1
PENOBSCOT SHOE COMPANY
000 XXXXX XXXX XXXXXX
XXX XXXX, XXXXX 00000
October 12, 1999
To Our Stockholders:
We are pleased to inform you that on October 6, 1999, Penobscot Shoe
Company (the "Company") entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Xxxxxxx Corporation ("Parent") and PSC Acquisition
Corp. ("Purchaser"), an indirect wholly owned subsidiary of Parent. Pursuant to
the Merger Agreement, Purchaser has commenced a cash tender offer (the "Offer")
to acquire all of the issued and outstanding shares of the Company's common
stock, $1.00 par value per share (the "Shares"), for $11.75 per share, net to
the seller in cash. Under the terms of the Merger Agreement, as soon as
practicable after the consummation of the Offer and subject to the terms and
conditions set forth in the Merger Agreement, the Company will merge with and
into the Purchaser (the "Merger"), and each remaining share which is then issued
and outstanding will be converted into the right to receive $11.75 net to the
seller in cash (or any higher price that may be paid in the Offer), without
interest.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (A) DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER
AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS, (B) ADOPTED AND APPROVED THE MERGER AGREEMENT AND AUTHORIZED THE
EXECUTION THEREOF BY THE COMPANY AND (C) RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER.
To arrive at its recommendation, the Board of Directors carefully evaluated
a number of factors as described in the attached Offer to Purchase of the
Purchaser, dated October 12, 1999, and the Schedule 14D-9 that is being filed
today with the Securities and Exchange Commission. These factors include, among
other things, the opinion of Advest, Inc., the Company's financial advisor, that
the $11.75 per Share that stockholders of the Company will receive pursuant to
the Merger Agreement is fair from a financial point of view to these
stockholders. The full text of the written opinion of Advest, Inc., which sets
forth assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as an Exhibit to the
attached Schedule 14D-9 that is being filed today with the Securities and
Exchange Commission. Stockholders are urged to read this opinion in its
entirety.
In addition to the attached Schedule 14D-9 relating to the Offer and the
Offer to Purchase are related tender offer materials, including a Letter of
Transmittal to be used for tendering your Shares. These documents set forth the
terms and conditions of the Offer and Merger and provide instructions as to how
to tender your Shares. We urge you to read the enclosed material carefully.
Sincerely,
/S/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
Chairman of the Board of Directors
