Exhibit 10
June 16, 1997
The Board of Directors
The Multicare Companies, Inc.
411 Hackensack Avenue
Hackensack, NJ 07601
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of the common stock of The Multicare Companies, Inc.
("Multicare") of the consideration to be received by such holders pursuant to
the terms and subject to the conditions set forth in the Agreement and Plan of
Merger, dated as of June 16, 1997 (the "Merger Agreement"), by and among Genesis
ElderCare Corp. ("GEC"), Genesis ElderCare Acquisition Corp., a wholly owned
subsidiary of GEC ("Merger Sub"), and Multicare. As more fully described in the
Merger Agreement, (i) GEC will cause Merger Sub to commence a tender offer to
purchase all outstanding shares of the common stock, par value $0.01 per share,
of Multicare (the "Multicare Common Stock") at a purchase price of $28.00 per
share, net to the seller in cash (the "Tender Offer") and (ii) subsequent to the
Tender Offer, Merger Sub will be merged with and into Multicare (the "Merger"
and, together with the Tender Offer, the "Transaction") and each outstanding
share of Multicare Common Stock not previously tendered will be converted into
the right to receive $28.00 in cash.
In arriving at our opinion, we reviewed the Merger Agreement and held
discussions with certain senior officers, directors and other representatives
and advisors of Multicare and certain senior officers and other representatives
of GEC concerning the business, operations and prospects of Multicare. We
examined certain publicly available business and financial information relating
to Multicare as well as certain financial forecasts and other information and
data for Multicare which were provided to or otherwise discussed with us by the
management of Multicare. We reviewed the financial terms of the Transaction as
set forth in the Merger Agreement in relation to, among other things: current
and historical market prices and trading volumes of Multicare Common Stock; the
historical and projected earnings and other operating data of Multicare; and the
capitalization and financial condition of Multicare. We considered, to the
extent publicly available, the financial terms of similar transactions recently
effected which we considered relevant in evaluating the Transaction and analyzed
certain financial, stock market and other publicly available information
relating to the businesses of other companies whose operations we considered
relevant in evaluating those of Multicare. In connection with our engagement, we
were requested to approach, and held discussions with, third parties to solicit
indications of interest in a possible acquisition of Multicare. In addition to
the foregoing, we conducted such other analyses and examinations and considered
such other financial, economic and market criteria as we deemed appropriate in
arriving at our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us. With respect to financial forecasts and other information
and data provided to or otherwise reviewed by or discussed with us, we have been
advised by the management of Multicare that such forecasts and other information
and data were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of Multicare as to the
future financial performance of Multicare. We have not made or
The Board of Directors
The Multicare Companies, Inc.
June 16, 1997
Page 2
been provided with an independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of Multicare nor have we made any physical
inspection of the properties or assets of Multicare. Our opinion is necessarily
based upon information available to us, and financial, stock market and other
conditions and circumstances existing and disclosed to us, as of the date
hereof.
Smith Barney has been engaged to render financial advisory services to Multicare
in connection with the proposed Transaction and will receive a fee for such
services, a significant portion of which is contingent upon the consummation of
the Transaction. We also will receive a fee upon the delivery of this opinion.
In the ordinary course of our business, we and our affiliates may actively trade
or hold the securities of Multicare and certain affiliates of GEC for our own
account or for the account of our customers and, accordingly, may at any time
hold a long or short position in such securities. We have in the past provided
investment banking services to Multicare unrelated to the proposed Transaction,
for which services we have received compensation. In addition, we and our
affiliates (including Travelers Group Inc. and its affiliates) may maintain
relationships with Multicare, GEC and their respective affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of Multicare in its evaluation of the
proposed Transaction, and our opinion is not intended to be and does not
constitute a recommendation to any stockholder as to whether or not such
stockholder should tender shares of Multicare Common Stock in the Tender Offer
or how such stockholder should vote on the proposed Merger. Our opinion may not
be published or otherwise used or referred to, nor shall any public reference to
Smith Barney be made, without our prior written consent; provided that this
opinion letter may be included in its entirety in the
Solicitation/Recommendation Statement of Multicare relating to the proposed
Transaction.
Based upon and subject to the foregoing, our experience as investment bankers,
our work as described above and other factors we deemed relevant, we are of the
opinion that, as of the date hereof, the cash consideration to be received by
the holders of Multicare Common Stock (other than GEC and its affiliates) in the
Transaction is fair, from a financial point of view, to such holders.
Very truly yours,
SMITH BARNEY INC.