-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FY/ZjPPViuikAaNMdiv89ra5zWi40e9FpvopmBXFtbxW6SeEcnb+q1wZE9DwPcrG HoRXmi820zGrOiS0sWWN9A== 0000928385-01-500924.txt : 20010518 0000928385-01-500924.hdr.sgml : 20010518 ACCESSION NUMBER: 0000928385-01-500924 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010517 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SODEXHO MARRIOTT SERVICES INC CENTRAL INDEX KEY: 0000905036 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 520936594 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-42819 FILM NUMBER: 1642767 BUSINESS ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 BUSINESS PHONE: 3019474431 MAIL ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 FORMER COMPANY: FORMER CONFORMED NAME: MARRIOTT INTERNATIONAL INC DATE OF NAME CHANGE: 19930517 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SODEXHO MARRIOTT SERVICES INC CENTRAL INDEX KEY: 0000905036 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 520936594 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 BUSINESS PHONE: 3019474431 MAIL ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 FORMER COMPANY: FORMER CONFORMED NAME: MARRIOTT INTERNATIONAL INC DATE OF NAME CHANGE: 19930517 SC 13E3 1 dsc13e3.txt SCHEDULE 13E-3 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ SCHEDULE 13E-3 RULE 13e-3 TRANSACTION STATEMENT (Pursuant to Section 13(e) of the Securities Exchange Act of 1934) SODEXHO MARRIOTT SERVICES, INC. (Name of Issuer) SODEXHO MARRIOTT SERVICES, INC. (Name of Person(s) Filing Statement) Common Stock, $1.00 par value Rights to purchase Series A Junior Participating Preferred Stock (Title of Class of Securities) 833793 10 2 (CUSIP Number of Class of Securities) _________________ Robert A. Stern, Esq. Senior Vice President and General Counsel Sodexho Marriott Services, Inc. 9801 Washingtonian Boulevard Gaithersburg, MD 20878 (301) 987-4000 (Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications on Behalf of Persons Filing Statement) _________________ Copies to: Howard I. Flack, Esq. Thomas H. McCormick, Esq. Joseph G. Connolly, Jr., Esq. Thomas J. Plotz, Esq. Hogan & Hartson, L.L.P. Shaw Pittman 555 13th Street, N.W. 2300 N Street, N.W. Washington, D.C. 20004 Washington, D.C. 20037 (202) 637-5600 (202) 663-8000 This statement is filed in connection with (check the appropriate box): a. [ ] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities Exchange Act of 1934. b. [ ] The filing of a registration statement under the Securities Act of 1933. c. [X] A tender offer. d. [ ] None of the above. Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [ ] Check the following box if the filing is a final amendment reporting the results of the transaction: [ ] Calculation of Filing Fee - -------------------------------------------------------------------------------- Transaction Valuation (1) Amount of Filing Fee (2) $1,172,701,536 $234,541 - -------------------------------------------------------------------------------- (1) Estimated for the purposes of calculating the amount of the filing fee only. This calculation assumes the purchase of 36,646,923 shares of Common Stock, par value $1.00 per share (the "Shares" or the "Common Stock"), of Sodexho Marriott Services, Inc., at a purchase price of $32.00 per Share net in cash. Such number of Shares represents the 63,723,383 Shares outstanding and exercisable options to purchase 2,873,465 Shares, in each case, as of May 11, 2001, less the 29,949,925 Shares already beneficially owned by Sodexho Alliance, S.A. (2) The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the value of the transaction. [X] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: $234,541 Form or Registration No.: Schedule TO Filing Party Sodexho Alliance, S.A. Date Filed: May 17, 2001 ================================================================================ This Rule 13e-3 Transaction Statement on Schedule 13E-3 (this "Schedule 13E-3") is filed by Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"). The filing person is the subject company. The Schedule 13E-3 relates to the tender offer by SMS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"), to purchase any and all of the outstanding shares of SMS Common Stock, $1.00 par value per share, along with their associated rights to purchase Series A Junior Participating Preferred Stock of SMS (the "Shares") at a purchase price of $32.