Exhibit 99.(c)(2)
Contact information
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UBS WARBURG LLC
1999 Avenue of the Stars, 15/th/ Floor
Los Angeles, CA 90067
Tel: 310-556-6700
www.ubswarburg.com
UBS Warburg LLC is a subsidiary of UBS AG
UBS Warburg is a business group of UBS AG
[LOGO] UBS Warburg
[LOGO] UBS Warburg
Project Showtime
Presentation to the Special Committee of the Board of Directors
May 1, 2001
MAY 2001
________________________________________________________________________________
This board presentation was prepared by UBS Warburg LLC solely for the benefit
and use of the special committee of the board of directors of Sodexho Marriott
Services, Inc. The board presentation was delivered to the Special Committee on
May 1, 2001, and is current only as of that date. The board presentation is
subject to, and should be reviewed in conjunction with, the assumptions,
qualifications and limitations set forth in the text of the written fairness
opinion, dated May 1, 2001, delivered by UBS Warburg LLC to the special
committee and included as Exhibit (c)(1) to this Schedule TO.
[LOGO] UBS Warburg
Contents
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SECTION 1 TRANSACTION OVERVIEW ____________________________________ 1
SECTION 2 Magic Overview __________________________________________ 5
SECTION 3 Valuation Analyses ______________________________________ 14
[LOGO] UBS Warburg
Transaction Overview
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SECTION 1
[LOGO] UBS Warburg
Transaction History
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. Magic ("Magic" or the "Company") was formed in March 1998 through the
merger of the North American food service operations of Alcindor and the
food service operations of Magic International
. As a result of the merger, Alcindor owned 48% (excluding the dilutive
effect of options outstanding), the Magic family controlled 9% and former
Magic International shareholders owned the remaining 43%
. In conjunction with the merger, Alcindor and Magic entered into several
agreements whereby Alcindor agreed to provide a variety of operational
services for Magic for a fee, as well as guarantee a substantial portion of
Magic's debt
. In order to maintain the tax free status of the distribution of certain
businesses to shareholders of Magic International, Alcindor and Magic
International entered into an agreement whereby Alcindor was prohibited
from increasing its ownership stake to 50% or more until 3/27/01
. Magic stock began trading on 3/23/98 at $24.00 per share and subsequently
traded down to an all-time low of $10.31 on 2/15/00 as a result of poor
operating results
. In anticipation of the expiration of its three year standstill obligation,
on 1/25/01, Alcindor announced a bid of $27.00 per share in cash for the
54.2% of the fully-diluted shares of Magic outstanding that it does not
already own /1/
. On 1/29/01, the Board of Directors of Magic appointed a Special Committee
to evaluate the Alcindor proposal
. On 2/27/01, the Company announced the appointment of UBS Warburg ("UBSW")
to advise the Special Committee with regard to the Alcindor proposal
. On 4/25/01, Alcindor agreed to pay $32.00 per share in cash for the 54.7%
of the fully-diluted shares of Magic it did not already own /1/
. Alcindor plans to fund the cash purchase price through a combination of
debt and equity offerings with no financing contingency
NOTE:
1 Percentage of fully-diluted shares not owned by Alcindor is 54.2% @ $27.00
and 54.7% @ $32.00
[LOGO] UBS Warburg
Deal Overview
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Initial
Alcindor Current Alcindor Proposal
One Month One Day Proposal Market -----------------------------
Valuation Prior Prior (100.0%) 4/27/01 (54.7%) (100.0%)
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Stock Price ($) 20.81 24.88 27.00 29.53 32.00 32.00
Premium to One Day Prior Stock Price (%) -- -- 8.5 18.7 28.6 28.6
Premium to One Month Prior Stock Price (%) -- 19.6 29.7 41.9 53.8 53.8
Equity Value ($mm) 1,340 1,620 1,767 1,943 1,158 2,117
Total Enterprise Value ($mm) 2,210 2,490 2,637 2,813 -- 2,987
Total Enterprise Value as a Multiple of LTM: /1/
Revenue ($4,863 mm) (x) 0.5 0.5 0.5 0.6 -- 0.6
EBITDA ($296 mm) (x) 7.5 8.4 8.9 9.5 -- 10.1
EBIT ($209 mm) (x) 10.6 11.9 12.6 13.5 -- 14.3
Stock Price Multiple of:
