EXHIBIT 99.7
[LETTERHEAD OF XXXXXX X. XXXXX]
December 4, 1996
Board of Directors
Barefoot Inc.
000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxx 00000
Gentlemen:
Barefoot Inc., a Delaware corporation (the "Company"), proposes to enter into
an Acquisition Agreement (the "Agreement") with ServiceMaster Limited
Partnership, a Delaware limited partnership ("Parent"), and ServiceMaster
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of
Parent ("Sub"). Pursuant to the Agreement, Parent would make a tender offer
(the "Offer") to acquire all of the outstanding shares of common stock, par
value $.01 per share (the "Company Common Stock"), together with the associated
Series A Junior Participating Preferred Stock Purchase Rights of the Company,
at the price of $16.00 per share (the "Consideration"). Each holder of Company
Common Stock may elect to receive the Consideration in cash or in limited
partnership interests of Parent. With respect to holders of Company Common
Stock electing to receive limited partnership interests, the Consideration of
$16.00 per share assumes that the Average ServiceMaster Share Price (as defined
in the Agreement) is at least equal to $23.00 per share. As soon as practicable
after the purchase of not less than the Minimum Number (as defined in the
Agreement) of shares of Company Common Stock pursuant to the Offer, Sub would
be merged (the "Merger") with and into the Company and each share of Company
Common Stock not owned by Parent would be converted into the right to receive
the Consideration in cash. The Offer and the Merger are referred to herein as
the "Transaction."
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of Company Common Stock of the Consideration in the
Transaction.
Xxxxxx X. Xxxxx & Co. Incorporated ("Baird"), as part of its investment banking
business, is engaged in the evaluation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements, and valuations for estate, corporate and other purposes.
In conducting our investigation and analysis and in arriving at our opinion
herein, we have reviewed such information and taken into account such financial
and economic factors as we have deemed relevant under the circumstances. In
that connection, we have, among other things: (i) reviewed certain internal
information, primarily financial in nature, including projections, concerning
the business and operations of the Company and Parent furnished to us for
purposes of our analysis, as well as publicly available information including
but not limited to the Company's and Parent's recent filings with the
Securities and Exchange Commission (the "SEC") and equity analyst research
reports prepared by various investment banking firms including, in the case of
the Company, Baird; (ii) reviewed the Agreement in the form presented to the
Company's Board of Directors; (iii) compared the historical market prices and
trading activity of the Company Common Stock and limited partnership interests
of
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Parent with those of certain other publicly traded companies we deemed
relevant; (iv) compared the financial position and operating results of the
Company and Parent with those of other publicly traded companies we deemed
relevant; and (v) compared the proposed financial terms of the Transaction with
the financial terms of certain other business combinations we deemed relevant.
We have held discussions with certain members of the Company's and Xxxxxx's
senior management concerning the Company's and Xxxxxx's respective historical
and current financial conditions and operating results as well as the future
prospects of the Company and Parent, respectively. We have not been requested
to, and did not, solicit third party indications of interest in acquiring all
or any part of the Company. We have also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant for the preparation of this opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information provided to us by or
on behalf of the Company and Parent, or publicly available, and have not
assumed any responsibility to verify any such information independently. We
have also assumed, with your consent, that (i) the Merger will be accounted for
under the purchase method; (ii) there has been no material change in the assets
or liabilities of the Company or Parent from those set forth in the most recent
consolidated financial statements of the Company and Parent, respectively; and
(iii) the Transaction will be consummated in accordance with the terms of the
Agreement in the form presented to the Company's Board of Directors. Management
of Barefoot and ServiceMaster have represented to us, and we have assumed, that
the financial forecasts examined by us were reasonably prepared on bases
reflecting the best available estimates and good faith judgments of the
Company's and Parent's senior management as to future performance of the
Company and Parent, respectively. In conducting our review, we have not
undertaken nor obtained an independent evaluation or appraisal of any of the
assets or liabilities (contingent or otherwise) of the Company or Parent nor
have we made a physical inspection of the properties or facilities of the
Company or Parent. Our opinion necessarily is based upon economic, monetary and
market conditions as they exist and as can be evaluated on the date hereof, and
does not predict or take into account any changes which may occur, or
information which may become available, after the date hereof.
Our opinion has been prepared solely for the information of the Company's Board
of Directors, and shall not be used for any other purpose or disclosed to any
other party without the prior written consent of Baird; provided, however, that
this letter may be reproduced in full as required for any filing with the SEC
required to be made by the Company or Parent in connection with the
Transaction. This opinion does not address the relative merits of the
Transaction and any other potential transactions or business strategies
considered by the Company's Board of Directors, and does not constitute a
recommendation to any stockholder of the Company as to (i) whether any such
stockholder should tender shares pursuant to the Offer, (ii) whether any such
stockholder electing to tender shares should elect to receive cash or limited
partnership interests of Parent, or (iii) how any such stockholder should vote
with respect to the Merger. Baird has acted as financial advisor to the Company
in connection with the Transaction and will receive a fee for its services,
part of which is payable upon delivery of this opinion and part of which is
contingent upon consummation of the Transaction. In the past, we have provided
investment banking services to the Company, for which we received agreed upon
compensation.
In the ordinary course of our business, we may from time to time trade the
securities of the Company or Parent for our own account or accounts of our
customers and, accordingly, may at any time hold long or short positions in
such securities.
Based upon and subject to the foregoing, we are of the opinion that, as of the
date hereof, the Consideration is fair, from a financial point of view, to the
holders of Company Common Stock; provided, however, that because holders of
Company Common Stock can elect to receive cash
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pursuant to the Offer at any time prior to expiration of the Offer, no opinion
is given as to the fairness of the Consideration to such holders who receive
limited partnership interests of Parent if the Average ServiceMaster Share
Price is less than $23.00 per share.
Sincerely yours,
Xxxxxx X. Xxxxx & Co. Incorporated
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