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase, dated May 17, 2001 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). This Schedule 13E-3 also relates to an Agreement and Plan of Merger dated as of May 1, 2001 among SMS, Sodexho and the Purchaser (the "Merger Agreement"). The Merger Agreement provides that, subject to the satisfaction or waiver of certain conditions, following completion of the Offer, and in accordance with the Delaware General Corporation Law (the "DGCL"), the Purchaser will be merged with and into SMS (the "Merger"). Following the consummation of the Merger, SMS will continue as the surviving corporation and will be a direct wholly-owned subsidiary of Sodexho. At the effective time of the Merger (the "Effective Time"), each issued and outstanding Share (other than Shares owned by SMS, Sodexho, Purchaser or any other subsidiary of Sodexho, which Shares shall be canceled and retired, and Shares held by stockholders who properly exercise their appraisal rights in accordance with all of the relevant provisions of Section 262 of the DGCL) will be converted into the right to receive $32.00 in cash or any greater amount per share paid pursuant to the Offer (the "Merger Consideration"). Concurrently with the filing of this Schedule 13E-3, SMS is filing a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") and Sodexho is filing a Tender Offer Statement on Schedule TO (the "Schedule TO"). A copy of the Schedule 14D-9 is attached hereto as Exhibit (a)(1), a copy of the Offer to Purchase is attached as Exhibit (a)(1) to the Schedule TO and a copy of the Merger Agreement is attached as Annex A to the Offer to Purchase. All references in this Schedule 13E-3 to Items numbered 1001 through 1016 are references to Items contained in Regulation M-A under the Securities Exchange Act of 1934, as amended. Certain sections contained in the Schedule 14D-9 and Offer to Purchase, which sections are expressly listed below, are hereby expressly incorporated herein by reference. All information in, or incorporated by reference in, this Schedule 13E-3 concerning SMS has been supplied by SMS and all information concerning Sodexho and the Purchaser has been supplied by Sodexho. Item 1. Summary Term Sheet. Item 1001 The information contained in the section of the Offer to Purchase entitled "Summary Term Sheet" is hereby incorporated herein by reference. Item 2. Subject Company Information. Item 1002 (a)-(b) The information contained in the section of the Schedule 14D-9 entitled "Item 1. Subject Company Information" is hereby incorporated herein by reference. (c)-(d) The information contained in the section of the Offer to Purchase entitled "The Offer - Price Range of Shares; Dividends" is hereby incorporated herein by reference. (e) SMS has not made any underwritten public offering of Shares during the past three years. (f) SMS has not purchased any Shares during the past two years. Item 3. Identity and Background of Filing Person. Item 1003 (a), (c) The information contained in the section of the Schedule 14D-9 entitled "Item 1. Subject Company Information" and in Annex A attached hereto is hereby incorporated herein by reference. (b) Not applicable. Item 4. Terms of the Transaction. Item 1004 (a)(1) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet," "The Offer - Terms of the Offer; Expiration Date," "The Offer - Extension of Tender Period; Termination; Amendment; Subsequent Offering Period," "The Offer -Acceptance for Payment and Payment," "The Offer - Procedure for Tendering Shares," "The Offer - Withdrawal Rights," "The Offer -Certain United States Federal Income Tax Consequences" and "The Offer- Effect of the Offer on the Market for the Shares; Stock Exchange Listing(s); Registration under the Exchange Act" is hereby incorporated herein by reference. (a)(2) Not applicable. (c) Not applicable. (d) The information contained in the section of the Schedule 14D-9 entitled "Item 8. Additional Information - (b) Delaware General Corporation Law" is hereby incorporated herein by reference. (e) The information contained in the section of the Offer to Purchase entitled "The Offer - Certain Legal Matters; Regulatory Approvals" is hereby incorporated herein by reference. (f) Not applicable. Item 5. Past Contacts, Transactions, Negotiations and Agreements. Item 1005 (a)(1),(2) The information contained in sections of the Schedule 14D-9 entitled "Item 3. Past Contacts, Transactions, Negotiations and Agreements" and "Annex B - Information Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 Thereunder" is hereby incorporated herein by reference. (b), (c) The information contained in the sections of the Schedule 14D-9 entitled "Item 2. Identity and Background of Filing Person," "Item 3. Past Contacts, Transactions, Negotiations and Agreements," "Item 4. The Solicitation or Recommendation" and "Item 5. Persons/Assets Retained, Employed, Compensated or Used" is hereby incorporated herein by reference. (e) The information contained in the sections of the Schedule 14D-9 entitled "Item 3. Past Contacts, Transactions, Negotiations and Agreements," "Item 4. The Solicitation or Recommendation" and "Annex B - Information Statement Pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 Thereunder" is hereby incorporated herein by reference. Item 6. Purposes of the Transaction and Plans or Proposals. Item 1006 (b) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Special Factors - Purpose and Structure of the Offer and the Merger; Reasons of Sodexho for the Offer and the Merger," "Special Factors - Plans for SMS After the Offer and the Merger; Certain Effects of the Offer" and "Special Factors - The Merger Agreement" is hereby incorporated herein by reference. (c)(1)-(8) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Special