CY2001E Cash EPS ($1.68) (x) 12.4 14.8 16.1 17.6 -- 19.1
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________________________________________
NOTE:
/1/ Latest Twelve Months as of 3/2/01
[LOGO OF UBS WARBURG] Section 1: Transaction Overview 3
Summary of Merger Agreement
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Form of Transaction: . Tender Offer by Alcindor Acquisition Corporation, a Delaware corporation controlled
by Alcindor
Merger Consideration: . $32.00 per share in cash
Tax Structure: . Fully taxable to selling shareholders
Accounting Treatment: . Purchase accounting
Significant Conditions and Other Terms: . Special Committee and Board of Directors approval of the Tender Offer
. Tender of the requisite number of common shares of Magic to Alcindor Acquisition
Corporation to give Alcindor majority ownership of common shares outstanding on a
fully diluted basis
. Customary conditions relating to regulatory approvals and no material adverse effect
. Non-solicitation of other offers
. Limited representations and warranties by Magic due to existing ownership stake by
Alcindor
. [Alcindor makes certain representations to the effect that the transaction will not
jeopardize the tax-free nature of the 1998 spin-off]
Termination Conditions: . Customary termination conditions and provisions including:
- Termination by mutual consent
- Termination by either Magic or Alcindor, if the merger is not consummated on or
before [_]
- Termination by Alcindor, if (i) the Board of Directors fails to recommend the
Tender Offer; (ii) Magic enters into a different Acquisition Proposal (as defined
in the Agreement); or (iii) Alcindor terminates the Tender Offer because of a
failure of any conditions set forth in Annex I of the Agreement
- Termination by Magic, if before Alcindor accepts for payment shares tendered in
the offer (i) the Board of Directors advises the Company to enter into a Superior
Proposal (as defined in the Agreement); or (ii) the offer expires without the
requested number of shares being tendered to give Alcindor a majority ownership
on a fully diluted basis
- Termination fee for Alcindor of [_] million, if (i) the Company terminates due to
a third party Acquisition Proposal; (ii) Alcindor terminates because the Magic
Board of Directors fails to recommend the Tender Offer or enters into a different
Acquisition Proposal; or (iii) each of the following occurs: the Tender Offer
expires without sufficient shares being tendered to Alcindor, the Merger
Agreement is terminated because the merger is not consummated by [_], 2001, a
different Acquisition Proposal is received during that period, and, within 12
months following termination, Magic enters into [and consummates] a different
Acquisition Proposal
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[LOGO OF UBS WARBURG] Section 1: Transaction Overview 4
Magic Overview
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SECTION 2
[LOGO OF UBS WARBURG]
Summary of Magic Actual and Projected Financial Results
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53 WEEKS 53 WEEKS 2000-2005
Fiscal Years ending September 1/st/ 1999A 2000A LTM 2001E 2002E 2003E 2004E 2005E CAGR (%)
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Operating Summary
Revenue ($mm) 4,502 4,734 4,863 4,970 5,244 5,559 6,011 6,263 5.8
EBIT ($mm) 187 196 209 215 235 269 299 338 11.5
EBITDA ($mm) 272 280 296 300 320 355 390 429 8.9
Interest Expense ($mm) 87 84 80 78 74 71 54 43 -
Net Income ($mm) 60 63 74 78 92 115 143 174 22.5
Capital Expenditures ($mm) 72 66 66 82 99 96 98 103 -
FY EPS ($)/1/ 0.94 1.00 1.16 1.21 1.42 1.76 2.17 2.62 21.2
FY Cash EPS ($) 1.35 1.41 1.56 1.61 1.81 2.13 2.53 2.97 16.0
Margins
Operating Margin (%) 6.7 6.7 6.9 6.9 7.2 7.5 7.6 8.1 -
EBIT Margin (%) 4.2 4.1 4.3 4.3 4.5 4.8 5.0 5.4 -
EBITDA Margin (%) 6.0 5.9 6.1 6.0 6.1 6.4 6.5 6.8 -
Net Income Margin (%) 1.3 1.3 1.5 1.6 1.8 2.1 2.4 2.8 -
Capital Expenditures (%) 1.6 1.4 1.4 1.6 1.9 1.7 1.6 1.6 -
Growth Rates/2/
Revenue (%) - 7.2 - 5.0 5.5 6.0 6.1 6.2 -
EBITDA (%) - 4.9 - 7.1 6.7 10.9 7.8 12.1 -
Net Income (%) - 7.0 - 23.8 17.9 25.0 22.0 24.0 -
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NOTES:
/1/ Management earnings estimates
/2/ Adjusted to reflect the additional week in fiscal 1999 and 2004
[LOGO OF UBS WARBURG] Section 2: Magic Overview 6
Historical Balance Sheet
