[LETTERHEAD OF XXXXXX XXXXXXX]
February 10, 1998
Board of Directors
Waverly, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Members of the Board:
We understand that Waverly, Inc. ("Waverly" or the "Company"), Wolters Kluwer
U.S. Corporation ("Wolters Kluwer") and MP Acquisition Corp., a wholly owned
subsidiary of Wolters Kluwer ("MP"), have entered into an Agreement and Plan of
Merger dated as of February 10, 1998 (the "Merger Agreement") which provides,
among other things, for (i) the commencement by MP of a tender offer (the
"Tender Offer") for all outstanding shares of common stock, par value $2.00 per
share (the "Waverly Common Stock") of Waverly for $39.00 per share net to the
seller in cash, and (ii) the subsequent merger (the "Merger") of MP with and
into Waverly. Pursuant to the Merger, Waverly will become a wholly owned
subsidiary of Wolters Kluwer, and each outstanding share of Waverly Common
Stock, other than shares held in treasury or held by Wolters Kluwer or any
affiliate of Wolters Kluwer, will be converted into the right to receive $39.00
per share in cash. 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 Waverly 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 Waverly
Common Stock;
(vi) compared the financial performance of the Company and the prices
and trading activity of the Waverly Common Stock 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, Xxxxxxx Xxxxxx and certain other parties and their
financial and legal advisors;
(ix) reviewed the Merger Agreement; and
(x) performed such other analyses 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 assumed that the Merger will be consummated in accordance with the terms
set forth in the Merger Agreement. 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
financing services for Wolters Kluwer N.V., the parent of Wolters Kluwer, and
have received fees for the rendering of these services.
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. In addition, Xxxxxx Xxxxxxx expresses no opinion or
recommendation as to whether the holders of shares of Waverly Common Stock
should accept the Tender Offer.
Based on the foregoing, we are of the opinion on the date hereof that the
consideration to be received by the holders of shares of Waverly 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
