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ANNEX A
LOGO
PERSONAL AND CONFIDENTIAL
May 31, 1996
Board of Directors
Univar Corporation
6100 Carillon Point
Kirkland, WA 98033
Members of the Board of Directors:
We understand that Royal Pakhoed N.V. ("Pakhoed") is contemplating the
acquisition of all of the outstanding shares of Common Stock of Univar
Corporation ("Univar" or the "Company") (the "Transaction"). The Transaction
will be effected in two steps, the first of which would be a tender offer (the
"Tender Offer") by UC Acquisition Corp. ("UC"), an indirect wholly-owned
subsidiary of Pakhoed, for all of the outstanding shares of Common Stock of the
Company (the "Shares") not currently owned by Pakhoed, UC or their affiliates,
pursuant to which shareholders of the Company other than Pakhoed, UC and their
affiliates would receive $19.45 net in cash in exchange for each Share tendered.
The Tender Offer must remain open for a period of at least 30 business days from
the date upon which the Tender Offer is first publicly announced. UC may extend
the expiration date of the Tender Offer to a date not later than July 31, 1996,
provided that UC may extend the expiration date of the Tender Offer to a date
not later than August 31, 1996 if (i) necessary Government Approvals (as defined
in the proposed Agreement and Plan of Reorganization among Pakhoed, UC and the
Company (the "Reorganization Agreement")) have not been obtained by July 31,
1996, or (ii) by July 26, 1996, less than 80% of the outstanding Shares have
been tendered pursuant to the Tender Offer. In the event the Tender Offer is
extended beyond July 31, 1996, the price per Share to be paid to shareholders of
the Company in the Tender Offer and the Merger (as defined below) shall be
increased by an amount equal to the product of (i) $19.45; (ii) the prime
interest rate as announced by Bank of America NW, N.A. (doing business as
Seafirst Bank) in Seattle, Washington as in effect on August 1, 1996; and (iii)
the quotient obtained by dividing (x) the number of days the Tender Offer is
extended through July 31, 1996 by (y) 365. The terms and conditions of the
Tender Offer are more fully described in the Reorganization Agreement.
Concurrent with the closing of the Tender Offer, the holder of each
outstanding option to purchase Shares which was not previously exercised would
receive in cash the positive difference, if any, between the highest price paid
to shareholders of the Company who tendered their Shares in the Tender Offer and
the exercise price per share of such option. Subsequent to the Tender Offer,
among other things, (i) the Company and UC would be merged and the surviving
corporation would be an indirectly wholly-owned subsidiary of Pakhoed (the
"Merger") and (ii) each remaining Share not owned by Pakhoed, UC or their
affiliates would be converted into the right to receive an amount in cash equal
to the highest price paid to shareholders of the Company who tendered their
Shares in the Tender Offer. The terms and conditions of the Merger are more
fully described in the Reorganization Agreement.
You have requested that Schroder, Wertheim & Co. Incorporated ("Schroder
Wertheim") render an opinion (the "Opinion"), as investment bankers, as to the
fairness, from a financial point of view, of the consideration to be received by
the shareholders of the Company other than Pakhoed, UC and their affiliates in
the Transaction (the "Transaction Consideration").
Schroder Wertheim, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Schroder Wertheim has acted
as financial advisor to Univar with respect to the Transaction for which we have
received fees and will receive additional fees, a portion of which is contingent
upon consummation of the Transaction.
In connection with the Opinion set forth herein, we have, among other
things:
i. reviewed a draft, dated May 30, 1996, of the Reorganization
Agreement;
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ii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-1 to be
filed by UC with the Securities and Exchange Commission in connection with
the Tender Offer, including a draft of the Offer to Purchase incorporated
therein by reference (the "Offer to Purchase");
iii. reviewed a draft, dated May 30, 1996, of the Schedule 14D-9 to be
filed by the Company with the Securities and Exchange Commission in
connection with the Tender Offer;
iv. reviewed the Company's Annual Reports on Form 10-K filed with the
Securities and Exchange Commission for the fiscal years ended February
1992, 1993, 1994, 1995 and 1996, including the audited consolidated
financial statements of Univar included therein;
v. reviewed historical financial results of Univar by operating
division prepared by management;
vi. reviewed forecasts and projections for Univar prepared or supplied
by Univar management for the fiscal years ending February 1997 through
2002;
vii. held discussions with Univar management regarding the business,
operations and prospects of the Company;
viii. performed various valuation analyses, as we deemed appropriate,
of Univar using generally accepted analytical methodologies, including: (i)
the application to the financial results of Univar of the public trading
multiples of companies which we deemed comparable; (ii) the application to
the financial results of Univar of the multiples reflected in recent
mergers and acquisitions for businesses which we deemed comparable; and
(iii) discounted cash flow and leveraged buyout analyses of Univar's
operations;
ix. reviewed the historical trading prices and volumes of Univar
Common Stock; and
x. performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering the Opinion, we have assumed and relied upon the accuracy and
completeness of all information supplied or otherwise made available to us by
Univar or obtained by us from other sources, and upon the assurance of Univar's
management that they are not aware of any information or facts that would make
the information provided to us incomplete or misleading. We have not
independently verified such information, undertaken an independent appraisal of
the assets or liabilities (contingent or otherwise) of Univar, or been furnished
with any such appraisals. With respect to financial forecasts for Univar, we
have been advised by Univar, and we have assumed, without independent
investigation, that they have been reasonably prepared and reflect the best
currently available estimates and judgment as to the expected future financial
performance of Univar.
The Opinion is necessarily based upon financial, economic, market and other
conditions as they exist, and the information made available to us, as of the
date hereof. We disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting the Opinion which may come or be
brought to our attention after the date of the Opinion unless specifically
requested to do so.
The Opinion does not constitute a recommendation as to any action the Board
of Directors of the Company or any shareholder of the Company should take in
connection with the Transaction or any aspect thereof. In rendering the Opinion,
we have not been engaged as an agent or fiduciary of the Company's shareholders
or of any other third party. The Opinion relates solely to the fairness from a
financial point of view of the Transaction Consideration to the shareholders of
Univar other than Pakhoed, UC and their affiliates. We express no opinion herein
as to the structure, terms or effect of any other aspect of the Transaction.
This letter is for the information of the Board of Directors of the Company
solely for its use in evaluating the fairness from a financial point of view of
the Transaction Consideration to the shareholders of the Company other than
Pakhoed, UC and their affiliates and may not be used for any other purpose or
referred to without our prior written consent.
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Transaction Consideration is
fair, from a financial point of view, to the shareholders of Univar other than
Pakhoed, UC and their affiliates.
Very truly yours
SCHRODER WERTHEIM & CO.
INCORPORATED
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