1585 Broadway New York, New York 10036
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October 5,
2009
Board of
Directors
Avocent Corporation
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Huntsville, AL 35805
Members of the Board:
We understand that Avocent Corporation (“Avocent” or
the “Company”), ▇▇▇▇▇▇▇ Electric Co. (the
“Buyer”) and Globe Acquisition Corporation, a
wholly-owned subsidiary of the Buyer (“Acquisition
Sub”), propose to enter into an Agreement and Plan of
Merger, substantially in the form of the draft dated
October 4, 2009 (the “Merger Agreement”), which
provides, among other things, for (i) the commencement by
Acquisition Sub of a tender offer (the “Tender Offer”)
for all outstanding shares of common stock, par value $0.001 per
share (the “Company Common Stock”) of the Company for
$25.00 per share in cash, and (ii) the subsequent merger
(the “Merger”) of Acquisition Sub with and into the
Company. Pursuant to the Merger, the Company will become a
wholly-owned subsidiary of the Buyer, and each outstanding share
of Company Common Stock, other than shares held in treasury or
held by the Buyer or Acquisition Sub or as to which
dissenters’ rights have been perfected, will be converted
into the right to receive $25.00 per share in cash. The terms
and conditions of the Tender Offer and the Merger are more fully
set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration
to be received by the holders of shares of the Company Common
Stock pursuant to the Merger Agreement is fair from a financial
point of view to such holders of shares of the Company Common
Stock.
For purposes of the opinion set forth herein, we have:
1) Reviewed certain publicly available financial
statements and other business and financial information of the
Company and the Buyer, respectively;
2) Reviewed certain internal financial statements and
other financial and operating data concerning the Company;
3) Reviewed certain financial projections prepared by
the management of the Company;
4) Discussed the past and current operations and
financial condition and the prospects of the Company with senior
executives of the Company;
5) Reviewed the reported prices and trading activity
for the Company Common Stock;
6) Compared the financial performance of the Company
and the prices and trading activity of the Company Common Stock
with that of certain other publicly-traded companies comparable
with the Company and their securities;
7) Reviewed the financial terms, to the extent
publicly available, of certain comparable acquisition
transactions;
8) Participated in certain discussions and
negotiations among representatives of the Company and the Buyer
and certain parties and their financial and legal advisors;
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9) Reviewed the Merger Agreement and certain related
documents; and
10) Performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon, without independent
verification, the accuracy and completeness of the information
that was publicly available or supplied or otherwise made
available to us by the Company, and formed a substantial basis
for this opinion. With respect to the financial projections, we
have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments
of the management of the Company of the future financial
performance of the Company. In addition, we have assumed that
the Merger will be consummated in accordance with the terms set
forth in the Merger Agreement without any waiver, amendment or
delay of any terms or conditions. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ has assumed
that in connection with the receipt of all the necessary
governmental, regulatory or other approvals and consents
required for the proposed Merger, no delays, limitations,
conditions or restrictions will be imposed that would have a
material adverse effect on the contemplated benefits expected to
be derived in the proposed Merger. We are not legal, tax or
regulatory advisors. We are financial advisors only and have
relied upon, without independent verification, the assessment of
the Company and their legal, tax or regulatory advisors with
respect to legal, tax or regulatory matters. We express no
opinion with respect to the fairness of the amount or nature of
the compensation to any of the Company’s officers,
directors or employees, or any class of such persons, relative
to the consideration to be received by the holders of shares of
the Company Common Stock in the transaction. We have not made
any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any
such appraisals. Our opinion is necessarily based on financial,
economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof. Events
occurring after the date hereof may affect this opinion and the
assumptions used in preparing it, and we do not assume any
obligation to update, revise or reaffirm this opinion.
We have acted as financial advisor to the Board of Directors of
the Company in connection with this transaction and will receive
a fee for our services, a significant portion of which is
contingent upon the closing of the Merger. In the two years
prior to the date hereof, we have provided financial advisory
and financing services for the Buyer and have received fees in
connection with such services. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may also seek to
provide such services to the Buyer in the future and would
receive fees for the rendering of these services.
Please note that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ is a global financial services
firm engaged in the securities, investment management and
individual wealth management businesses. Our securities business
is engaged in securities underwriting, trading and brokerage
activities, foreign exchange, commodities and derivatives
trading, prime brokerage, as well as providing investment
banking, financing and financial advisory services. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, its affiliates, directors and officers may at any time
invest on a principal basis or manage funds that invest, hold
long or short positions, finance positions, and may trade or
otherwise structure and effect transactions, for their own
account or the accounts of its customers, in debt or equity
securities or loans of the Buyer, the Company, or any other
company, or any currency or commodity, that may be involved in
this transaction, or any related derivative instrument.
This opinion has been approved by a committee of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
investment banking and other professionals in accordance with
our customary practice. This opinion is for the information of
the Board of Directors and may not be used for any other purpose
without our prior written consent, except that a copy of this
opinion may be included in its entirety in any filing the
Company is required to make with the Securities and Exchange
Commission in connection with this transaction if such inclusion
is required by applicable law. In addition, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
expresses no opinion or recommendation as to whether the
shareholders of the Company should accept the Tender Offer or
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how the shareholders of the Company should vote at any
shareholders’ meeting held in connection with the Merger or
whether to take any other action in connection with the Tender
Offer and Merger.
Based on and subject to the foregoing, we are of the opinion on
the date hereof that the consideration to be received by the
holders of shares of the Company Common Stock pursuant to the
Merger Agreement is fair from a financial point of view to such
holders of shares of the Company Common Stock.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
| By: |
/s/ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director
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