Exhibit 99.1
October 18, 2002
Special Committee of Independent Directors
Seaboard Corporation
9000 West 67th Street
Shawnee Mission, KS 66202
Attention: David Adamsen & Thomas Shields
Special Committee of Independent Directors
Gentlemen:
You have requested an affirmation of our opinion (the "Fairness
Opinion"), originally delivered on October 2, 2002, as to the
fairness, from a financial point of view to the stockholders of
Seaboard Corporation (the "Company") not affiliated with
Seaboard Flour Corporation ("Flour") and its successor Seaboard
Flour LLC ("Newco"), of the consideration to be paid to the
Company by Flour, a private and separate legal entity, pursuant
to the definitive Reorganization Agreement (the "Agreement") by
and between Flour and the Company. Under the terms of the
Agreement, the Company effectively will acquire a number of
shares of Company common stock at an imputed price of $203.26
per share from Flour in exchange for $ 47.24 million in
immediately available funds which shall be used by Flour to pay
liabilities and obligations of Flour listed in the Agreement,
including the payment of approximately $11.26 million of debt
obligations owed to the Company by Flour, and any transaction
costs payable by Flour related to this transaction. In
addition, the Company agrees to issue common stock to Newco, a
newly formed legal entity which is principally owned by the
owners of Flour, with an aggregate price equal to the amount of
periodic earnout payments relating to real estate holdings and
earnings from Newco as defined in the Purchase and Sale
Agreement between Flour and Newco (the "Purchase and Sale
Agreement"). According to the Agreement, for purposes of such
issuance of common stock with respect to the earnout payments,
the per share prices of the common stock will be determined by
the ten day average of the per share closing sales prices of
the Company's common stock immediately preceding the applicable
settlement calculation dates. Collectively the Agreement and
the above detailed exchange of consideration will hereinafter
be called the "Transaction."
Adams, Harkness & Hill, Inc., as part of its investment banking
activities, is regularly engaged in the valuation of businesses
and their securities in connection with mergers and
acquisitions, underwritings, distributions of listed and
unlisted securities, private placements and valuations for
corporate and other purposes. In the ordinary course of our
business we may hold long or short positions of the Company's
common stock for either our customers or our own account. We
are serving as financial advisor to the Special Committee of
Independent Directors ("Special Committee") of the Company in
connection with the Transaction and will receive a fee for
providing this Fairness Opinion that is not contingent upon the
consummation of the Transaction.
In developing our Fairness Opinion, we have, among other
things:
(i) reviewed a final copy of the Agreement dated October 18,
2002;
(ii) reviewed final copy of the Purchase and Sale Agreement
dated October 18, 2002;
(iii) analyzed and discussed with members of management of
the Company certain historic and projected financial statements
and other financial and operating data concerning the Company,
prepared by management of the Company;
(iv) visited the Company's principal place of its hog
processing business in Guymon, Oklahoma;
(v) conducted due diligence discussions with members of senior
management of the Company;
(vi) compared the financial and operating results of the
Company with those of certain companies we deemed to be
relevant and comparable;
(vii) compared the terms and conditions of the Agreement
with certain other corporate repurchase transactions of common
stock from large stockholders which we deemed to be relevant
and comparable;
(viii) compared the terms and conditions of the Agreement
with certain other private corporate sales of common stock to
sophisticated private investors in negotiated transactions;
(ix) reviewed and analyzed the historical common stock trading
history of the Company;
(x) analyzed the capitalization structure and ownership tables
of the Company; and
(xi) performed such other financial studies, investigations and
analyses and took into account such other matters as we deemed
necessary, including our assessment of general economic, market
and monetary conditions as of the date hereof.
In connection with our review and arriving at our Fairness
Opinion, we have not independently verified any information
received from the Company, have relied on such information, and
have assumed that all such information is complete and accurate
in all material respects. With respect to any forecasts
reviewed relating to the prospects of the Company, Flour or
Newco, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and
judgments of management as to the future financial performance.
Our Fairness Opinion is rendered on the basis of securities
market conditions prevailing as of the date hereof and on the
conditions and prospects, financial and otherwise, of the
Company, Flour and Newco as known to us on the date hereof. We
have not conducted, nor have we received copies of, any
independent valuation or appraisal of any of the assets of the
Company, Flour or Newco. In addition, we have assumed that any
material liabilities (contingent or otherwise, known or
unknown) of the Company, Flour and Newco are as set forth in
the historic and projected financial statements of the Company,
Flour and Newco. This Fairness Opinion is necessarily based
upon the information available to us and facts and
circumstances as they exist and are subject to evaluation on
the date hereof; events occurring after the date hereof could
materially affect the assumptions used in preparing this
Fairness Opinion.
We are not expressing any opinion herein as to the price at
which shares of Company common stock have traded or may trade
at any future time.
It is agreed between the Special Committee and Adams, Harkness
& Hill, Inc. that this Fairness Opinion is directed to and for
the information of the Special Committee and the Board of
Directors of the Company in connection with the Transaction,
may not be relied upon by any other person, and may not be used
for any other purpose without our prior written consent, except
that this Fairness Opinion may be included in its entirety in
any filing made by the Company with the Securities and Exchange
Commission and/or the American Stock Exchange with respect to
the Transaction as contemplated. It is also agreed that this
Fairness Opinion does not address the relative merits of the
Transaction or the other business strategies that the Special
Committee and the Board of Directors have considered or may be
considering, nor does it address the decision of the Special
Committee and the Board of Directors to proceed with the
Transaction.
Based upon and subject to the foregoing, it is our opinion
that, as of the date hereof, the consideration to be received
by the Company in the Transaction is fair, from a financial
point of view to the stockholders of the Company not affiliated
with Flour and/or its successor.
Sincerely,
ADAMS, HARKNESS & HILL, INC.