ANNEX 2
COMPASS PARTNERS INTERNATIONAL, L.L.C.
599 Lexington Avenue
38th Floor
New York, NY 10022
Tel. No.: (212) 702-9800
Fax No.: (212) 702-9587
July 2, 1997
Board of Directors
Duty Free International, Inc.
63 Copps Hill Road
Ridgefield, CT 06877
Members of the Board:
BAA plc ("Parent"), W&G Acquisition Corporation ("Sub"), a wholly owned
subsidiary of Parent, and Duty Free International, Inc. (the "Company") propose
to enter into an Agreement and Plan of Merger (the "Merger Agreement") pursuant
to which Sub will make a tender offer (the "Offer") for all the issued and
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
the Company and, subsequent to the consummation of the Offer, Sub will be merged
with and into the Company (the "Merger"). Each Share acquired pursuant to the
Offer will be purchased for, and each outstanding Share (other than Shares held
by Parent, Sub or any other subsidiary of Parent) will be converted at the
effective time of the Merger into the right to receive, cash consideration of
$24.00 per share. In connection with the Offer and the Merger, Parent and the
Company also propose to enter into an agreement (the "Stock Option Agreement")
pursuant to which the Company will grant to Parent an option to acquire up to
5,434,367 newly issued Shares, representing approximately 19.9% of the Shares
outstanding, upon the occurrence of certain events. In addition, Parent, Sub and
certain holders of shares propose to enter into an agreement (the "Shareholders'
Agreement") pursuant to which such holders will agree to take certain actions to
support the consummation of the Offer and the Merger.
You have requested our opinion as to the fairness, from a financial point
of view, of the cash consideration to be received by the holders of Shares in
the Offer and the Merger.
-2-
In arriving at our opinion, we have (a) reviewed certain publicly available
financial statements and other business and financial information relating to
the Company that we believe to be relevant to our inquiry, including the
Company's Forms 1 O-K for the three years ended January 31, 1997 and its Form I
O-Q for the fiscal quarter ended April 30, 1997; (b) reviewed certain financial
analyses, financial forecasts, reports and other information prepared by the
management of the Company; (c) conducted discussions with members of management
of the Company concerning the Company's historical and current operations,
financial condition and prospects and such other matters we deemed relevant; (d)
reviewed the historical financial information and stock price data of the
Company and compared such financial data with similar information for certain
other companies we deemed relevant; (e) reviewed the financial terms of the
Offer and the Merger and compared such financial terms with similar information
for other selected acquisitions we deemed relevant; (f) reviewed drafts dated
July 2, 1997 of the Merger Agreement, the Stock Option Agreement and the
Shareholders' Agreement; and (g) conducted such other studies, analyses and
investigations as we deemed appropriate.
In arriving at our opinion, we have, with your consent, assumed and relied
upon the accuracy and completeness of all information supplied or otherwise made
available to us or publicly available and have not assumed any responsibility
for the independent verification of any such information. In addition, we have
not assumed any obligation to conduct, nor have we conducted, any physical
inspection of the properties or assets of the Company. We have, with your
consent, assumed that the financial forecasts provided to us were reasonably
prepared by the Company's management on bases reflecting the best currently
available estimates and good faith judgments of such management as to the future
financial performance of the Company. We have not made or obtained any
independent evaluations, valuations or appraisals of the assets or liabilities
(contingent or otherwise) of the Company, nor have we been furnished with such
materials. Our opinion is necessarily based upon economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
Compass Partners International, L.L.C. is acting as exclusive financial
advisor to the Company in connection with the Offer and the Merger and will
receive a fee from the Company for our services.
-3-
It is understood that this letter is for the information of the Board of
Directors of the Company. Our opinion does not constitute a recommendation to
any holder of Shares as to whether such holder should tender any Shares pursuant
to the Offer or how such holder should vote on the Merger.
On the basis of, and subject to, the foregoing, we are of the opinion that,
as of the date hereof, the cash consideration to be received by the holders of
Shares in the Offer and the Merger is fair, from a financial point of view, to
such holders.
Very truly yours,
COMPASS PARTNERS INTERNATIONAL, L.L.C.
The shares represented by this proxy will be voted as directed
by the stockholder. Where no voting instructions are
given, the shares represented by this Proxy will be voted FOR Item 1.
X Please Mark
your votes as this
Item 1-Approve the Merger Agreement as FOR AGAINST ABSTAIN
described in the Company's Proxy / / / / / /
Statement. The Board of Directors
unanimously recommends a vote FOR
the Merger Agreement.
Item 2-In the discretion of the Board of Directors, upon such other business as
may be properly brought before the Special Meeting or any postponement or
adjournment thereof.
If you plan to attend the / /
Special Meeting, please check
this box
COMMENTS/ADDRESS CHANGE / /
Please mark this box if you have
written comments/address change
on the reverse side.
Receipts is hereby acknowledged of the Notice of
Special Meeting and Proxy Statement of Duty Free International, Inc.
Signature(s)_________________________________________________________________
Date ______________________ Please mark, date and sign as your name appears
opposite and return it in the enclosed envelope. If acting as executor,
administrator, trustee, guardian, etc. you should so indicate when signing. If
the signer is a corporation, please sign full corporate name.
DUTY FREE INTERNATIONAL, INC.
63 Copps Hill Road
Ridgefield, Connecticut 06877
Proxy for Special Meeting of Stockholders
September 2, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints [ ] and [ ], jointly and
severally, proxies for the undersigned with full power of substitution,
and hereby authorizes them to represent and to vote, in accordance with
the instructions on the reverse side of this card, all shares of the
common stock par value $.01 per share (the "Shares") of Duty Free
International, Inc. the undersigned is entitled to vote at the Special
Meeting of Stockholders to be held on [September 2], 1997 at 63 Copps
Hill Road, Ridgefield, Connecticut 06877, commencing at [10 a.m.],
Eastern Daylight Time, or at any postponement or adjournment thereof.
The proxies may vote in their discretion upon such other business as
may properly be brought before the meeting or any postponement or
adjournment thereof.
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COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on the reverse side)