EXHIBIT 7
XXXXXX BROTHERS
August 4, 1999
Board of Directors
EKCO Group, Inc.
00 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxx Xxxxxxxxx 00000
Members of the Board:
We understand that EKCO Group, Inc. ("EKCO or the "Company), CCPC
Acquisition Corp. ("CCPC") and Eg Two Acquisition Co. ("Newco"), a newly formed
subsidiary of CCPC, are proposing to enter into an Agreement and Plan of Merger,
dated August 4, 1999, (the "Agreement"), pursuant to which Newco (or its
permitted designee) will commence a tender offer to purchase all the outstanding
shares of EKCO for $7.00 in cash per share and upon consummation of such tender
offer, Newco will be merged with and into EKCO and all the remaining shares
outstanding of EKCO will be converted into the right to receive $7.00 per share
in cash (the "Proposed Transaction"). The terms and conditions of the Proposed
Transaction are set forth in more detail in the Agreement.
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered to such stockholders
in the Proposed Transaction. We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
analysis, including its Annual Report on Form 10-K for the fiscal year ended
January 3, 1999 and Quarterly Report on Form 10-Q for the quarter ended April 4,
1999 and its July 26, 1999 press release regarding its financial results for the
second quarter of 1999, (3) financial and operating information with respect to
the business, operations and prospects of EKCO furnished to us by EKCO, (4) a
trading history of the Company's common stock from July 30, 1997 to the present
and a comparison of that trading history with those of other companies that we
deemed relevant, (5) a comparison of the historical financial results and
present financial condition of EKCO with those of other companies that we deemed
relevant, (6) the results of our efforts to solicit indications of interest from
third parties with respect to a puchase of all or a portion of the Company's
business and (7) a comparison of the financial terms of the Proposed Transaction
with the financial terms of certain other transactions that we deemed relevant.
In addition, we have had discussions with the management of the Company
concerning its business, operations, assets, financial condition and prospects
and have undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without assuming
any responsibility for independent verification of such information and have
further relied upon the assurances of management of the Company that they are
not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of EKCO,
upon advice of the Company we have assumed that such projections have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of the Company as to the future financial
performance of EKCO and we have relied upon such projections in performing our
analysis. In arriving at our opinion, we have conducted only a
limited physical inspection of the properties and facilities of the Company and
have not made or obtained any evaluations or appraisals of the assets or
liabilities of the Company. Our opinion necessarily is based upon market,
economic and other conditions as they exist on, and can be evaluated as of, the
date of this letter.
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the stockholders of the Company in the Proposed Transaction is fair
to such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is contingent
upon the consummation of the Proposed Transaction. In addition, the Company has
agreed to indemnify us for certain liabilities that may arise out of the
rendering of this opinion. We also have performed various investment banking
services for the Company in the past and have received customary fees for such
services. In the ordinary course of our business, we may trade in the debt and
equity securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as to
whether to accept the consideration to be offered to the stockholders in
connection with the Proposed Transaction.
Very truly yours,
/s/ Xxxx X. Xxxxxxxx
XXXXXX BROTHERS
