[XXXX XXXXX LETTERHEAD]
August 10, 1998
The Board of Directors
Liberty Technologies, Inc.
000 Xxxxx Xxxx, Xxx Xxxx
Xxxxxxxxxxxx, XX 00000
Members of the Board:
We have been advised that Liberty Technologies, Inc. ("Liberty")
proposes to enter into an Agreement and Plan of Merger (the "Agreement") with
Crane Co. ("Purchaser"), a draft of which dated August 6, 1998 was reviewed by
us. Pursuant to the Agreement, Purchaser will make a tender offer to purchase
all the issued and outstanding capital stock of Liberty for a purchase price of
$3.50 per share in cash (the "Transaction"). The terms and conditions of the
Transaction are more fully set forth in the Agreement.
You have requested our opinion, as investment bankers (the "Opinion"),
as to the fairness to the shareholders of Liberty from a financial point of
view, of the consideration to be received by the shareholders of Liberty in the
Transaction. We have not participated in negotiations or otherwise advised the
Board of Directors of Liberty in connection with the Transaction and have not
acted on behalf of Liberty in connection with any other transaction or proposed
transaction. We will receive a fee for providing this Opinion.
In arriving at our Opinion set forth below, we have, among other
things: (i) reviewed the Agreement; (ii) reviewed certain audited and unaudited
financial statements of Liberty; (iii) reviewed certain internal information,
primarily financial in nature, concerning Liberty prepared by management of
Liberty; (iv) discussed the past and current operations and financial condition
and prospects of Liberty with management of Liberty; (v) reviewed forecast
financial statements of Liberty prepared and furnished to us by the management
of Liberty; (vi) reviewed certain publicly available financial and stock market
data relating to selected public companies that we considered relevant to our
analysis; (vii) reviewed certain publicly available information concerning the
terms of selected merger and acquisition transactions that we considered
relevant to our inquiry; and (viii) conducted such other financial studies,
analyses and investigations and considered such information as we deemed
appropriate.
In connection with our review, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied to us
by Liberty, and all publicly available information, and we have not
independently verified such information. We also have relied upon the
management of Liberty for the financial projections (and the assumptions and
bases therein) provided to us for Liberty, and we have assumed that such
projections were
Liberty Technologies, Inc.
Page 2
prepared on bases reflecting the best currently available estimates and
judgment of management as to the future operating performance of Liberty.
Liberty does not publicly disclose internal management projections of the type
provided to Xxxx Xxxxx. Such projections were not prepared with the expectation
of public disclosure. The projections were based on numerous variables and
assumptions that are inherently uncertain, including without limitation,
factors related to general economic and competitive conditions. Accordingly,
actual results could vary significantly from those set forth in such
projections.
We have not been requested to make, and we have not made, an
independent appraisal or evaluation of the assets, properties, facilities or
liabilities of Liberty and we have not been furnished with any such appraisals
or evaluations.
Our Opinion is necessarily based on share prices and economic and other
conditions and circumstances as in effect on, and the information made
available to us as of August 10, 1998. It is understood that subsequent
developments may affect the conclusions reached in the Opinion and that we do
not have any obligation to update, revise or reaffirm our Opinion. In arriving
at our Opinion, we were not authorized to solicit, and did not solicit, third
party indications of interest from any party with respect to an acquisition of
Liberty, its assets, or any part thereof. Our Opinion does not address nor
should it be construed to address the relative merits of the Transaction or any
alternative business strategies that may be available to Liberty. We have
assumed that the Transaction described above will be consummated on the terms
and conditions described in the form of the Agreement reviewed by us.
It is understood that this letter is directed to Liberty's Board of
Directors and does not constitute a recommendation either of the Transaction or
to any shareholder of Liberty as to how such shareholder should vote on or
otherwise respond to the Transaction. This letter is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus or
proxy statement, or in any other document used in connection with the offering
or sale of securities, nor shall this letter be used for any other purposes,
without the prior written consent of Xxxx Xxxxx Xxxx Xxxxxx, Incorporated,
provided that this Opinion may be included in its entirety in any filing made
by Liberty with the Securities and Exchange Commission with respect to the
Transaction.
Based upon and subject to the foregoing, we are of the opinion that,
as of August 10, 1998, the consideration to be reviewed by the shareholders of
Liberty in the Transaction is fair, from a financial point of view, to such
shareholders.
Very truly yours,
/s/ Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
XXXX XXXXX XXXX XXXXXX, INCORPORATED