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($mm) 1999 2000 3/2/01
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Cash 48 54 70
Accounts Receivable 445 463 515
Inventories 60 67 67
PP&E 85 96 95
Intangible Assets 535 497 478
Other Assets 174 187 196
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TOTAL ASSETS 1,347 1,364 1,421
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Accounts Payable and Current Liabilities 585 684 728
Other Long Term Liabilities 113 112 110
LONG TERM DEBT
Revolving Credit Facility 52 -- --
Secured Credit Facility 430 350 310
Guaranteed Credit Facility 620 620 620
Senior Debt 6 6 6
Other 5 5 4
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TOTAL DEBT 1,113 981 940
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Convertible Sub. Debt 30 -- --
Shareholders' Equity (494) (413) (357)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,347 1,364 1,421
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[LOGO] UBS Warburg
Section 2: Magic Overview 7
Magic Stock Price History--Last Twelve Months
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APRIL 27, 2000 TO APRIL 27, 2001
[PERFORMANCE GRAPH APPEARS HERE]
[Graph depicting the daily closing stock price and the daily trading volume of
Magic from April 27, 2000 to April 27, 2001. The graph has annotations A
through G as described below. The graph also has a line at $32.00 per share for
the proposed purchase price which demonstrates that the offer price is higher
than any closing stock price over the time period presented.]
SOURCE: Factset
Annotations Selected Statistics/1,/2/ ($)
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A Reported Q3 results, including moderate growth (7/14/00)
B Reported FY 2000 results (11/13/00) Pre-announcement Price (1/24/01) 24.88
C Reported Q1 results (1/12/01) 30 Day Average 22.58
D Alcindor announced bid of $27.00 (1/25/01) 90 Day Average 20.90
E UBS Warburg announced as advisor to Special Committee (2/27/01) 52 Week Average 16.31
F Announced the award of 2 Marine Corps Contracts (3/15/01) 52 Week High 25.69
G Reported Q2 results (4/12/01) 52 Week Low 10.31
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NOTES:
1 Statistics for the periods denoted prior to the
announcement date, January 25, 2001
2 Closing prices
[LOGO] UBS Warburg
Section 2: Magic Overview 8
Magic Price Performance Since the 1998 Transaction
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[PERFORMANCE GRAPH APPEARS HERE]
[Graph depicting the daily closing stock price and the daily trading volume of
Magic from March 23, 1998 to April 27, 2001. The graph has annotations showing
the all-time high stock price of $32.69 on 7/10/98 and the all-time low stock
price of $10.31 on 2/15/00. The graph also has a line at $32.00 per share for
the proposed purchase price which demonstrates that the offer price is higher
than any closing stock price during the time period presented except for a few
days during the middle of 1998 and early 1999.]
[LOGO] UBS Warburg
Section 2: Magic Overview 9
Magic Relative Price Performance
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APRIL 26, 2000 TO APRIL 27, 2001
[PERFORMANCE GRAPH APPEARS HERE]
[Graph depicting the relative price performance of Magic and Alcindor to an
index of comparable companies consisting of ABM, Autogrill, Chemed, Compass,
Elior, ISS, Rentokil Initial and ServiceMaster from April 26, 2000 to April 27,
2001. The graph shows that Magic and Alcindor have outperformed the comparable
companies index beginning in October 2000. The graph also shows that Magic
outperformed the comparable companies index by a wide margin since the
announcement by Alcindor of its proposal to purchase the remaining shares of
Magic on January 25, 2001.]
SOURCE: FactSet
NOTE: Comparable Companies Index consists of: ABM, Autogrill, Chemed, Compass,
Elior, ISS, Rentokil Initial and ServiceMaster Magic Trading Summary Prior to
Announcement
[LOGO] UBS Warburg
Section 2: Magic Overview 10
Magic Trading Summary Prior to Announcement
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[Four graphs depicting how many shares traded at various per share stock prices
during specific time periods prior to the announcement by Alcindor of its
proposal to purchase the remaining shares of Magic on January 25, 2001. The
tables below describe the information in those graphs.]
