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EXHIBIT 5
[XXXXXXX & COMPANY INTERNATIONAL LETTERHEAD]
CONFIDENTIAL
May 12, 1999
Board of Directors
Xxxxxx Industries, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Members of the Board:
We understand that Xxxxxx Industries, Inc. ("Xxxxxx" or the "Company"), Xxxxxxx
Electric Co. ("Emerson"), and a wholly owned subsidiary of Emerson
("Subsidiary") propose to enter into an Agreement and Plan of Merger
substantially in the form of the latest draft dated May 12, 1999 (the "Merger
Agreement") which provides, among other things, for: (i) the commencement by
Subsidiary of a tender offer (the "Tender Offer") for all the outstanding shares
of common stock, par value $1.25 per share, of Xxxxxx (the "Xxxxxx Common
Stock") for $21.25 per share net to the seller in cash, and (ii) the subsequent
merger (the "Merger") of Subsidiary with and into Xxxxxx. Pursuant to the
Merger, Xxxxxx will become a wholly owned subsidiary of Emerson, and each
outstanding share of Xxxxxx Xxxxxx Stock, other than the shares held in treasury
or held by Emerson or its affiliates or as to which dissenters' rights have been
perfected, will be converted into the right to receive $21.25 per share in cash.
For reference, the full terms and conditions of the Tender Offer and the Merger
are set forth in the Merger Agreement. Unless the context otherwise requires,
references in this letter to "Xxxxxx" or "Company" include Xxxxxx and its
subsidiaries.
You have requested the opinion of Xxxxxxx & Company International ("Xxxxxxx") as
investment bankers as to the fairness, from a financial point of view, of the
consideration to be received by the holders of Xxxxxx Xxxxxx Stock (other than
Emerson and its affiliates) pursuant to the terms of the Merger Agreement.
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[XXXXXXX & COMPANY INTERNATIONAL LETTERHEAD]
May 12, 1999
Page 2
In conducting our analysis and arriving at our opinion expressed herein, we
have considered such financial and other factors as we deemed appropriate under
the circumstances including, without limitation, the following: (i) the Merger
Agreement; (ii) certain publicly available financial statements and other
information concerning the Company; (iii) certain internal business and
financial information relating to the Company, including certain financial
forecasts prepared by management of the Company and provided to Xxxxxxx by the
Company; (iv) discussions of the past and current operations and the financial
condition and prospects of the Company with senior executives of the Company;
(v) certain publicly available information concerning the trading of, and the
trading market for, Xxxxxx Common Stock; (vi) the financial performance of the
Company and the trading prices and activity of Xxxxxx Xxxxxx Stock as compared
to those of certain other comparable publicly-traded companies; and (vii) the
terms and consideration of certain other acquisition transactions that we
believe to be relevant. We also took into account our assessment of general
economic, market and financial conditions and our experience in connection with
similar transactions and securities' valuations generally. The opinion expressed
herein is necessarily based upon conditions as they exist and can be evaluated
on, and on the information made available at, the date hereof.
In arriving at this opinion, we, with your consent, assumed and relied upon the
accuracy and completeness of all the foregoing information and did not
independently verify any of such information. With respect to financial
forecasts, we utilized certain information set forth therein and assumed that
such information was reasonably prepared on bases reflecting the best estimates
and judgments of the management of the Company as to the future financial
performance of the Company, as available at the time of preparation. We did not
conduct a physical inspection of any of the assets, operations or facilities of
the Company and did not make or receive any independent evaluation or appraisal
of any assets or liabilities (contingent or otherwise) of the Company.
We are serving as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. As a
specialized energy-related investment banking firm, we are engaged, among other
things, in the valuation of businesses and their securities in connection with
mergers and acquisitions, in the management and underwriting of sales of equity
and debt to the public and in private placements of equity and debt. In
addition, in the ordinary course of business, we may actively trade the
securities of Xxxxxx and Emerson 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. We also have from time to time been engaged by the Company to
provide general corporate financial advisory services.
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[XXXXXXX & COMPANY INTERNATIONAL LETTERHEAD]
May 12, 1999
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You agree that this opinion letter is for the use and benefit of the Board of
Directors of the Company, and may not be used for any other purpose without our
prior written consent. This opinion does not address the merits of the
underlying decision by the Company to enter into the Merger Agreement and does
not constitute a recommendation to any Xxxxxx stockholder as to how such
stockholder should respond to the Tender Offer or vote on the Merger Agreement
or Merger or on any matter related thereto. We are not expressing any opinion
herein as to the prices at which Xxxxxx Xxxxxx Stock will trade following
announcement of the Tender Offer or the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be received by the holders of Xxxxxx Xxxxxx
Stock (other than Emerson and its affiliates) pursuant to the terms of the
Merger Agreement is fair, from a financial point of view, to such holders.
Sincerely,
/s/ XXXX X. XXXXXXXXXX
XXXXXXX & COMPANY INTERNATIONAL
