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EXHIBIT (6)(2)
June 18, 1998
The Board of Directors of
The GNI Group, Inc.
0000 Xxxxxxxxxxxx Xxxx
X.X. Box 220
Deer Park, Texas 77536-0220
Dear Sirs:
It is our understanding that, based on the definitive agreement and
plan of merger executed February 12, 1998 (the "Merger Agreement") between Green
I Acquisition Corp., a Delaware corporation ("Green I"), and The GNI Group,
Inc., a Delaware corporation ("GNI" or the "Company") (the "Merger"), and
subject to the consummation of certain financing requirements, GNI will purchase
for cash from its shareholders all of the issued and outstanding common stock
(the "Common Stock") of the Company (the "Merger Consideration Shares") at a
currently proposed price per share of $7.00 (the "Merger Consideration") and
certain issued and outstanding common stock purchase options and warrants (the
"Option(s)") at a price per Option reflecting the difference between the Merger
Consideration and the exercise price thereof, excluding certain shares of Common
Stock and Options of management of the Company.
You have requested our opinion as to the fairness, from a financial
point of view, of the Merger Consideration to holders of the Merger
Consideration Shares. In arriving at our opinion, we have reviewed the Merger
Agreement, certain publicly available financial information concerning the
Company and certain internal financial analyses and other information furnished
to us by the Company. We have also held discussions with members of the senior
management of the Company regarding the business and prospects of the Company.
In addition, we have (i) reviewed the reported price and trading activity of the
Common Stock of the Company, (ii) compared certain financial information of the
Company with similar information for selected publicly traded companies that we
considered comparable in whole or in part to GNI, (iii) considered, to the
extent publicly available, the financial terms of other recent business
combinations involving companies whose operations we considered comparable in
whole or in part to the operations of the Company, and (iv) performed such other
studies and analyses and considered such other factors as we deemed appropriate.
We have not independently verified the information described above and,
for purposes of this opinion, have assumed and relied upon the accuracy and
completeness thereof. With respect to information relating to the Company, we
have assumed that such information reflects the best currently available
estimates and judgments of management of the Company and as to the likely future
financial performance of the Company. We are not expressing any opinion as to
what the value of the Common Stock of the Company will be after giving effect to
the Merger. In addition, we have not made an independent evaluation or appraisal
of the assets of the Company. We have not been asked to consider, and our
opinion does not address, the relative merits of the Merger to holders of the
Merger Consideration Shares as compared to any alternative business strategies
that may exist for the Company. We were not requested to, and did not, determine
or recommend the Merger. Our opinion is based on market, economic and other
conditions, including the circumstances regarding the Merger, as they exist and
can be evaluated as of the
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The Board of Directors of
The GNI Group, Inc.
June 18, 1998
Page 2
date of this letter. It should be understood that, although subsequent events
may effect this opinion, we do not have any obligation to update, revise, or
reaffirm this opinion.
Xxxxxxx Xxxxxx Xxxxx Inc., has been engaged to deliver an opinion in
connection with the Merger and will receive a fee upon delivery of this opinion.
In the ordinary course of our business, we may actively trade the equity
securities of GNI for our own account, the accounts of its principals or the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. Xxxxxxx Xxxxxx Xxxxx has provided financial
advisory services to GNI in the past and may continue to do so in the future.
As customary part of its investment banking business, Xxxxxxx Xxxxxx
Xxxxx is regularly engaged in the issuance of fairness opinions and the
valuations of businesses and their securities in connection with private
placements, mergers and acquisitions, underwritings, and valuations for
corporate and other purposes.
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 transaction contemplated by the Merger
Agreement and such opinion does not constitute a recommendation as to whether
the GNI directors should engage in the transaction contemplated by the Merger
Agreement or how any holder of the Merger Consideration Shares should vote with
respect to the transaction contemplated by the Merger Agreement.
Based upon and subject to the foregoing, it is our opinion that, as of
the date of this letter, the Merger Consideration is fair, from a financial
point of view, to the holders of the Merger Consideration Shares of the Company.
Sincerely,
Xxxxxxx Xxxxxx Xxxxx Inc.
By:
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Xxxxxxx X. Xxxxx
Vice President
