SCHEDULE I
X. X. XXXXXXXX & CO.
CORPORATE FINANCE
000 XXXXXXXX XXXXXX
XXXXXXXXX, XX 00000
May 29, 1998
The Board of Directors
Sigma Circuits, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Gentlemen:
Sigma Circuits, Inc. (the "Company"), Tyco International Ltd. ("Tyco") and
T10 Acquisition Corp., an indirect wholly-owned subsidiary of Tyco (the "Sub"),
propose to enter into an Agreement and Plan of Merger (the "Merger Agreement").
The Merger Agreement provides for the commencement by the Sub of a tender offer
(the "Offer") for all of the outstanding shares of Common Stock of the Company,
par value $0.001 per share (the "Shares"), at a price of $10.50 per Share, net
to the seller in cash, followed by a merger (the "Merger") of Sub with and into
the Company pursuant to which each outstanding Share (other than Shares held in
the treasury of the Company or by any wholly-owned subsidiary of the Company and
any shares owned by Tyco, Sub or any other wholly-owned subsidiary of Tyco) will
be converted into the right to receive $10.50 in cash.
You have asked us whether, in our opinion, the cash consideration to be
received by the stockholders of the Company in the Offer and the Merger is fair
to such stockholders from a financial point of view.
X.X. Xxxxxxxx & Co., L.L.C., as part of its investment banking business,
engages in the valuation of businesses and securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of listed
and unlisted securities, private placements and valuations for estate, corporate
and other purposes. We have acted as financial advisor to the Board of Directors
of the Company in connection with the proposed Offer and Merger and will receive
a fee from the Company for our services, a significant portion of which is
contingent upon consummation of the Offer.
In conducting our analysis and arriving at our opinion, we have considered
such financial and other information as we deemed appropriate including, among
other things, the following: (i) the Merger Agreement; (ii) the historical and
current financial position and results of operations of the Company; (iii)
certain internal financial analyses and forecasts of the Company prepared by
senior management, and provided to us as reasonable forecasts appropriate for
use in rendering our opinion; (iv) certain financial, securities and research
data of certain other companies in businesses similar to the Company, the
securities of which are publicly traded; (v) prices and premiums paid in certain
other acquisitions and transactions that we believed to be relevant; (vi)
historical and current price and trading activity for the Common Stock; and
(vii) such other financial studies, analyses and investigations as we deemed
appropriate for purposes of our opinion.
We also have held discussions with members of the senior management of the
Company regarding the past and current business operations, financial condition
and future prospects of the Company. With your permission, we have assumed that
financing for the Offer and the Merger has been irrevocably obtained, and that
the Merger Agreement has been executed and delivered by the parties thereto on
the terms contained in the most recent draft of the Merger Agreement supplied to
and reviewed by us.
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We have taken into account our assessment of general economic, market,
financial and other conditions and our experience in other transactions, as well
as our experience in securities valuation and our knowledge of the industry in
which the Company operates generally. Our opinion is necessarily based upon the
information made available to us and conditions as they currently exist and can
be evaluated as of the date hereof. We have relied upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of our opinion and have not assumed any responsibility for, nor
undertaken an independent verification of, such information. With respect to the
internal operating data and financial analyses and forecasts supplied to us, we
have assumed that such data, analyses and forecasts were reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's senior management as to the recent and likely future performance of
the Company. Accordingly, we express no opinion with respect to such analyses or
forecasts or the assumptions on which they are based.
Our opinion does not address the relative merits of the proposed Offer and
Xxxxxx as compared to any alternative business strategies that might exist for
the Company or the effect of any other transactions in which the Company might
engage. Furthermore, we have not made an independent evaluation or appraisal of
the assets or liabilities (contingent or otherwise) of the Company, nor have we
been furnished with any such evaluations or appraisals.
In the ordinary course of our business, we may actively trade the equity
securities of the Company and Tyco for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Offer and the Merger, does
not constitute a recommendation to any stockholder as to whether such
stockholder should tender shares pursuant to the Offer or vote to approve the
Merger, and is not to be quoted or referred to, in whole or in part, in any
proxy statement, nor shall this letter be used for any other purposes, without
our prior written consent.
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 cash
consideration to be received by the stockholders of the Company in the Offer and
the Merger is fair to such stockholders from a financial point of view.
Very truly yours,
X.X. XXXXXXXX & CO., L.L.C.
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