Factors - Purpose and Structure of the Offer and the Merger; Reasons of Sodexho for the Offer and the Merger," "Special Factors - Plans for SMS After the Offer and the Merger; Certain Effects of the Offer," "Special Factors - The Merger Agreement," "The Offer - Effect of the Offer on the Market for the Shares; Stock Exchange Listing(s); Registration under the Exchange Act" and "The Offer - Dividends and Distributions" is hereby incorporated herein by reference. Item 7. Purposes, Alternatives, Reasons and Effects. Item 1013 (a)-(c) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," and "Special Factors -Purpose and Structure of the Offer and the Merger; Reasons of Sodexho for the Offer and the Merger" is hereby incorporated herein by reference. (d) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Special Factors - Plans for SMS After the Offer and the Merger; Certain Effects of the Offer," "Special Factors - The Merger Agreement," "Special Factors - Appraisal Rights," "Special Factors - Interests of Certain Persons in the Offer and the Merger," "The Offer -Certain United States Federal Income Tax Consequences," "The Offer - Effect of the Offer on the Market for the Shares; Stock Exchange Listing(s); Registration under the Exchange Act" and "The Offer - Dividends and Distributions" is hereby incorporated herein by reference. Item 8. Fairness of the Transaction. Item 1014 (a), (b) The information contained in the section of the Schedule 14D-9 entitled "Item 4. The Solicitation or Recommendation" and in the sections of the Offer to Purchase entitled "Summary Term Sheet," "Introduction," "Special Factors - Background of the Offer" and "Special Factors -Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger" is hereby incorporated herein by reference. (c) Under the terms of the Merger Agreement, the transaction does not require approval of at least a majority of unaffiliated security holders. (d) The information contained in the section of the Schedule 14D-9 entitled "Item 4. The Solicitation or Recommendation" is hereby incorporated herein by reference. No unaffiliated representative was retained to act on behalf of the unaffiliated security holders for purposes of negotiating the terms of the Rule 13e-3 transaction. (e) The information contained in the section of the Schedule 14D-9 entitled "Item 4. The Solicitation or Recommendation" is hereby incorporated herein by reference. (f) No other firm offers to acquire SMS were received during the past two years. Item 9. Reports, Opinions, Appraisals and Negotiations. Item 1015 (a)-(c) The information contained in the sections of the Schedule 14D-9 entitled "Item 4. The Solicitation or Recommendation," "Item 5. Persons/Assets Retained, Employed, Compensated or Used" and in Annex A to the Schedule 14D-9 and in the sections of the Offer to Purchase entitled "Special Factors - Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger" and "Special Factors - Opinion of Financial Advisor" is hereby incorporated herein by reference. Item 10. Source and Amounts of Funds or Other Consideration. Item 1007 (a), (b) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet" and "The Offer - Source and Amount of Funds" is hereby incorporated herein by reference. (c) The information contained in the section of the Offer to Purchase entitled "The Offer - Fees and Expenses" is incorporated herein by reference. (d)(1),(2) The information contained in the sections of the Offer to Purchase entitled "Summary Term Sheet" and "The Offer - Source and Amount of Funds" is hereby incorporated herein by reference. Item 11. Interest in Securities of the Subject Company. Item 1008 (a) The information contained in Schedule II of the Schedule 14D-9 is hereby incorporated herein by reference. (b) The information contained in the section of the Schedule 14D-9 entitled "Item 6. Interest in Securities of the Subject Company" and in Schedule III of the Schedule 14D-9 is hereby incorporated herein by reference. Item 12. The Solicitation or Recommendation. Item 1012 (d), (e) The information contained in the section of the Schedule 14D-9 entitled "Item 4. The Solicitation or Recommendation" is hereby incorporated herein by reference. Item 13. Financial Statements. Item 1010 (a) The information contained in the section of the Offer to Purchase entitled "The Offer - Certain Information Concerning SMS" is hereby incorporated herein by reference. In addition, SMS's Consolidated Financial Statements on pages 25-50 of SMS's Annual Report on Form 10-K for the fiscal year ended September 30, 2000, is hereby incorporated herein by reference. (b) Not applicable. Item 14. Persons/Assets, Retained, Employed, Compensated or Used. Item 1009 (a), (b) The information contained in the section of the Schedule 14D-9 entitled "Item 5. Persons/Assets Retained, Employed, Compensated or Used" is hereby incorporated herein by reference. Item 15. Additional Information. Item 1011 (b) The information contained in the Schedule 14D-9, including all exhibits, schedules and annexes thereto, is hereby incorporated herein by reference. Item 16. Exhibits.
