EXHIBIT (A)(3)
LOGO
May 3, 1998
Board of Directors
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Boulevard
P.O. Box 2120
Houston, Texas 77056
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares of common stock, par
value $0.05 per share ("Company Common Stock") of Union Texas Petroleum
Holdings, Inc. (the "Company") of the consideration to be received by such
holders in the proposed acquisition of the Company by Atlantic Richfield
Company ("Acquiror") pursuant to the Agreement and Plan of Merger (the
"Agreement"), dated May 3, 1998, among Acquiror, VWK Acquisition Corp. ("Sub")
and the Company.
As more specifically set forth in the Agreement, Sub will commence a tender
offer (the "Proposed Tender Offer") to purchase all outstanding shares of
Company Common Stock at a price of $29.00 per share. Following consummation of
the Proposed Tender Offer, Sub will be merged with and into the Company (or,
at the election of Acquiror, the Company will be merged with and into Sub)
(the "Proposed Merger" and, collectively with the Proposed Tender Offer, the
"Proposed Transaction") and each then outstanding share of Company Common
Stock (other than shares held in the treasury of the Company, shares owned by
Acquiror, Sub or any other wholly owned subsidiary of Acquiror or of the
Company, and shares as to which appraisal rights have been properly exercised
under applicable law) will be converted into the right to receive, in cash,
the amount paid for a share of Company Common Stock pursuant to the Proposed
Tender Offer.
In connection with rendering our opinion, we have reviewed and analyzed
material bearing upon the financial and operating condition and prospects of
the Company including, among other things, the following: (i) the final draft
of each of the Agreement and the stockholder's agreement between Acquiror and
the Company's principal stockholder; (ii) certain publicly available
information concerning the Company, including the Annual Report on Form 10-K
of the Company for the period ended December 31, 1997 and the amendment
thereto and the Quarterly Report on Form 10-Q of the Company for the quarter
ended March 31, 1998; (iii) certain internal information of the Company,
primarily financial in nature, including projections, concerning the business
and operations of the Company furnished to us by the Company for purposes of
our analysis; (iv) certain publicly available information concerning the
trading of, and the trading market for, the Company Common Stock; (v) certain
publicly available information with respect to certain publicly traded
companies that we believe to be comparable to the Company and the trading
markets for certain of such other companies' securities; and (vi) certain
publicly available information concerning the nature and terms of certain
other transactions that we consider relevant to our inquiry. We have also
considered such other information, financial studies, analyses, investigations
and financial, economic and market criteria that we deemed relevant. We have
also discussed the foregoing, as well as other matters we believe relevant to
our inquiry, with the management of the Company.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided to us or publicly available and have neither
attempted independently to verify nor assumed any responsibility for verifying
any of such information and have further relied upon the assurance of
management of the Company that they are not aware of any facts
that would make any of such information inaccurate or misleading. We have not
conducted a physical inspection
SALOMON BROTHERS INC Seven World Trade Center New York NY 10048
of any of the properties or facilities of the Company, nor have we made or
obtained or assumed any responsibility for making or obtaining any independent
evaluations or appraisals of any of such properties or facilities, nor have we
been furnished with any such evaluations or appraisals. With respect to
projections, we have been advised by management of the Company that such
projections were reasonably prepared on bases reflecting the best currently
available estimates and judgment of the Company's management as to the future
financial performance of the Company and we express no view with respect to
such projections or the assumptions on which they were based. We have also
assumed that the definitive Agreement will not, when executed, contain any
terms or conditions that differ materially from the terms and conditions
contained in the draft of such document we have reviewed and that the Proposed
Transaction will be consummated in a timely manner and in accordance with the
terms of the Agreement.
In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following:
(i) the historical and current financial position and results of operations of
the Company; (ii) the business prospects of the Company; (iii) the historical
and current market for the Company Common Stock and for the equity securities
of certain other companies that we believe to be comparable to the Company;
and (iv) the nature and terms of certain other acquisition transactions that
we believe to be relevant. We have also taken into account our assessment of
general economic, market and financial conditions as well as our experience in
connection with similar transactions and securities valuation generally. We
have also considered the process that resulted in the negotiation of the
Agreement, including discussions with certain other potential acquirors. Our
opinion necessarily is based upon conditions as they exist and can be
evaluated on the date hereof and we assume no responsibility to update or
revise our opinion based upon circumstances or events occurring after the date
hereof. Our opinion is, in any event, limited to the fairness, from a
financial point of view, of the consideration to be received by the holders of
Company Common Stock in the Proposed Transaction and does not address the
Company's underlying business decision to effect the Proposed Transaction or
constitute a recommendation to any holder of Company Common Stock as to
whether such holder should tender such stock in the Proposed Tender Offer or
as to how such holder should vote with respect to the Proposed Merger.
As you are aware, Salomon Brothers Inc, now doing business as Salomon Smith
Barney (collectively with all other entities doing business as Salomon Smith
Barney, "Salomon Smith Barney"), is acting as financial advisor to the Company
in connection with the Proposed Transaction and will receive a fee for its
services, a substantial portion of which is contingent upon consummation of
the Proposed Transaction. Additionally, Salomon Smith Barney or its affiliates
have previously rendered certain investment banking and financial advisory
services to the Company and Acquiror and certain of its affiliates, for which
we received customary compensation. In addition, in the ordinary course of our
business, Salomon Smith Barney may actively trade the debt and equity
securities of the Company for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. Salomon Smith Barney and its affiliates (including Travelers
Group Inc.) may have other business relationships with the Company or
Acquiror.
This opinion is intended for the benefit and use of the Company (including
its management and directors) in considering the transaction to which it
relates and may not be used by the Company for any other purpose or
reproduced, disseminated, quoted or referred to by the Company at any time, in
any manner or for any purpose, without the prior written consent of Salomon
Smith Barney.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the consideration to be received by the
holders of Company Common Stock in the Proposed Transaction is fair, from a
financial point of view, to such holders.
Very truly yours,
/s/ Salomon Smith Barney
Salomon Smith Barney