BEAR STEARNS
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10104
(212) 272-2000
July 28, 1995
Board of Directors
Marsam Pharmaceuticals Inc.
41 Olney Avenue, Building 31
Cherry Hill, NJ 08034
Attention: Marvin Samson, Chief Executive Officer
We understand that Marsam Pharmaceuticals Inc. ("Marsam") has received an
offer from Schein Pharmaceutical, Inc. ("Schein") to acquire all of the
outstanding shares of the common stock of Marsam (the "Shares"). You have
provided us with the Agreement and Plan of Merger in substantially final form
(the "Merger Agreement") among Marsam, Schein and SM Acquiring Co., Inc.
("SMA"), a wholly owned subsidiary of Schein. As more fully described in the
Merger Agreement, (i) Schein would promptly commence a tender offer to purchase
all Shares for $21.00 per share in cash and (ii) as promptly after the purchase
of shares pursuant to the tender offer as practicable, SMA would merge with
Marsam and each outstanding Share not previously tendered would be converted
into the right to receive $21.00 in cash (collectively, the "Transaction").
You have asked us to render our opinion as to whether the consideration to
be paid pursuant to the Transaction is fair, from a financial point of view, to
the public shareholders of Marsam.
In the course of our analyses for rendering this opinion, we have:
1. reviewed the Merger Agreement;
2. reviewed Marsam's Annual Reports to Shareholders and Annual
Reports on Form 10-K for the fiscal years ended December 31, 1991
through 1994, and its Quarterly Report on Form 10-Q for the
period ended March 31, 1995;
3. reviewed certain operating and financial information, including
projections, provided to us by management relating to its
business and prospects;
4. met with certain members of Marsam's senior management to discuss
its operations, historical financial statements and future
prospects;
5. visited Marsam's facilities in Cherry Hill, New Jersey;
6. reviewed the historical prices and trading volume of the common
shares of Marsam;
7. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally
comparable to Marsam;
8. reviewed the terms of recent acquisitions of companies which we
deemed generally comparable to Marsam; and
9. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy
and completeness of the financial and other information provided to us by
Marsam. With respect to Marsam's projected financial results, we have assumed
that they have been reasonably prepared on a bases reflecting the best currently
available estimates and judgments of the management of Marsam as to its expected
future performance. We have not assumed any responsibility for the information
or projections provided to us and we have further relied upon the assurances of
the management of Marsam that it is unaware of any facts that would make the
information or projections provided to us incomplete or misleading. In arriving
at our opinion, we have not performed or obtained any independent appraisal of
the assets of Marsam. Our opinion is necessarily based on economic, market and
other conditions, and the information made available to us, as of the date
hereof.
Based on the foregoing, it is our opinion that the consideration to be paid
pursuant to the Transaction is fair, from a financial point of view, to the
public shareholders of Marsam.
We have acted as financial advisor to Marsam in connection with the
Transaction and will receive a fee for such services, payment of a significant
portion of which is contingent upon the consummation of the Transaction.
Very truly yours,
BEAR, STEARNS & CO. INC.
By:
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Managing Director