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NATIONSBANC XXXXXXXXXX SECURITIES
December 14, 1998
Board of Directors
The Rival Company
000 Xxxx 000xx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
We understand that The Rival Company, a Delaware corporation ("Seller"),
Xxxxxx Products Corp., a Massachusetts corporation ("Buyer"), and Xxxxxxxxx
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Buyer
("Merger Sub"), propose to enter into an Agreement and Plan of Merger
substantially in the form of the draft dated as of December 12, 1998 (the
"Merger Agreement"), pursuant to which Merger Sub will be merged with and into
Buyer, which will be the surviving entity (the "Merger"). Pursuant to the Merger
Agreement, as more fully described in the Merger Agreement and as further
described to us by management of Seller, we understand that Buyer and Merger Sub
will commence a tender offer (the "Offer") to purchase all of the issued and
outstanding shares of common stock, par value $0.01 per share, of Seller (the
"Seller Stock"), at a price of not less than $13.75 per share, net to tendering
shareholders of Seller in cash, subject to a reduction only for applicable
back-up withholding or stock transfer taxes payable by tendering shareholders of
Seller. Following consummation of the Offer, or, in certain circumstances,
regardless of consummation of the Offer, but subject to approval by the
shareholders of Seller, the Merger will be effected and all remaining shares of
Seller Stock, other than those held by Buyer and Merger Sub, and other than
Dissenting Shares (as defined in the Merger Agreement), will be converted into
and become the right to receive, upon surrender of the certificates representing
such shares of Seller Stock in accordance with the terms of the Merger
Agreement, $13.75 per share. The terms and conditions of the Offer and the
Merger are set forth in more detail in the Merger Agreement. The description of
the Offer and the Merger and the other matters contemplated by the Merger
Agreement set forth herein is qualified in its entirety by reference to the
specific terms of the Merger Agreement.
You have asked for our opinion as investment bankers as to whether the
consideration to be received by the shareholders of Seller (other than Buyer and
Merger Sub, and other than holders of Dissenting Shares) pursuant to the Offer
and the Merger is fair to such shareholders from a financial point of view, as
of the date hereof. As you are aware, we were requested by Seller to limit our
solicitation of indications of interest from third parties for all or any part
of Seller or other transactions which might have been pursued instead of those
contemplated by the Merger Agreement.
In connection with our opinion, we have, among other things: (i) reviewed
certain publicly available financial and other data with respect to Seller,
including the consolidated financial statements for recent years and interim
periods to November 30, 1998 and certain other relevant financial and operating
data relating to Seller made available to us from published sources and from the
internal records of Seller; (ii) reviewed the financial terms and conditions of
the Merger Agreement; (iii) reviewed certain publicly available information
concerning the trading of, and the trading market for, Seller Stock; (iv)
compared Seller from a financial point of view with certain other companies in
the small home appliance industry which we deemed to be relevant; (v) considered
the financial terms, to the extent publicly available, of selected recent
business combinations of companies in the small home appliance industry since
January 1, 1994, which we deemed to be comparable, in whole or in part, to the
transactions contemplated by the Merger Agreement; (vi) analyzed premiums paid
for companies in the small home appliance industry since January 1, 1994; (vii)
analyzed premiums offered or
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxx XxXxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000
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Phone (000) 000-0000 Fax (000) 000-0000
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Board of Directors
The Rival Company
December 14, 1998
Page 2
paid in cash tender offers since January 1, 1998, whose transaction size was in
a range similar to the transaction size of the Offer; (viii) considered
valuations of Seller based on certain discounted cash flow analyses; (ix)
reviewed and discussed with representatives of the management of Seller certain
information of a business and financial nature regarding Seller, furnished to us
by Seller's management, including financial forecasts and related assumptions of
Seller; (x) made inquiries regarding and discussed the Merger Agreement and the
transactions contemplated by the Merger Agreement and other matters related
thereto with Seller's counsel; and (xi) performed such other analyses and
examinations as we have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Seller provided to us by its management, upon their advice and
with your consent we have assumed for purposes of our opinion that the forecasts
have been reasonably prepared on bases reflecting the best available estimates
and judgments of Seller's management at the time of preparation as to the future
financial performance of Seller and that they provide a reasonable basis upon
which we can form our opinion. With respect to the forecasts for Seller provided
to us by its management, for purposes of examining sensitivities of the
discounted cash flow analyses we have varied certain assumptions made by
management of Seller. We have discussed these varied assumptions with management
of Seller and they have acknowledged our use of the varied assumptions in
arriving at our opinion. We have also assumed that there have been no material
changes in Seller's assets, financial condition, results of operations, business
or prospects since the date of its last financial statements made available to
us. We have relied on advice of counsel and independent accountants to Seller as
to all legal and financial reporting matters with respect to Seller, the Offer,
the Merger, and the Merger Agreement. We have assumed that the Offer and the
Merger will each be consummated in a manner that complies in all respects with
the applicable provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934 and all other applicable
federal and state statutes, rules and regulations. In addition, we have not
assumed responsibility for making an independent evaluation, appraisal or
physical inspection of any of the assets or liabilities (contingent or
otherwise) of Seller or Buyer, nor have we been furnished with any such
appraisals. Finally, our opinion is based on economic, monetary and market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Accordingly, although subsequent developments may affect
this opinion, we have not assumed any obligation to update, revise or reaffirm
this opinion.
We have further assumed with your consent that the Offer and the Merger
will be consummated in accordance with the terms described in the Merger
Agreement, without any further amendments thereto, and without waiver by Seller
or Buyer of any of the conditions thereunder.
We have acted as financial advisor to Seller in connection with the Merger
and will receive a fee for our services, including rendering this opinion, a
significant portion of which is contingent upon the consummation of the Offer or
the Merger. In the ordinary course of our business, we have performed various
investment banking services for Seller. In addition, one or more of our
affiliates, including Bank of America, provides Seller with senior credit
financing as well as other financial services.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the consideration to be received by the shareholders of
Seller (other than Buyer and Merger Sub, and other than holders of Dissenting
Shares) pursuant to the Offer and the Merger is fair to such shareholders from a
financial point of view, as of the date hereof.
This opinion is directed to the Board of Directors of Seller in its
consideration of the Offer and the Merger and is not a recommendation to any
shareholder as to whether or not such shareholder should tender its shares of
Seller Stock into the Offer, or how such shareholder should vote with respect to
the Merger.
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Board of Directors
The Rival Company
December 14, 1998
Page 3
Further, this opinion addresses only the financial fairness of the consideration
to be received by shareholders of Seller in the Offer and the Merger and does
not address the relative merits of the Offer and the Merger and any alternatives
to the Offer and the Merger, Seller's underlying decision to proceed with the
Offer or the Merger, or any other aspect of the Offer, the Merger or the other
matters contemplated by the Merger Agreement. This opinion may not be used or
referred to by Seller, or quoted or disclosed to any person in any manner,
without our prior written consent, which consent is hereby given to the
inclusion of this opinion in its entirety in the Tender Offer Statement to be
filed with the Securities and Exchange Commission in connection with the Offer
and/or the Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the Merger.
Very truly yours,
/s/ Nationsbanc Xxxxxxxxxx Securities LLC
NATIONSBANC XXXXXXXXXX SECURITIES LLC