Graph 1
One Month (12/26/00-1/24/01)
Stock Price Range Volume (`000s) % of Total Volume
----------------- -------------- -----------------
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$20-$22 992 33.5%
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$22-$24 456 15.4%
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$24-$26 1,512 51.1%
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Graph 2
Three Months (10/23/00-1/24/01)
Stock Price Range Volume (`000s) % of Total Volume
----------------- -------------- -----------------
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$18-$20 808 14.0%
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$20-$22 2,915 50.5%
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$22-$24 536 9.3%
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$24-$26 1,512 26.2%
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Graph 3
Six Months (7/24/00-1/24/01)
Stock Price Range Volume (`000,000s) % of Total Volume
----------------- ------------------ -----------------
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$14-$16 0.3 0.3%
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$16-$18 29.1 33.4%
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$18-$20 8.1 9.3%
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$20-$22 29.2 33.5%
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$22-$24 5.4 6.2%
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$24-$26 15.1 17.4%
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Graph 4
One Year (1/24/00-1/24/01)
Stock Price Range Volume (`000,000s) % of Total Volume
----------------- ------------------ -----------------
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$10-$12 47.3 26.2%
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$12-$14 10.4 5.8%
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$14-$16 25.9 14.4%
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$16-$18 36.5 20.2%
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$18-$20 10.9 6.0%
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$20-$22 29.2 16.1%
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$22-$24 5.4 3.0%
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$24-$26 15.1 8.4%
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[LOGO] UBS Warburg Section 2: Magic Overview 11
Ownership Summary
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Ownership
Shares (`000S) %
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Alcindor 29,950 47.1
Transamerica Corp. 7,486 11.8
Other:
Bank of America Corp. 2,078 3.3
Goldman Sachs Group 1,800 2.8
Fidelity 1,347 2.1
Massachusetts Financial 1,112 1.8
Barclays Bank 636 1.0
Vanguard Group 415 0.7
Oppenheimer International 282 0.5
State Street Corp. 238 0.4
Other Holders 18,150 28.6
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Total 63,537/1/ 100.0
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SOURCE: Magic Proxy (12/1/00), 10-Q (4/12/00), CDA Spectrum
/1/ Reflects basic shares outstanding
[LOGO] UBS Warburg Section 2: Magic Overview 12
Valuation Analyses
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SECTION 3
[LOGO] UBS Warburg
Valuation Techniques
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UBS Warburg used the following methodologies to determine the appropriate
Magic valuation
Methodology Description
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. Comparable Companies Analysis Compares trading multiples (Total
Enterprise Value/EBITDA and
Price/Cash EPS) of companies
similar to Magic to the proposed
purchase price multiples for the
Alcindor/Magic merger
. Comparable Transactions Analysis Compares purchase price multiples
of similar transactions to the
proposed multiples for the
Alcindor/Magic merger
. Premiums Paid Analysis All Deals: Compares stock price
premiums paid to other companies
one day, one week and one month
prior to transaction announcement
to the proposed premiums for the
Alcindor/Magic merger
Minority Squeeze-Out Deals:
Compares stock price premiums paid
for companies that were acquired in
minority squeeze-outs to the
proposed premiums for the
Alcindor/Magic merger
Control Deals: Compares stock price
premiums paid to acquire more than
50% of companies where the
ownership before the transaction
was less than 50% but greater than
5% to the proposed premiums for the
Alcindor/Magic merger
. DISCOUNTED CASH FLOW ANALYSIS Implies valuation ranges for Magic
by taking free cash flow estimates
and arriving at a terminal value by
either (i) growing the free cash
flow estimates by a growth rate
into perpetuity and discounting
them to the terminal year; or (ii)
using a multiple of EBITDA
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[LOGO] UBS Warburg Section 3: Valuatior Analyses 14
Valuation Issues
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There are several issues that need to be considered when evaluating the
Alcindor proposal, which are not entirely reflected in the valuation analyses
Methodology Issues
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. Comparable Company Analysis - Magic has lower EBITDA margins and
lower expected revenue growth than its
comparables
- Magic operates in the relatively
mature North American market, whereas
many of the highly valued comparables
operate in the faster growing European
market
- Unlike many of the comparables, Magic
is not a global business, it operates
solely in the North American market
- Many of the higher multiple
comparables trade on foreign exchanges
. Comparable Transaction Analysis - Alcindor already exercises de facto
control over Magic's operations.
