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ANNEX C
XXXXXX XXXXXXX XXXX XXXXXX
0000 XXXXXXXX
XXX XXXX, XXX XXXX 00000
(000) 000-0000
December 14, 1998
Board of Directors
The Xxxxxxxx Companies, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Members of the Board:
We understand that Xxxxxxxx, Inc. ("Xxxxxxxx" or the "Company"), EMAP plc
("EMAP") and EMAP Acquisition Corp., a wholly owned subsidiary of EMAP ("Merger
Subsidiary"), have entered into an Agreement and Plan of Merger, dated as of
December 14, 1998 (the "Merger Agreement"), which provides, among other things,
for (i) the commencement by Merger Subsidiary of a tender offer (the "Tender
Offer") for all the issued and outstanding shares of Class A Common Stock, par
value $0.01 per share, of the Company (the "Class A Common") and all the issued
and outstanding shares of Class B Common Stock, par value $0.01 per share, of
the Company (the "Class B Common" and, together with Class A Common, the "Common
Stock") for $34.00 per share net to the seller in cash, and (ii) the subsequent
merger (the "Merger") of the Company with and into the Merger Subsidiary.
Pursuant to the Merger, the Company will become a wholly owned subsidiary of
EMAP and each issued and outstanding share of Common Stock, other than shares
held in treasury or held by Buyer or any affiliate of Buyer or as to which
dissenters' rights have been perfected, will be converted into the right to
receive $34.00 per share in cash. We further understand that certain of the
holders of Common Stock and EMAP have entered into a Stockholders' Agreement,
dated as of December 14, 1998 (the "Stockholders' Agreement"). The terms and
conditions of the Tender Offer and the Merger are more fully set forth in the
Merger Agreement.
You have asked for our opinion as to whether the consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and
other information of the Company;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning the Company prepared by the
management of the Company;
(iii) analyzed certain financial projections prepared by the
management of the Company;
(iv) discussed the past and current operations and financial
condition and the prospects of the Company with senior executives of the
Company;
(v) reviewed the reported prices and trading activity for the Class A
Common;
(vi) compared the financial performance of the Company and the prices
and trading activity of the Class A Common with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among
representatives of the Company, EMAP and certain other parties and their
financial and legal advisors;
(ix) reviewed the Merger Agreement, the Stockholders' Agreement and
certain related documents; and
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(x) performed such other analyses and considered such other factors
as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services. In
the past, Xxxxxx Xxxxxxx & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and have received fees
for the rendering of these services. In particular, we acted as lead manager in
connection with the initial public offering of the Company Common Stock in
October 1997.
It is understood that this letter is for the information of the Board of
Directors of the Company 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 the Company in respect of the Tender Offer and the Merger
with the Securities and Exchange Commission. In addition, Xxxxxx Xxxxxxx
expresses no opinion or recommendation as to whether or not the shareholders of
the Company should tender their shares in connection with the Tender Offer.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of shares of Common
Stock pursuant to the Merger Agreement is fair from a financial point of view to
such holders.
Very truly yours,
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Managing Director
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