into the right to receive $13.00 in cash.
You have requested our opinion as to the fairness, from a financial point
of view, of the proposed cash consideration to be received by the holders of the
Shares (other than the Acquiror and its affiliates) in the Offer and the Merger.
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 certain financial forecasts and other data provided to us
by the Company relating to its businesses and prospects (such
forecasts being limited to fiscal 1999, the Company having informed
us that no longer term forecasts are available);
(iv) Conducted discussions with members of the senior management of the
Company with respect to the businesses and prospects;
(v) Reviewed public information with respect to certain other companies
in lines of business we believe to be generally comparable to the
business 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 those of the Company;
(vii) Reviewed the historical stock prices and trading volumes of the
Shares; and
(viii) Conducted such other financial studies, analyses and investigations
as we deemed appropriate.
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
LAZARD FRERES & CO. LLC
valuation or appraisal of any of the assets or liabilities of the Company, or
concerning the solvency or fair value of the Company. With respect to financial
forecasts referred to above, 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.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the Offer and the Merger
will be consummated on the terms described in the Agreement, without any waiver
of any material terms or conditions by the Company. We were not requested to,
and did not, solicit third party indications of interest in acquiring the
Company.
We acted as the lead underwriter for the Acquiror's offer of American
Depository Shares on November 19, 1997. We have in the past provided, and are
currently providing, investment banking services to the Acquiror, for which we
have received customary fees. Our Chairman is a director of the Acquiror and a
Director of the Eurafrance Group which beneficially owned 5.7% of the Acquiror
and 8.8% of the voting rights pertaining thereto as of November 13, 1997, and
also has an indirect economic interest in Lazard Freres & Co. LLC.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Offer and the Merger and will receive a fee for our
services, a substantial portion of which is contingent upon the consummation of
the Offer. We also have performed investment banking services for the Company
in the past and have received customary fees for such services.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the transaction. This
opinion is not intended to and does not constitute a recommendation to any
holder of Shares as to whether such holder should tender such Shares in the
Offer or vote for the Merger. 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 the cash
consideration to be paid to the holders of the Shares (other than Acquiror and
its affiliates) pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ Xxxxxxx Xxxxxx
----------------------------
Xxxxxxx X. Xxxxxx
Managing Director