Alcindor assists the Company in
purchasing activities, catering and
site support services, marketing,
management and administration, legal
and financial matters, human
relations, communications and cash
management
- There are no expected material
synergies as a result of this
transaction
. Premiums Paid Analysis - The pre-announcement stock prices may
have been impacted by speculation of
an impending offer from Alcindor for
the remaining interest in Magic
- Given Alcindor's current ownership
position, minority squeeze out
premiums may be more applicable
. Discounted Cash Flow Analysis - Alcindor's guarantee of a substantial
portion of Magic's debt results in an
artificially low cost of debt
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[LOGO] UBS Warburg Section 3: Valuatior Analyses 15
Comparable Company Analysis
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Stock Total Equity Debt / LTM
Company Name Price Enterprise Market Value Total LTM Revenue LTM Ebitda Ebitda Margin
(4/27/01) Value ($MM) Enterprise ($MM) ($MM) (%)
($) ($MM) Value (%)
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ABM Industries 33.00 878.9 834.9 4.5 1,849.4 101.7 5.5
Autogrill 11.13 3,975.9 2,831.4 28.3 2,837.1 348.1 12.3
Chemed 34.31 437.7 363.2 18.9 500.7 59.3 11.8
Compass Group/1/ 7.69 18,177.2 17,087.3 5.8 11,821.6 1,183.4 10.0
Elior 12.32 1,587.8 1,266.6 35.5 1,606.0 135.6 8.4
ISS 58.29 2,849.2 2,329.6 18.2 3,584.4 230.2 6.4
Rentokil Initial 2.73 6,698.9 6,212.8 23.0 3,801.7 887.3 23.3
ServiceMaster 10.14 4,713.8 3,057.9 37.3 5,970.6 574.6 9.6
MEAN/3/ 9.8
MEDIAN 9.8
HIGH 23.3
LOW 5.5
Magic 32.00 2,986.7 2,116.7 31.5 4,863.0 296.0 6.1
Alcindor 49.31 7,682.1 6,647.3 23.2 9,577.2 645.4 6.7
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TEV / Equity Value /
---------------------
Company Name LTM Cy2001e Cy2002e I/B/E/S Growth
Ebitda Cash EPS Cash EPS Rate (%)
(X) (X)/2/ (X)/2/
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ABM Industries 8.6 13.0 11.8 12.0
Autogrill 11.4 13.7 12.2 14.6
Chemed 7.4 11.6 -- 22.5
Compass Group/1/ 15.4 18.3 17.0 14.7
Elior 11.7 17.8 -- --
ISS 12.4 20.6 17.7 (2.5)
Rentokil Initial 7.5 14.3 13.1 9.9
ServiceMaster 8.2 12.4 11.7 12.0
MEAN/3/ 10.0 14.9 13.5 12.6
MEDIAN 10.0 14.0 12.7 12.0
HIGH 15.4 20.6 17.7 22.5
LOW 7.4 11.6 11.7 (2.5)
Magic 10.1 19.1 16.7 14.5
Alcindor 11.9 28.0 25.6 10.5
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NOTES:
/1/ Pro forma for acquisition of Morrison Management Services and Selecta Group
and for sale of Hotel Group for an estimated $5.0 billion after tax from
MSDW research
/2/ I/B/E/S earnings estimates with the exception of Compass (MSDW), Autogrill
(Merrill), ISS (Dresdner), Magic (Management) and Alcindor (UBSW) all
adjusted to exclude amortization of goodwill
/3/ Excludes high and low
[LOGO] UBS Warburg Section 3 Valuator Analyses 16
Comparable Company Business Descriptions
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Company Business Description
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Abm Industries Largest public facility services contractor with over 60,000 employees. Provides air conditioning, elevator,
engineering, janitorial and parking and security services to thousands of customers throughout North
America.
Autogrill Operator of restaurants along highways and in airports throughout Europe and America. Also operates self service
restaurants across Italy.
Chemed Provides plumbing and drain cleaning services through Roto-Rooter Inc. Also offers home healthcare services and
air-conditioning repair.
Compass Group International food service operator, providing contract and concession catering services to businesses,
airports, healthcare institutions, schools and universities.
Elior Supplier of food to restaurants located near highways, at airports, in rail stations, in schools and in
hospitals. Services over 7,400 restaurants in France, the U.K., the Netherlands and Italy.
