Exhibit 7
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[LETTERHEAD OF XXXXXXX, XXXXX & CO.]
PERSONAL AND CONFIDENTIAL
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October 21, 1998
Board of Directors
Essex International Inc.
0000 Xxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of common stock, par value $0.01 per
share (the "Shares"), of Essex International Inc. (the "Company") of the
consideration proposed to be paid by Superior TeleCom Inc. ("Buyer") in the
Tender Offer and the Merger (each as defined below) pursuant to the Agreement
and Plan of Merger, dated as of October 21, 1998, by and among Buyer, SUT
Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of Buyer, and the
Company (the "Agreement"), taken together as a unitary transaction. The
Agreement provides for a tender offer for up to 22,562,135 Shares (the "Tender
Offer") pursuant to which Merger Sub will pay $32.00 per Share in cash for each
Share accepted. The Agreement further provides that following completion of the
Tender Offer, Merger Sub will be merged with and into the Company (the "Merger")
and each outstanding Share (other than Shares already owned by Buyer and Merger
Sub and Shares owned by holders who have properly exercised their appraisal
rights) will be exchanged for 0.64 of a share of Series A Cumulative Convertible
Exchangeable Preferred Stock, par value $0.01 per share, of Buyer (the
"Convertible Preferred Stock"), or a combination of cash and Convertible
Preferred Stock, as provided in the Agreement in the event that the Tender Offer
is not fully subscribed.
Xxxxxxx, Xxxxx & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of public
offerings of Shares in April 1997 and September 1997 (in which certain
affiliates of Xxxxxxx, Xxxxx & Co., having previously owned approximately 14.5%
of the then outstanding Shares, sold all of their ownership interest in the
Company), and having acted as its financial advisor in connection with the
Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement, including the form of Certificate of Designation of the Convertible
Preferred Stock and the form of the Stockholders
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Essex International Inc.
October 21, 1998
Page Two
Agreement among Buyer, Merger Sub and certain stockholders of the Company
attached as exhibits thereto; the form of Buyer's Indenture for the 8.5%
Subordinated Convertible Exchange Debentures due 2013; the Company's Prospectus
for the initial public offering of Shares dated April 17, 1997; the Company's
Prospectus for the secondary offering of Shares dated September 17, 1997;
Xxxxx's Prospectus for the initial public offering of Buyer's common stock dated
October 11, 1996; Annual Report to Stockholders of the Company for the year
ended December 31, 1997 and Annual Reports on Form 10-K of the Company and its
predecessor for the five years ended December 31, 1997; Annual Reports to
Stockholders and Annual Reports on Form 10-K of Buyer for the two fiscal years
ended April 30, 1998; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and Buyer; certain other communications from
the Company and Buyer to their respective stockholders; and certain internal
financial analyses and forecasts for the Company through the calendar year ended
December 31, 1999, and for Buyer through the calendar year ended December 31,
2002 prepared by their respective managements. We also have held discussions
with members of the senior management of the Company and Buyer regarding the
past and current business operations, financial condition and future prospects
of their respective companies and the companies combined pursuant to the
Agreement. In addition, we have reviewed the reported price and trading activity
of Shares, the common stock of Buyer and convertible securities generally,
compared certain financial and stock market information for the Company and
Buyer with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain business
combinations in the cable and wire industry specifically and in other industries
generally, and performed such other studies and analyses as we considered
appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. We have not made an independent
evaluation or appraisal of the assets and liabilities of the Company, Buyer or
any of their respective subsidiaries and we have not been furnished with any
such evaluation or appraisal. In addition, we were not requested to solicit, and
did not solicit, interest from other parties with respect to an acquisition of
or other business combination with the Company. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transactions contemplated by the Agreement and such opinion does not constitute
a recommendation as to whether or not any holder of Shares should tender such
Shares in connection with the Tender Offer or how any holder of Shares should
vote, or whether such holder should seek appraisal rights, in connection with
the Merger.
We note that under current market conditions, there may be a limited trading
market for the
Convertible Preferred Stock. Any estimate of the future trading value of the
Convertible Preferred Stock would be speculative and subject to substantial
uncertainties and contingencies. We are not
Essex International Inc.
October 21, 1998
Page Three
expressing a view as to the actual trading price of the Convertible Preferred
Stock, which will be dependent upon and fluctuate with dividend rates generally,
the market price of the common stock of Buyer into which the Convertible
Preferred Stock is convertible, market conditions, general economic conditions,
the financial condition and prospects of Buyer after the Merger and other
factors which generally influence the price of similar securities.
We are not opining on the fairness from a financial point of view of the
Convertible Preferred Stock to be received by holders of Shares pursuant to the
Merger if viewed as a separate and distinct transaction from the Tender Offer.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the
consideration to be received pursuant to the Agreement by the holders of Shares
in the Tender Offer and the Merger, taken together as a unitary transaction, is
fair from a financial point of view to such holders.
Very truly yours,
/s/ XXXXXXX, XXXXX & CO.
XXXXXXX, XXXXX & CO.
