EXHIBIT (B)
April 24, 1998
CONFIDENTIAL
The Special Committee of the Board of Directors
Artistic Greetings Incorporated
One Xxxxx Center
Elmira, NY 14902
Ladies and Gentlemen:
Artistic Greetings Incorporated (the "Company") has entered into an
Agreement and Plan of Merger (the "Agreement") with AGI Acquisition Co.
("Newco") and MDC Communications Corp. ("Parent") dated December 21, 1997,
pursuant to which Newco shall be merged with and into the Company (the
"Merger"). At the Effective Time (as defined in the Agreement) of the Merger,
each outstanding share of common stock, par value $0.10 per share of the Company
(the "Company Common Stock"), other than shares held in the Company's treasury,
will be converted into the right to receive $5.70 in cash (the "Merger
Consideration").
You have asked us whether or not, in our opinion, the proposed Merger
Consideration to be received by the unaffiliated shareholders of the Company is
fair to the unaffiliated shareholders of the Company from a financial point of
view. For the purposes of this opinion, "unaffiliated shareholders" means all of
the shareholders of the Company other than American Greetings Corporation,
Xxxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxx X. Xxxxxxx.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1996, the
Company's Forms 10-Q and the related unaudited financial information for
the nine months ended September 30, 1996 and 1997;
(2) Reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets and prospects of the Company
which were furnished to us by the Company;
(3) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(4) Reviewed the historical market prices and trading activity for the
Company Common Stock and compared them with that of certain other
publicly traded companies which we deemed to be relevant;
(5) Compared the results of operations of the Company with that of certain
other companies which we deemed to be relevant;
(6) Reviewed the Merger Consideration premium to the historical market
prices of the Company Common Stock and compared them to historical
transaction stock premiums paid by acquirors in transactions of similar
value;
(7) Reviewed the Agreement; and
(8) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness of
all information that was publicly available, supplied or otherwise communicated
to us by or on behalf of the Company, and we have not assumed any responsibility
to independently verify such information. With respect to the financial
forecasts (the "Projections") examined by us, we have assumed, with your
consent, that they were reasonably prepared on bases reflecting the best
available estimates and good faith judgments of the Company's management as to
the future performance of the Company at the time of such preparation.
PaineWebber Incorporated noted that the Projections provided by the Company's
management (i) for the Fiscal Year Ended December 31, 1997 were significantly
higher than the actual results for the twelve month period ended September 30,
1997; (ii) had been prepared approximately eight months prior to delivery of the
Opinion; and (iii) had not been updated since that time. We have not undertaken,
and have not been provided with, an independent evaluation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company and have assumed
that (i) the purchase method of accounting will be used, and (ii) all material
assets and liabilities (contingent or otherwise, known or unknown) of the
Company are as set forth in the consolidated financial statements.
Our Opinion is directed to the Special Committee of the Board of Directors
of the Company and does not constitute a recommendation to any shareholder of
the Company as to how any such shareholder should vote on the Merger. This
opinion does not address the relative merits of the Merger and any other
transactions or business strategies that may have been discussed by the Special
Committee of the Board of Directors of the Company as alternatives to the Merger
or the decision of the Special Committee of the Board of Directors of the
Company to proceed with the Merger. In addition, we were not requested to, and
have not, expressed any opinion as to the fairness, from a financial point of
view, of that sale of certain assets and liabilities of the non-check businesses
of the Company. Our opinion is based on economic, monetary and market conditions
on the date hereof.
In the ordinary course of its business, PaineWebber Incorporated may trade
the securities of the Company and Parent for its own account and for the
accounts of customers and, accordingly, may at any time hold long or short
positions in such securities.
PaineWebber Incorporated is currently acting as financial advisor to the
Special Committee of the Board of Directors of the Company in connection with
the Merger and will receive a fee in connection with rendering of this opinion
and upon the consummation of the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that,
as of the date hereof, the proposed Merger Consideration to be received by the
unaffiliated shareholders of the Company pursuant to the Merger is fair to the
unaffiliated shareholders of the Company from a financial point of view.
This opinion has been prepared at the request of and for the information of
the Special Committee of the Board of Directors of the Company in connection
with the Merger and shall not be reproduced, summarized, described or referred
to, provided to any person or otherwise made public or used for any other
purpose without the prior written consent of PaineWebber Incorporated; provided,
however, that this letter may be reproduced in full in the Proxy Statement
relating to the Merger.
Very truly yours,
PAINEWEBBER INCORPORATED