Exhibit No. Description - ------- ----------- (a)(1) SMS Solicitation/Recommendation Statement on Schedule 14D-9, filed with the Securities and Exchange Commission (the "SEC") on May 17, 2001 (incorporated by reference herein). (a)(2) Letter to the stockholders of SMS, dated May 17, 2001 (incorporated by reference to Exhibit (a)(1) to the Schedule 14D-9 filed by SMS with the SEC on May 17, 2001). (a)(3) Offer to Purchase, dated May 17, 2001 (incorporated by reference to Exhibit (a)(1) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(4) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(5) Press Release issued by SMS on May 2, 2001 (incorporated by reference to press release under cover of Schedule 14D-9C filed by SMS with the SEC on May 2, 2001). (a)(6) Press Release issued by Sodexho on May 2, 2001 (incorporated by reference to press release under cover of Schedule TO-C filed by Sodexho with the SEC on May 2, 2001) (a)(7) Notice of Guaranteed Delivery (incorporated by reference to Exhibit (a)(3) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(8) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(4) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(9) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(5) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(10) Letter to Participants in SMS's Employee Stock Purchase Plan (incorporated by reference to Exhibit (a)(6) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(11) Letter to holders of old Marriott International, Inc. certificates (incorporated by reference to Exhibit (a)(7) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(12) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (incorporated by reference to Exhibit (a)(8) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(13) Summary advertisement dated May 17, 2001 (incorporated by reference to Exhibit (a)(9) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(14) Complaint of Barry Feldman against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(11) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(15) Complaint of Arthur Bieler against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(12) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(16) Complaint of John McMullen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(13) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(17) Complaint of Margaret Alessi, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(14) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(18) Complaint of Sylvia Piven, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(15) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(19) Complaint of Audrey Goldberg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(16) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(20) Complaint of Gary Remmen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(17) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(21) Complaint of Neil Berg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(18) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(22) Complaint of C. Oliver Burt against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(19) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(23) SMS's Consolidated Financial Statements on pages 25-50 of SMS's Annual Report on Form 10-K for the fiscal year ended September 1, 2000 filed with the SEC on November 13, 2000 (incorporated by reference herein). (c)(1) Opinion of UBS Warburg, dated as of May 1, 2001 (incorporated by reference to Annex A of the Schedule 14D-9 filed by SMS with the SEC on May 17, 2001). (c)(2) Presentation of representatives of UBS Warburg to the Special Committee of the Board of Directors dated May 1, 2001. (d)(1) Agreement and Plan of Merger, dated as of May 1, 2001, among Sodexho, the Purchaser and SMS (included as Annex A of the Offer to Purchase, which is incorporated by reference to Exhibit (a)(1) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(2) Tax Sharing and Indemnification Agreement dated as of March 27, 1998, by and among, Marriott International, Inc., New Marriott, Inc. and Sodexho (incorporated by reference to Exhibit 9 of Amendment No. 1 to Sodexho's Schedule 13D filed with the SEC on April 15, 1998). (d)(3) Royalty Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated by reference to Exhibit 10.19 of SMS's Form 10-K/A filed with the SEC on April 30, 1998). (d)(4) Stockholder Agreement dated as of March 27, 1998 between SMS and Sodexho (incorporated by reference to Exhibit 3 of Sodexho's Schedule 13D filed with the SEC on April 6, 1998). (d)(5) Assistance Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated by reference to Exhibit (d)(5) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(6) Sodexho Guaranty dated as of March 27, 1998 from Sodexho as Guarantor in favor of the Lender Parties referred to in the Credit Agreement referred to therein (incorporated by reference to Exhibit (d)(6) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(7) Guaranty fee letter dated as of March 27, 1998 between Sodexho and SMS (incorporated by reference to Exhibit (d)(7) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(8) Confidentiality Agreement dated as of April 5, 2001 between Sodexho and SMS (incorporated by reference to Exhibit (d)(8) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (f) Section 262 of the Delaware General Corporation Law (included as Annex C of the Offer to Purchase). (g) None.