ISS Provider of cleaning and maintenance services primarily in Europe for the food processing and healthcare
sectors. Also provides landscaping, security, linen and catering services.
Rentokil Initial Services include pest control, landscaping, hospital waste disposal, cleaning services and facilities management
operations. Also provides staffing, delivery and security services.
Servicemaster Provides housecleaning, pest control, and landscaping services. Also supplies facilities management,
housekeeping and food services to healthcare and education facilities.
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[LOGO] UBS Warburg Section 3 Valuator Analyses 17
Comparable Transaction Analysis
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Implied Target Target TEV / Equity /
Enterprise LTM LTM LTM LTM Cash
Date Transaction Value Revenue EBITDA EBITDA Earnings
Announced Target Name Acquiror Name Consideration ($MM) ($MM) ($MM) (X) (X) /1/
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3/29/01 LSG SkyChefs /2/ Lufthansa Cash 2,662.5 -- 186.3 14.3 --
2/12/01 Selecta Group /2/ Compass Group Cash 775.3 510.4 82.7 9.4 21.4
2/6/01 Morrison Mgmt. Specialists Compass Group Cash 633.6 509.3 36.2 17.5 33.4
12/7/00 Henkel-Ecolab /2/ Ecolab Cash/Stock 969.4 900.2 127.4 7.6 18.2
5/17/00 Compass Group Granada Group Stock 10,096.7 8,138.4 687.3 17.6 3 36.3
7/26/99 Host Marriott Services Autogrill Cash 947.1 1,436.6 132.2 7.2 28.7
11/2/98 LandCare ServiceMaster Stock 279.7 304.0 31.0 9.0 14.6
MEAN /4/ 11.6 25.4
MEDIAN 9.4 25.1
HIGH 17.6 36.3
LOW 7.2 14.6
1/24/01 Magic Alcindor Cash 2,986.7 4,863.0 296.0 10.1 21.2
Premium to Stock Price (%)
--------------------------------
One One One
Date Day Week Month
Announced Target Name Prior Prior Prior
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3/29/01 LSG SkyChefs /2/ -- -- --
2/12/01 Selecta Group /2/ 30.1 33.3 38.5
2/6/01 Morrison Mgmt. Specialists 20.8 21.0 25.6
12/7/00 Henkel-Ecolab /2/ -- -- --
5/17/00 Compass Group 3.5 (11.4) (8.9)
7/26/99 Host Marriott Services 61.5 78.7 111.8
11/2/98 LandCare 30.4 30.4 60.5
MEAN /4/ 27.1 28.2 41.5
MEDIAN 30.1 30.4 38.5
HIGH 61.5 78.7 111.8
LOW 3.5 (11.4) (8.9)
1/24/01 Magic 28.6 30.9 53.8
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NOTES:
/1/ Excludes goodwill amortization
/2/ Pending
/3/ 17.6x TEV/EBITDA excludes expected synergies of $112 million, 14.7x
TEV/EBITDA including the synergies
/4/ Excludes high and low
[LOGO] UBS Warburg Section 3 Valuator Analyses 18
Comparable Transaction Target Business Descriptions
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Company Name Business Description
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Compass Group International food service operator, providing contract and concession catering services to
businesses, airports, healthcare institutions, schools and universities.
Henkel-Ecolab European joint venture between Ecolab and Henkel. Provider of cleaning products and services.
Host Marriott Services Operates food, beverage, and merchandise concessions at US airports, toll road travel plazas,
shopping malls and entertainment venues.
Landcare Offers landscape maintenance, landscape installation and tree services to the commercial and
institutional markets.
LSG SkyChefs The world's largest inflight catering alliance. Previously jointly owned by Lufthansa and Onex
Corp.
Morrison Mgmt. Specialists Second largest outsourcing provider in the healthcare and senior living industries. Only national
publicly held company that specializes exclusively in providing food, nutrition and dining
services to the healthcare and senior living markets.
Selecta Group Largest operator of vending machines in Europe. The company sells and leases machines as well as
offering repair and maintenance services.
