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EXHIBIT (C)(20)
[ADVEST, INC. LOGO]
October 6, 1999
Board of Directors
Penobscot Shoe Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxx, Xxxxx 00000
Members of the Board:
Penobscot Shoe Company ("Penobscot" or the "Company") and Xxxxxxx
Corporation ("Xxxxxxx") are expected to enter into an Agreement and Plan of
Merger (the "Agreement"), whereby a newly created indirect wholly-owned
subsidiary of Xxxxxxx ("Merger Subsidiary") will offer to purchase all of the
issued and outstanding shares of Penobscot common stock for $11.75 per share
(the "Tender Offer"). Subsequent to the completion of the Tender Offer, Merger
Subsidiary will be merged with and into the Company (the "Merger"), and each
outstanding share of Penobscot common stock that was not acquired in the Tender
Offer will be converted into the right to receive $11.75 in cash. The Merger and
the Tender Offer together comprise the "Transaction". At the completion of the
Transaction, Penobscot will be an indirect wholly-owned subsidiary of Xxxxxxx.
You have asked us whether, in our opinion, the cash consideration to be
received by Penobscot shareholders is fair, from a financial point of view, to
such shareholders of the outstanding shares of common stock of the Company.
In arriving at our opinion set forth below, we have, among other things:
(i) Reviewed the Agreement and Plan of Merger dated October 6, 1999 and
the Tender Agreements dated October 6, 1999;
(ii) Reviewed the drafts of Schedule 14D-9 and Schedule 14D-1 to be
submitted to the Securities and Exchange Commission;
(iii) Reviewed the publicly available consolidated financial statements
of Penobscot for recent years and interim periods to date as well
as other filings with the Securities and Exchange Commission for
such periods;
(iv) Reviewed the reported prices of common stock, trading activity, as
well as publicly available financial and operating data for
companies deemed similar to Penobscot;
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Board of Directors
Penobscot Shoe Company
October 6, 1999
Page 2 of 3
(v) Reviewed the pricing and financial terms of recent corporate
transactions involving acquired companies deemed similar to
Penobscot;
(vi) Reviewed internal financial and operating information, including
certain projections prepared by the senior management of
Penobscot;
(vii) Discussed the business, financial condition, and prospects of
Penobscot with certain members of senior management; and
(viii) Performed such other financial studies and analyses and
investigations as we deemed necessary.
In addition to the foregoing, we have, among other things, performed the
following analyses and investigations: (i) compared the proposed purchase price
per share to the historical trading range of Penobscot's common stock; (ii)
compared the proposed purchase price and its implied ratios ("multiples") to
sales, earnings, book value and cash flow to the same multiples calculated from
current public market valuations of publicly traded companies deemed similar to
the Company; (iii) compared the proposed purchase price and its implied
multiples of sales and cash flow to the same multiples as calculated from
valuations established in recent transactions of companies deemed similar to the
Company; (iv) analyzed and compared the proposed purchase price to the value of
estimated future free cash flows discounted to their current value; and (v)
analyzed Penobscot's historical trading activity, including volume and price
relationships. In addition, we performed such other investigations and took into
account such other matters and information as we deemed necessary.
Advest has provided certain investment banking services to Penobscot in the
past and has received fees for rendering these services, including a fee for
advising the Company on this Transaction. As part of our engagement, the Company
has agreed to pay Advest a fee for delivery of this opinion letter.
In preparing this opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and we have not independently verified such information, nor have we undertaken
an independent appraisal of the assets or liabilities of the Company. This
opinion is necessarily based upon circumstances and conditions as they exist and
can be evaluated by us as of the date of this letter. Our opinion is directed to
the Board of Directors of Penobscot and does not constitute a recommendation of
any kind to any shareholder of Penobscot as to whether such shareholder should
tender his or her stock in the Tender Offer or how such shareholder should vote
at the shareholders' meeting to be held in connection with the Merger. We have
assumed for purposes of this opinion that there have been no material changes in
the financial condition of the Company from the conditions disclosed in the
Company's financial reports.
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Board of Directors
Penobscot Shoe Company
October 6, 1999
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Advest hereby consents to a description and inclusion of this opinion in
any public filings issued with regard to this transaction and to references to
Advest in such documents. Except as otherwise provided above, this opinion is
solely for the use and benefit of the Company and shall not be disclosed
publicly or made available to third parties without the prior written approval
of Advest.
In reliance upon and subject to the foregoing, it is our opinion that, as
of the date hereof, the cash consideration to be received by the Company's
shareholders in the Transaction is fair, from a financial point of view, to the
Company's shareholders.
Very truly yours,
ADVEST, INC.
/s/ Xxx X. Xxxxx
Xxx X. Xxxxx
Managing Director
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