Annex A CURRENT SMS BOARD AND EXECUTIVE OFFICERS The SMS Board currently consists of eight members and SMS currently has fourteen executive officers. The name, age, citizenship, present principal occupation or employment and five-year employment history of each individual who is a director or executive officer of SMS is set forth below. None of the directors and officers of SMS listed below has, during the past five years, (i) been convicted in a criminal proceeding or (ii) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Unless otherwise indicated, the business address of each such person is c/o Sodexho Marriott Services, Inc., 9801 Washingtonian Boulevard, Gaithersburg, Maryland 20878. Unless otherwise indicated, each person listed below is a citizen of United States. William J. Shaw, age 55, has served as Chairman of the SMS Board since March 27, 1998. Mr. Shaw has served as President and Chief Operating Officer of Marriott International, Inc. ("Marriott International") since March 31, 1997, (including service in the same capacity with SMS's predecessor until March 1998). Mr. Shaw joined Marriott Corporation in 1974, was elected Corporate Controller in 1979 and a Vice President in 1982. In 1986, Mr. Shaw was elected Senior Vice President - Finance and Treasurer of Marriott Corporation. He was elected Executive Vice President of Marriott Corporation and promoted to Chief Financial Officer in April 1988. In February 1992, he was elected President of the Marriott Service Group, which then included Marriott International's Contract Service Group. Mr. Shaw was elected Executive Vice President and President - Marriott Service Group in October 1993. Mr. Shaw serves on the Board of Marriott International. He also serves as a trustee of the University of Notre Dame and the Suburban Hospital Foundation. Daniel J. Altobello, age 60, has served as a director of SMS since March 27, 1998. Since October 1, 2000, Mr. Altobello has been a private investor and active board member of several companies. From September 1995 until October 2000, Mr. Altobello was the Chairman of Onex Food Services, Inc., the parent corporation of Caterair International, Inc. and LSG/SKY Chefs, and the largest airline catering company in the world. From 1989 to 1995, Mr. Altobello served as Chairman, President and Chief Executive Officer of Caterair International Corporation. From 1979 to 1989, he held various managerial positions with the food service management and in-flight catering divisions of Marriott Corporation, including Executive Vice President of Marriott Corporation and President, Marriott Airport Operations Group. Mr. Altobello began his management career at Georgetown University, including service as Vice President, Administration Services. He is a member of the Board of Directors of American Management Systems, Inc., Colorado Prime Foods, Care First, Inc. of which he is non-executive chairman, Care First of Maryland, Inc., MESA Air Group, World Airways, Inc., First Union Realty Trust, Atlantic Aviation Holdings, Friedman, Billings and Ramsey Group, Inc., an advisory director of Thayer Capital Partners, and a trustee of Loyola Foundation, Inc., Mt. Holyoke College, Suburban Hospital Foundation, Inc. and the Woodstock Theological Center at Georgetown University. Pierre Bellon, age 71, has served as a director of SMS since March 27, 1998. Mr. Bellon is Chairman and Chief Executive Officer of Sodexho, a worldwide food and management services company, which he founded in 1966 and which has been listed on the Paris Bourse since 1983. In addition, he is Vice Chairman of the Mouvement des Entreprises de France (Confederation of French Industries and Services), Conseil National du Patronat Francais (Confederation of French Industries and Services), and from 1969-1979 was a member of the Conseil Economique et Social (Social and Economic Council) in France. Mr. Bellon also serves as a director of L'Air Liquide (an industrial gas company). Mr. Bellon is a citizen of France. Bernard Carton, age 67, has served as a director of SMS since March 27, 1998. Mr. Carton is Senior Vice President and Chief Financial Officer of Sodexho, a position he has held since he joined Sodexho in 1975. Prior to joining Sodexho, Mr. Carton held positions with several French and American companies, including Manpower, Inc. (Vice President, Finance for European Operations 1970-1975), Control Data Corporation (Vice President, Finance European countries 1962-1970) and General Electric Company (Engineer 1960-1962). Mr. Carton is a citizen of France. Edouard de Royere, age 68, has served as a director of SMS since March 27, 1998. Mr. de Royere is a director and Honorary Chairman of L'Air Liquide since 1997, and its former Chairman and Chief Executive Officer, a position he held from 1985 until his retirement in 1995. Prior to such time, Mr. de Royere served in various capacities at L'Air Liquide, including Vice President (1982-1985), Assistant Vice President (1980-1982), Assistant to the Chief Executive Officer (1979) and General Counsel and Company Secretary (1967-1979). Mr. de Royere also serves as a director of Sodexho (a food management company), L'Oreal S.A. (a beauty and personal care company), Groupe Danone (a food and beverage company) and Solvay S.A. (a chemical and pharmaceutical company). Mr. de Royere is a citizen of France. Michel Landel, age 49, has served as President, Chief Executive Officer, and a member of the SMS Board since May 3, 1999. Mr. Landel joined Sodexho in 1984 as Chief Operating Manager for Eastern Africa, Libya and Algeria. He was promoted to President of Remote Site operations in Africa in 1986, where he served until his move to Sodexho's North American Operations. Mr. Landel served as President and Chief Executive Officer of Sodexho North America from 1989 to March 27, 1998. He was appointed an Executive Vice President of SMS as of