Exhibit (b)
January 26, 1997
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 shareholders of the
Company, other than American Greetings Corporation ("American Greetings"), is
fair to the shareholders of the Company, other than American Greetings, from
a financial point of view.
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
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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
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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 rendering this opinion, we have not been engaged to
act as an agent or fiduciary of, and the Special Committee of the Board of
Directors of the Company has expressly waived any duties or liabilities we
may otherwise deemed to have had to, the Company's equity holders or any
other third party.
In the ordinary course of its business, PainWebber
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.
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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 shareholders of the Company, other than American
Greetings, pursuant to the Merger is fair to the shareholders of the Company,
other than American Greetings, 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
