1
EXHIBIT 23
SCHEDULE II
CLEARY GULL REILAND & McDEVITT INC.
100 East Wisconsin Avenue
Milwaukee, WI 53202
414-291-4500
January 20, 1997
Board of Directors
New Image Industries, Inc.
2283 Cosmos Court
Carlsbad, CA 92009
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders (the "Stockholders") of shares of common stock, par value
$0.001 per share ("New Image Common Stock"), of New Image Industries, Inc.
("New Image") of the consideration to be received by the Stockholders pursuant
to the terms of the draft Agreement and Plan of Merger dated as of January 14,
1997 (the "Merger Agreement") by and among DENTSPLY International Inc.
("DENTSPLY"), Image Acquisition, Inc., a wholly owned, direct subsidiary of
DENTSPLY ("Subsidiary") and New Image. Pursuant to the Merger Agreement,
Subsidiary will offer to purchase all of the outstanding New Image Common Stock
in a tender offer (the "Tender Offer") and, following completion of the Tender
Offer, the Subsidiary will be merged (the "Merger") with and into New Image and
New Image will become a wholly owned subsidiary of DENTSPLY. The Tender Offer
and the Merger are collectively referred to herein as the "Acquisition".
Under the Merger Agreement, Subsidiary will offer to purchase all of the issued
and outstanding shares of New Image Common Stock in the Tender Offer for $2.00
per share in cash (the "Offer Consideration"). Upon consummation of the
Merger, any shares of New Image Common Stock not acquired in the Tender Offer
will be converted into the right to receive the Offer Consideration in the
Merger.
In arriving at our opinion, we have reviewed, among other things, the Merger
Agreement and certain business and financial information relating to New Image,
including certain financial projections, estimates and analyses provided to us
by New Image and certain business and financial information relating to
DENTSPLY. We have also reviewed and discussed the businesses and prospects of
New Image and its subsidiaries with representatives of New Image's management.
In arriving at our opinion, we have considered (a) certain financial and stock
market data relating to New Image and in certain cases have compared that
information to similar data for other publicly held companies in businesses
considered to be generally comparable to New Image, (b) certain publicly
available information concerning the nature and terms of certain transactions
2
New Image Industries, Inc.
January 20, 1997
Page 2
that Cleary Gull believed to be relevant on a comparative basis including the
acquisition of Insight Imaging Systems, Inc. by New Image effective May 17,
1996, (c) an unleveraged after-tax discounted cash flow analysis of New Image,
(d) the financial impact of the Acquisition on DENTSPLY's future earnings per
share, (e) a comparison of the purchase price premium to be paid for the New
Image Common Stock based on the Offer Consideration to certain other
similar-sized acquisitions, (f) a historical review of New Image's stock market
price, (g) the trading history of New Image, (h) a liquidation analysis of New
Image, (i) the financial and other conditions of New Image at the time of the
acceptance by New Image of DENTSPLY's offer, (j) the results of New Image's
efforts during FY96 and FY97 to arrange equity financing, (k) the results of
New Image's efforts to find a buyer and (l) such other information, financial
studies and analyses and financial, economic and market criteria as we deemed
relevant and appropriate.
In connection with our review, we have not independently verified any of the
foregoing information and have relied on its being complete and accurate in all
material respects. We have not made an independent evaluation or appraisal of
any assets or liabilities (contingent or otherwise) of New Image or any of
their respective subsidiaries, nor have we been furnished with any such
evaluation or appraisal that has not been publicly disclosed. With respect to
the financial plans, estimates and analyses provided to us by New Image, we
have assumed, with your permission, that all such information was reasonably
prepared on bases reflecting the best currently available estimates and
judgments of management of New Image as to future financial performance and was
based upon the historical performance of New Image and certain estimates and
assumptions which were reasonable at the time made. Our opinion is based on
economic, monetary and market conditions existing on the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Offer Consideration to be received by the Stockholders in the
Tender Offer and the subsequent Merger pursuant to the Merger Agreement is
fair, from a financial point of view, to the Stockholders.
We are acting as financial advisor to the Board of Directors of New Image in
this transaction and will receive a fee for our services, payable at the
mailing of the Offer to Purchase, the related Letter of Transmittal and other
materials. Our fee is not contingent upon the approval and consummation of the
Acquisition. In addition, New Image has agreed to indemnify us for certain
liabilities that may arise out of the rendering of this opinion. New Image has
also agreed to reimburse Cleary Gull for its reasonable and properly documented
expenses up to $15,000. Cleary Gull has not been engaged previously by New
Image to render financial advisory or investment banking services. However,
Cleary Gull has in the past provided and may in the future provide financial
3
New Image Industries, Inc.
January 20, 1997
Page 3
advisory and/or investment banking services to DENTSPLY and related entities.
The Board of Directors of New Image recognizes that in June 1994 Cleary Gull
was retained by DENTSPLY to explore a possible business combination with New
Image. Cleary Gull's engagement by DENTSPLY ended in September 1994 when
DENTSPLY and New Image were unable to agree on the terms of a business
combination. Since September 1994 and except for certain trading activities
relating to DENTSPLY common stock and options, Cleary Gull has not rendered any
financial advisory or investment banking services to DENTSPLY. Cleary Gull
provides research coverage on DENTSPLY and currently rates DENTSPLY a #1-Buy,
Cleary Gull's highest rating. In addition, in the ordinary course of business,
we may trade securities of New Image and DENTSPLY for our own account and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
This opinion is for the use and benefit of the Board of Directors of New Image
and is rendered to the Board of Directors of New Image in connection with its
consideration of the Acquisition. We are not making any recommendation
regarding whether or not it is advisable for Stockholders to tender their
shares of New Image Common Stock in the Tender Offer. We have not been
requested to opine as to, and our opinion does not in any manner address, New
Image's underlying business decision to proceed with or effect the Acquisition.
Very truly yours,
/s/ Cleary Gull Reiland & McDevitt Inc.
CLEARY GULL REILAND & McDEVITT INC.