March 27, 1998 and was also appointed President, Corporate Services, on June 16, 1998. From 1980 to 1984, Mr. Landel served as General Manager for the Poliet Group in France, a manufacturer and distributor of building materials. He began his career with Chase Manhattan Bank in France. At Chase, he worked within the accounting and control department for Europe, then started the company's Ivory Coast operations, becoming the first country operations manager for Chase. Mr. Landel is a citizen of France. John W. Marriott III, age 40, has served as a director of SMS since March 27, 1998. In March 2000, Mr. Marriott was named Executive Vice President, Sales and Marketing of Marriott International. From 1996 to March 2000, Mr. Marriott was the Senior Vice President of Marriott International's Mid-Atlantic Region in the Hotel Division. Mr. Marriott joined Marriott Corporation in 1986 as a Sales Manager and subsequently served as a Restaurant Manager and then a director of Food and Beverage. In 1989, Mr. Marriott served as Executive Assistant to the Chairman, J. W. Marriott, Jr., who is his father. He has also held positions as Director of Financial Planning, Hotel Director of Marketing, General Manager of the Crystal City Marriott, Director of Finance in Marriott International's Treasury Department, Director of Finance and Development at Host Marriott Corporation, and Vice President, Lodging Development for the Ritz-Carlton hotel brand. Since 1993, Mr. Marriott has been the Chief Executive Officer and President of JWM Family Enterprises, L.P., a partnership focused on hotel acquisitions and operations. Mr. Marriott is also a Director of Crestline Capital Corporation. Mary S. Metz, age 64, has served as a director of SMS since October 17, 2000, replacing Doctor R. Crants for the balance of his term. Since January 1999, Dr. Metz has been the President of the S.H. Cowell Foundation, having served on the Cowell Board of Directors since 1991. Dr. Metz is Dean Emeritus of University Extension, University of California at Berkeley after holding the title of Dean of University Extension, University of California at Berkeley from 1991 to 1998. Dr. Metz was President of Mills College in Oakland, California from 1981 until 1990. Dr. Metz is a member of the board of directors of Union BanCal, SBC Communications, Inc., Pacific Gas and Electric Corporation, Long's Drugstores, the S.H. Cowell Foundation, and the American Conservatory Theater. Stephen J. Brady, age 56, has served as Senior Vice President, Corporate Communications of SMS since March 1998. He previously served as Vice President of Marketing and Communications for Sodexho, USA, Inc. from February 1989 to March 1998. Rodney Bond, age 52, has served as President of SMS's School Services division since January 2001. He previously served as Senior Vice President of SMS's School Services division from 1990 to 2001. John M. Bush, age 46, has served as Senior Vice President and Chief Financial Officer of SMS since February 2000. He previously served as Senior Vice President, Finance and Planning for the Higher Education division of SMS since 1995. Mr. Bush began his career with SMS in 1976 as a Food Service Manager in the Higher Education division and became regional controller in 1989. William W. Hamman, age 60, has served as President, Education Services of SMS since March 1998 and has served as an Executive Vice President of SMS since May 1999. He previously served as President of the Marriott Education Services division of Marriott International, Inc. since 1990. Garry C. Knox, age 58, has served as President, Canada division of SMS since 1996. Ollie Lawrence, Jr., age 49, has served as Senior Vice President, Human Resources of SMS since April 2000. From 1996 to 1998, Mr. Lawrence served as Senior Vice President for Sodexho USA, Inc. and in 1998 he also founded his own company, "b michael" of New York City, New York were he served as President and CEO, until joining SMS in 2000. From 1978 to 1996, he served as Vice President, Human Resources for U.S. Airways, Inc., located in Arlington, Virginia. Richard Macedonia, age 57, has served as President, Health Care Services of SMS since March 2001. He previously served as the Eastern Division Vice President of Health Care Services of SMS since 1998. He also served as Senior Vice President, Business Development - Health Care Services of SMS from 1995 to 1998. Thomas M. Mulligan, age 49, has served as President, Corporate Services of SMS since May 1999. He previously served as Senior Vice President of the New England Corporate Services operations of SMS from 1993 to 1999. Emeka Okeani, age 46, has served as National Vice President, Laundry Services Division of SMS since October 1992. Bernard Royer, age 48, has served as Senior Vice President, Procurement and Distribution of SMS since April 2000. He previously served as Corporate Vice President of International Purchasing for Sodexho International Management since 1999. From 1990 to 1998, he served as Vice President of Purchasing for Sodexho USA, Inc. Robert A. Stern, age 42, has served as Senior Vice President and General Counsel of SMS since March 1998. He previously served as Associate General Counsel for Marriott International, Inc. since 1993. Philippe Taillet, age 41, has served as Senior Vice President and Chief Information Officer of SMS since July 2000. He previously served as Senior Vice President, Facilities Management of SMS from July 1999 to July 2000 and Senior Vice President, Strategic Planning of SMS from 1998 to 1999. He also served as Vice President of Corporate Strategy for Sodexho from 1995 to 1998. Susan H. Tatum, age 49, has served as Senior Vice President, Marketing of SMS since September 2000. From 1998 until 2000, Ms. Tatum held the position of Senior Vice President in the SMS Education Division. From 1995 to 1998, Ms. Tatum was Vice President, Operations and Communications, within the SMS Education division. SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. SODEXHO MARRIOTT SERVICES, INC. By: /s/ Robert A. Stern ------------------------------------- Robert A. Stern Senior Vice President and General Counsel Dated: May 17, 2001