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[LOGO] UBS Warburg Section 3 Valuator Analyses 19
Premiums Paid Analysis/1/
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Completed Transactions Premium to Stock Price (%)
---------------------------------------------------
One Day One Week One Month
Number of Deals Prior Prior Prior
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Deals Announced in 2001
Cash Deals 27 20.0 23.2 40.7
Other Deals 6 42.4 51.9 54.7
All Deals 33 24.3 28.4 43.2
Deals Announced in 2000
Cash Deals 104 35.2 41.3 46.0
Other Deals 69 33.5 38.1 42.5
All Deals 173 34.5 40.0 44.6
Deals Announced in 1999
Cash Deals 116 29.2 33.8 40.9
Other Deals 58 34.9 46.0 58.7
All Deals 174 31.1 37.9 46.8
Combined Averages
Cash Deals 247 30.8 35.8 43.0
Other Deals 133 34.5 42.2 50.1
All Deals 380 32.1 38.0 45.5
Premium of Offer Price to Magic Stock Price/2, 3/ 28.6 30.9 53.8
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NOTES:
/1/ Excludes financial company targets, transactions involving less than 10% of
the target and targets of less than $50 million in equity value
/2/ Based on Magic one day prior, one week prior, and four weeks prior stock
prices of $24.88, $24.44, and $20.81, respectively
/3/ Assumes offer price of $32.00 per share
[LOGO] UBS Warburg Section 3: Valuation Analyses 20
Discounted Cash Flow Analysis
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($mm unless specified otherwise) 2001 2002 2003 2004 2005
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EBIT 215 235 269 299 338
Less: Tax Effect @ 43.0% (92) (101) (116) (129) (145)
Plus: Depreciation and Amortization 85 85 86 91 91
Less: Capital Expenditures (82) (99) (96) (98) (103)
Change in Working Capital 33 24 22 30 28
Unlevered Free Cash Flows 159 144 165 193 209
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Implied Stock Price Sensitivity Analysis/1/
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Terminal Growth Rate
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2.5% 3.0% 3.5%
----------------------------
Weighted Average Cost of Capital 9.0% 29.26 32.12 35.51
9.5% 26.13 28.55 31.36
10.0% 23.43 25.48 27.85
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Terminal EBITDA Multiple
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8.0x 9.0x 10.0x
----------------------------
Weighted Average Cost of Capital 9.0% 30.65 34.87 39.08
9.5% 29.75 33.87 37.99
10.0% 28.87 32.90 36.93
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NOTE:
/1/ Calculated using 66.1 million fully-diluted shares outstanding based on
proposed Magic acquisition price of $32.00
[LOGO] UBS Warburg Section 3: Valuation Analyses 21
Weighted Average Cost of Capital Analysis
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Market
Adjusted Value
Equity of Equity Total Debt Tax Rate Unlevered
Company Name Beta/1/ ($mm) ($mm) (%) Beta /2/
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ServiceMaster 0.40 3,045.6 1,756.8 40.0 0.25
ABM Industries 0.40 758.3 39.5 40.0 0.38
Autogrill 0.72 2,860.1 1,126.6 48.0 0.52
Chemed 0.47 335.6 82.6 40.0 0.38
ISS 0.88 2,325.7 519.6 32.0 0.72
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Mean 0.45
Median 0.38
High 0.72
Low 0.25
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Weighted
Market Value Unlevered Equity Cost Debt Cost Average
Implied Of Equity Total Debt Tax Rate Industry Of Capital Of Capital Cost of
Equity Beta ($mm) ($mm) (%) Beta (%)/3/ (%) Capital (%)
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Magic/4/ 0.67 1,925.8 940.0 43.0 0.45 11.56 6.81 9.04
Compass Group 0.48 17,214.2 1,058.8 27.0 0.45 9.53 6.65 9.26
Elior/4/ 0.65 1,291.8 563.9 36.0 0.45 11.37 5.47 8.98
ServiceMaster/4/ 0.71 3,045.6 1,756.8 40.0 0.45 11.88 9.11 9.53
Alcindor 0.57 6,440.6 1,786.0 40.0 0.45 10.30 6.75 8.94
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NOTES:
/1/ Adj. Beta = 0.33 + 0.67*Raw Beta. Raw Beta calculated using weekly data
from 4/30/99 - 4/20/01 against local market index
/2/ Beta Unlevered = Beta Equity / [1 + (D / E) ]
/3/ Equity Cost of Capital = Risk Free Rate (5.71%) + Equity Beta * Market Risk
Premium (8.0%)
/4/ 0.5% mid-cap premium added to Equity Cost of Capital
[LOGO] UBS Warburg Section 3: Valuation Analyses 22