[LETTERHEAD OF BT WOLFENSOHN APPEARS HERE]
March 8, 1998
Board of Directors
Alumax Inc.
3424 Peachtree Road, N.E.
Suite 2100
Atlanta, GA 30326
Dear Directors:
BT Wolfensohn has acted as financial advisor to Alumax Inc. ("Alumax") in
connection with the proposed merger of Alumax and Aluminum Company of America
(the "Acquiror") pursuant to the Agreement and Plan of Merger, dated as of March
8, 1998 (the "Merger Agreement"), among Alumax, the Acquiror and AMX Acquisition
Corp., a wholly owned subsidiary of the Acquiror ("Acquiror Sub"), which
provides, among other things, for a tender offer (the "Offer") for a majority
(on a fully-diluted basis) of the shares of the Common Stock, par value $0.01
per share, of Alumax ("Alumax Common Stock") at $50.00 of cash, followed by a
merger (the "Merger"; together with the Offer, the "Transaction") of Alumax with
and into Acquiror Sub, as a result of which each share of Alumax Common Stock
(other than the Excluded Shares or Dissenting Shares (as defined in the Merger
Agreement)) will be converted into the right to receive 0.6975 of a share of the
Common Stock, par value $1.00 per share, of the Acquiror ("Acquiror Common
Stock") or, if less than a majority of the Alumax Common Stock is acquired in
the Offer, a fraction of a share of Acquiror Common Stock equal to the Adjusted
Exchange Ratio (as defined in the Merger Agreement) plus the Cash Prorate Amount
(as defined in the Merger Agreement). The terms and conditions of the
Transaction are more fully set forth in the Merger Agreement.
You have requested BT Wolfensohn's opinion, as investment bankers, as to the
fairness, from a financial point of view, of the consideration to be received by
the shareholders of Alumax pursuant to the Merger Agreement in the Offer and the
Merger, taken together, to such shareholders.
In connection with BT Wolfensohn's role as financial advisor to Alumax, and in
arriving at its opinion, BT Wolfensohn has reviewed certain publicly available
financial and other information concerning Alumax and the Acquiror and certain
internal analyses and other information furnished to it by Alumax and the
Acquiror and/or their respective advisors. BT Wolfensohn has also held
discussions with members of the senior managements of Alumax and the Acquiror
regarding the businesses and prospects of their respective companies and the
joint prospects of a combined company. In addition, BT Wolfensohn has (i)
reviewed the reported prices and trading activity for Alumax Common Stock and
Acquiror Common Stock, (ii) compared certain
Alumax Inc.
March 8, 1998
Page 2
financial and stock market information for Alumax and the Acquiror with similar
information for certain other companies whose securities are publicly traded,
(iii) reviewed the financial terms of certain recent business combinations which
it deemed comparable in whole or in part, (iv) reviewed the terms of the Merger
Agreement, and (v) performed such other studies and analyses and considered such
other factors as it deemed appropriate.
BT Wolfensohn has not assumed responsibility for independent verification of,
and has not independently verified, any information, whether publicly available
or furnished to it, concerning Alumax or the Acquiror, including, without
limitation, any financial information, forecasts or projections considered in
connection with the rendering of its opinion. Accordingly, for purposes of its
opinion, BT Wolfensohn has assumed and relied upon the accuracy and completeness
of all such information and BT Wolfensohn has not conducted a physical
inspection of any of the properties or assets, and has not prepared or obtained
any independent evaluation or appraisal of any of the assets or liabilities, of
Alumax or the Acquiror. With respect to the financial forecasts and projections,
including the analyses and forecasts of certain cost savings, operating
efficiencies, revenue effects and financial synergies expected by Alumax and the
Acquiror ("Synergies"), made available to BT Wolfensohn and used in its
analyses, BT Wolfensohn has assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
management of Alumax or the Acquiror, as the case may be, as to the matters
covered thereby. In rendering its opinion, BT Wolfensohn expresses no view as to
the reasonableness of such forecasts and projections, including the Synergies,
or the assumptions on which they are based. BT Wolfensohn's opinion is
necessarily based upon economic, market and other conditions as in effect on,
and the information made available to it as of, the date hereof. We undertake
no obligation to update this opinion to reflect any developments occurring after
the date hereof. We express no opinion as to the price or range of prices at
which Acquiror Common Stock may trade subsequent to the consummation of the
Merger.
For purposes of rendering its opinion, BT Wolfensohn has assumed that, in all
respects material to its analysis, the representations and warranties of Alumax,
the Acquiror and Acquiror Sub contained in the Merger Agreement are true and
correct, Alumax, the Acquiror and Acquiror Sub will each perform all of the
covenants and agreements to be performed by it under the Merger Agreement and
all conditions to the obligations of each of Alumax, the Acquiror and Acquiror
Sub to consummate the Transaction will be satisfied without any waiver thereof.
BT Wolfensohn has also assumed that all material governmental, regulatory or
other approvals and consents required in connection with the consummation of the
Transaction will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either Alumax or the Acquiror is a party or is subject or by which it is bound,
no limitations, restrictions or conditions will be imposed or amendments,
modifications or waivers made that would have a material adverse effect on
either Alumax or the Acquiror or materially reduce the contemplated benefits of
the Transaction to Alumax or its stockholders. In addition, you have informed BT
Wolfensohn, and accordingly for purposes of rendering its opinion BT Wolfensohn
has assumed, that the Merger will be tax-free to each of Alumax, the Acquiror,
the Acquiror's stockholders and, to the extent they receive Acquiror Common
Stock instead of cash, Alumax's stockholders.
Alumax Inc.
March 8, 1998
Page 3
In connection with our engagement, we have not been authorized by Alumax or its
Board of Directors to solicit, nor have we solicited, any alternative
transactions to the Transaction. This opinion is addressed to, and for the use
and benefit of, the Board of Directors of Alumax and is not a recommendation to
the stockholders of Alumax to tender their shares in the Offer or to approve the
Merger. This opinion is limited to the fairness, from a financial point of view,
to Alumax of the consideration to be received in the Offer and the Merger, taken
together, and BT Wolfensohn expresses no opinion as to the merits of the
underlying decision by Alumax to engage in the Transaction.
BT Wolfensohn is engaged in the merger and acquisition and client advisory
business of Bankers Trust (together with its affiliates the "BT Group") and,
for legal and regulatory purposes, is a division of BT Alex. Brown Incorporated,
a registered broker-dealer and member of the New York Stock Exchange. BT
Wolfensohn will be paid a fee for its services as financial advisor to Alumax in
connection with the Transaction, a substantial portion of which is contingent
upon consummation of the Transaction. BT Wolfensohn currently receives, and has
received in prior years, an annual retainer from Alumax. It has also provided
investment banking services to Alumax for which it has received compensation. In
the ordinary course of business, members of the BT Group may actively trade in
the securities and other instruments and obligations of Alumax and the Acquiror
for their own accounts and for the accounts of their customers. Accordingly, the
BT Group may at any time hold a long or short position in such securities,
instruments and obligations.
Based upon and subject to the foregoing, it is BT Wolfensohn's opinion as
investment bankers that, as of the date hereof, the consideration to be received
pursuant to the Merger Agreement by holders of Alumax Common Stock in the Offer
and the Merger, taken together, is fair, from a financial point of view, to such
stockholders.
Very truly yours,
/s/ BT Wolfensohn
BT WOLFENSOHN