Exhibit (e)
[Letterhead of Lazard Freres & Co. LLC]
June 17, 1999
The Board of Directors
Durakon Industries, Inc.
2101 N. Lapeer Road
Lapeer, MI 48446
Dear Members of the Board:
We understand that Durakon Industries, Inc. (the "Company") and Littlejohn
Partners IV, L.P. (the "Purchaser") have entered into an Agreement dated as of
June 17, 1999 (the "Agreement"), pursuant to which a wholly-owned subsidiary
of the Purchaser ("Merger Sub") will offer to acquire all of the outstanding
common stock of the Company, without par value ("Common Stock"), in a tender
offer at a price equal to $16.00 per share in cash (the "Offer"); the
Agreement further provides that, following the consummation of the Offer, or
in the event the conditions of the Offer (which conditions include, without
limitation, the requirement that the number of shares tendered in the Offer,
combined with shares, if any, already owned by Purchaser or any of its
affiliates, exceeds 90% of the then outstanding shares of Common Stock) are
not met (or waived) and the Offer is not consummated, Merger Sub will be
merged (the "Merger") with and into the Company, with all shares of Common
Stock (other than any shares held by the Purchaser or its affiliates) being
converted into the right to receive $16.00 per share in cash (the Offer and
the Merger collectively, or in the event the transaction is effected by the
Merger without consummation of the Offer, the Merger, being referred to herein
as the "Acquisition").
You have requested our opinion as to the fairness, from a financial point
of view, to the shareholders of the Company (other than the Purchaser or its
affiliates) ("Shareholders") of the consideration to be paid to such
Shareholders in connection with the Acquisition. In connection with this
opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement;
(ii) Analyzed certain historical business and financial information
relating to the Company;
(iii) Reviewed various financial forecasts and other data provided to us
by the Company relating to its business, as extrapolated, and, at
your direction, alternative forecasts consistent with the
expectations of the research analyst that covers the Company, as
extrapolated, and discussed with the Board of Directors its views as
to the likelihood of achieving each of the foregoing forecasts;
(iv) Held discussions with members of the senior management of the Company
with respect to the business and prospects of the Company and its
strategic objectives;
(v) Reviewed public information with respect to certain other companies in
lines of businesses we believe to be generally comparable, in whole or
in part, to the businesses of the Company;
(vi) Reviewed the financial terms of certain business combinations
involving companies in lines of businesses we believe to be generally
comparable, in whole or in part, to those of the Company;
(vii) Reviewed the historical stock prices and trading volumes of the
Company's common stock; and
(viii) Conducted such other financial studies, analyses and investigations
as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
information, and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of the Company, or concerning the solvency or
fair value of the Company. With respect to financial forecasts, at your
direction, we have relied upon the two forecasts referred to above, although
at your direction, we have relied principally on the projections consistent
with the expectations of the research analyst that covers the Company, as
extrapolated. With your consent, we have assumed that both of such projections
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the responsible party as to the future financial
performance of the Company; and, we have assumed with your consent that the
extrapolation in each case was reasonable. You have informed us that it is the
Board of Directors' view that such forecasts consistent with the expectations
of the research analyst that covers the Company, as extrapolated, reflect the
best currently available estimates and judgments of the Board of Directors as
to the future financial performance of the Company. We assume no
responsibility for and express no view as to forecasts or the assumptions on
which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof.
In rendering our opinion, we have assumed that the Acquisition will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company and that obtaining the necessary
regulatory approvals for the Acquisition will not have an adverse effect on
the Company.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Acquisition and will receive a fee for our services, all
of which is contingent upon the consummation of the sale of the Company to the
Purchaser.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and this opinion does not constitute a
recommendation to any Shareholder as to whether or not such Shareholder should
tender its shares of Common Stock pursuant to the Offer or as to how such
Shareholder should vote in connection with the Merger. It is understood that,
except for inclusion in its entirety in a Schedule 14D-9 relating to the Offer
and in a proxy or information statement of the Company relating to the Merger,
this letter may not be disclosed or otherwise referred to without our prior
consent, except as may otherwise be required by law or by a court of competent
jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
consideration to be received by the Shareholders (other than the Purchaser or
its affiliates) in the Acquisition is fair to such Shareholders from a
financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/Jeffrey A. Golman
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Jeffrey A. Golman
Managing Director