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EXHIBIT (a)(18)
LEHMAN BROTHERS
February 4, 1998
COHR Inc.
Board of Directors
21540 Plummer Street
Chatsworth, California 91311
Members of the Board:
We understand that Three Cities Research, Inc. ("TCR") has entered into
an agreement to initiate an unconditional tender offer for any and all of the
outstanding shares of the common stock of COHR Inc. (the "Company") for $6.50
per share in cash (the "Proposed Transaction"). The terms and conditions of the
Proposed Transaction are set forth in more detail in the Plan and Agreement of
Merger dated as of December 24, 1998, as amended and restated, as of February 4,
1999 between COHR Inc. and TCF Acquisition Corporation, a wholly owned
subsidiary of TCR (the "Agreement"). TCR currently owns approximately 48.3% of
the Company's outstanding common stock.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of view,
to the Company's stockholders (other than TCR or its affiliates) (the "Public
Stockholders") of the consideration to be offered to the Public Stockholders in
the Proposed Transaction. We have not been requested to opine as to, and our
opinion does not in any manner address, the Company's underlying business
decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) a draft copy
of the Agreement and the specific terms of the Proposed Transaction, (2)
publicly available information concerning the Company that we believe to be
relevant to our analysis, including its Annual Report on Form 10-K for the
fiscal year ended March 31, 1998 and its Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1998 and September 30, 1998, (3) financial and operating
information with respect to the business, operations and prospects of the
Company furnished to us by the Company, including without limitation current
projections prepared by management of the Company and information regarding
recent financial performance of the Company (4) a trading history of the
Company's common stock from December 16, 1996 to the present and a comparison of
that trading history with those of other companies that we deemed relevant, (5)
a comparison of the historical financial results and present financial condition
of the Company with those of other companies that we deemed relevant, (6) a
comparison of the financial terms of the Proposed Transaction with the financial
terms of certain other transactions that we deemed relevant and (7) the results
of our prior efforts to solicit indications of interest from third parties with
respect to a purchase of the Company. In addition, we have had discussions with
the management of the Company concerning its business, operations, assets,
financial condition and prospects and have undertaken such other studies,
analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of the
Company that they are not aware of any facts or circumstances that would make
such information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company we have assumed that such
projections have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the management of the Company as
to the future financial performance of the Company, and that the Company will
perform substantially in accordance with such projections. In arriving at our
opinion, we have conducted only a limited physical inspection of the properties
and facilities of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company. In addition, since the
initiation of discussions with TCR, you have not authorized us to solicit, and
we have not solicited, any indications of interest from any third party with
respect to the purchase
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of all or a part of the Company's business. However, in arriving at our opinion,
we have considered an unsolicited proposal received from a third party and
analyzed the terms of such proposal and the risks of such third party being
unable or unwilling to proceed with a proposed acquisition on terms acceptable
to the Company. Our opinion necessarily is based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
Based upon and subject to the foregoing, we are of the opinion as of
the date hereof that, from a financial point of view, the consideration to be
offered to the Public Stockholders in the Proposed Transaction is fair to the
Public stockholders.
We have acted as financial advisor to the Company in connection with
the Proposed Transaction and will receive a fee for our services which is
contingent upon the consummation of the Proposed Transaction. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion. We also have performed various investment banking
services for the Company in the past and have received customary fees for such
services.
This opinion is for the use and benefit of the Board of Directors of
the Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as to
whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
LEHMAN BROTHERS