EXHIBIT INDEX Exhibit No. Description - ------- ----------- (a)(1) SMS Solicitation/Recommendation Statement on Schedule 14D-9, filed with the Securities and Exchange Commission (the "SEC") on May 17, 2001 (incorporated by reference herein). (a)(2) Letter to the stockholders of SMS, dated May 17, 2001 (incorporated by reference to Exhibit (a)(1) to the Schedule 14D-9 filed by SMS with the SEC on May 17, 2001). (a)(3) Offer to Purchase, dated May 17, 2001 (incorporated by reference to Exhibit (a)(1) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(4) Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(2) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(5) Press Release issued by SMS on May 2, 2001 (incorporated by reference to press release under cover of Schedule 14D-9C filed by SMS with the SEC on May 2, 2001). (a)(6) Press Release issued by Sodexho on May 2, 2001 (incorporated by reference to press release under cover of Schedule TO-C filed by Sodexho with the SEC on May 2, 2001) (a)(7) Notice of Guaranteed Delivery (incorporated by reference to Exhibit (a)(3) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(8) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(4) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(9) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(5) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(10) Letter to Participants in SMS's Employee Stock Purchase Plan (incorporated by reference to Exhibit (a)(6) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(11) Letter to holders of old Marriott International, Inc. certificates (incorporated by reference to Exhibit (a)(7) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(12) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (incorporated by reference to Exhibit (a)(8) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(13) Summary advertisement dated May 17, 2001 (incorporated by reference to Exhibit (a)(9) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(14) Complaint of Barry Feldman against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(11) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(15) Complaint of Arthur Bieler against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(12) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(16) Complaint of John McMullen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(13) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(17) Complaint of Margaret Alessi, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(14) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(18) Complaint of Sylvia Piven, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(15) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(19) Complaint of Audrey Goldberg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(16) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(20) Complaint of Gary Remmen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(17) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001).
(a)(21) Complaint of Neil Berg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(18) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(22) Complaint of C. Oliver Burt against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (incorporated by reference to Exhibit (a)(19) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (a)(23) SMS's Consolidated Financial Statements on pages 25-50 of SMS's Annual Report on Form 10-K for the fiscal year ended September 1, 2000 filed with the SEC on November 13, 2000 (incorporated by reference herein). (c)(1) Opinion of UBS Warburg, dated as of May 1, 2001 (incorporated by reference to Annex A of the Schedule 14D-9 filed by SMS with the SEC on May 17, 2001). (c)(2) Presentation of representatives of UBS Warburg to the Special Committee of the Board of Directors dated May 1, 2001. (d)(1) Agreement and Plan of Merger, dated as of May 1, 2001, among Sodexho, the Purchaser and SMS (included as Annex A of the Offer to Purchase, which is incorporated by reference to Exhibit (a)(1) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(2) Tax Sharing and Indemnification Agreement dated as of March 27, 1998, by and among, Marriott International, Inc., New Marriott, Inc. and Sodexho (incorporated by reference to Exhibit 9 of Amendment No. 1 to Sodexho's Schedule 13D filed with the SEC on April 15, 1998). (d)(3) Royalty Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated by reference to Exhibit 10.19 of SMS's Form 10-K/A filed with the SEC on April 30, 1998). (d)(4) Stockholder Agreement dated as of March 27, 1998 between SMS and Sodexho (incorporated by reference to Exhibit 3 of Sodexho's Schedule 13D filed with the SEC on April 6, 1998). (d)(5) Assistance Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated by reference to Exhibit (d)(5) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(6) Sodexho Guaranty dated as of March 27, 1998 from Sodexho as Guarantor in favor of the Lender Parties referred to in the Credit Agreement referred to therein (incorporated by reference to Exhibit (d)(6) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(7) Guaranty fee letter dated as of March 27, 1998 between Sodexho and SMS (incorporated by reference to Exhibit (d)(7) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (d)(8) Confidentiality Agreement dated as of April 5, 2001 between Sodexho and SMS (incorporated by reference to Exhibit (d)(8) to the Schedule TO of Sodexho and the Purchaser filed with the SEC on May 17, 2001). (f) Section 262 of the Delaware General Corporation Law (included as Annex C of the Offer to Purchase). (g) None.
EX-99.C2 2 dex99c2.txt EXHIBIT 99.C.2 Exhibit (c)(2) STRICTLY PRIVATE AND CONFIDENTIAL [UBS Warburg logo] Project Showtime Presentation to the Special Committee of the Board of Directors May 1, 2001 MAY 2001 - -------------------------------------------------------------------------------- This board presentation was prepared by UBS Warburg LLC solely for the benefit and use of the special committee of the board of directors of Sodexho Marriott Services, Inc. The board presentation was delivered to the Special Committee on May 1, 2001, and is current only as of that date. The board presentation is subject to, and should be reviewed in conjunction with, the assumptions, qualifications and limitations set forth in the text of the written fairness opinion, dated May 1, 2001, delivered by UBS Warburg LLC to the special committee and included as Exhibit (c)(1) to this Schedule TO. [UBS Warburg logo] Contents - ---------------------------------------------------------------- SECTION 1 Transaction Overview____________________________ 1 SECTION 2 Magic Overview__________________________________ 5 SECTION 3 Valuation Analyses______________________________ 13 [UBS Warburg logo] Transaction Overview - -------------------------------------------------------------------------------- SECTION 1 [UBS Warburg logo] Transaction History - -------------------------------------------------------------------------------- . Magic ("Magic" or the "Company") was formed in March 1998 through the merger of the North American food service operations of Alcindor and the food service operations of Magic International . As a result of the merger, Alcindor owned 48% (excluding the dilutive effect of options outstanding), the Magic family controlled 9% and former Magic International shareholders owned the remaining 43% . In conjunction with the merger, Alcindor and Magic entered into several agreements whereby Alcindor agreed to provide a variety of operational services for Magic for a fee, as well as guarantee a substantial portion of Magic's debt . In order to maintain the tax free status of the distribution of certain businesses to shareholders of Magic International, Alcindor and Magic International entered into an agreement whereby Alcindor was prohibited from increasing its ownership stake to 50% or more until 3/27/01 . Magic stock began trading on 3/23/98 at $24.00 per share and subsequently traded down to an all-time low of $10.31 on 2/15/00 as a result of poor operating results . In anticipation of the expiration of its three year standstill obligation, on 1/25/01, Alcindor announced a bid of $27.00 per share in cash for the 54.2% of the fully-diluted shares of Magic outstanding that it does not already own/1/ . On 1/29/01, the Board of Directors of Magic appointed a Special Committee to evaluate the Alcindor proposal . On 2/27/01, the Company announced the appointment of UBS Warburg ("UBSW") to advise the Special Committee with regard to the Alcindor proposal . On 4/25/01, Alcindor agreed to pay $32.00 per share in cash for the 54.7% of the fully-diluted shares of Magic it did not already own/1/ . Alcindor plans to fund the cash purchase price through a combination of debt and equity offerings with no financing contingency NOTE: 1 Percentage of fully-diluted shares not owned by Alcindor is 54.2% @ $27.00 and 54.7% @ $32.00 [UBS Warburg logo] 2
Deal Overview - ------------------------------------------------------------------------------------------------------------------------------------ Initial Alcindor Current Alcindor Proposal One Month One Day Proposal Market ---------------------------- Valuation Prior Prior (100.0%) 4/27/01 (54.7%) (100.0%) - -------------------------------------------------------------------------------------------------------------------------- Stock Price ($) 20.81 24.88 27.00 29.53 32.00 32.00 Premium to One Day Prior Stock Price (%) -- -- 8.5 18.7 28.6 28.6 Premium to One Month Prior Stock Price (%) -- 19.6 29.7 41.9 53.8 53.8 Equity Value ($mm) 1,340 1,620 1,767 1,943 1,158 2,117 Total Enterprise Value ($mm) 2,210 2,490 2,637 2,813 -- 2,987 Total Enterprise Value as a Multiple of LTM:/1/ Revenue ($4,863 mm) (x) 0.5 0.5 0.5 0.6 -- 0.6 EBITDA ($296 mm) (x) 7.5 8.4 8.9 9.5 -- 10.1 EBIT ($209 mm) (x) 10.6 11.9 12.6 13.5 -- 14.3 Stock Price Multiple of: CY2001E Cash EPS ($1.68) (x) 12.4 14.8 16.1 17.6 -- 19.1 - --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------- NOTE: 1 Latest Twelve Months as of 3/2/01 [UBS Warburg logo] 3
Summary of Merger Agreement - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Form of Transaction: . Tender Offer by Alcindor Acquisition Corporation, a Delaware corporation controlled by Alcindor Merger Consideration: . $32.00 per share in cash Tax Structure: . Fully taxable to selling shareholders Accounting Treatment: . Purchase accounting Significant Conditions and Other Terms: . Special Committee and Board of Directors approval of the Tender Offer . Tender of the requisite number of common shares of Magic to Alcindor Acquisition Corporation to give Alcindor majority ownership of common shares outstanding on a fully diluted basis . Customary conditions relating to regulatory approvals and no material adverse effect . Non-solicitation of other offers . Limited representations and warranties by Magic due to existing ownership stake by Alcindor . [Alcindor makes certain representations to the effect that the transaction will not jeopardize the tax-free nature of the 1998 spin-off] Termination Conditions: . Customary termination conditions and provisions including: - Termination by mutual consent - Termination by either Magic or Alcindor, if the merger is not consummated on or before [ ] - Termination by Alcindor, if (i) the Board of Directors fails to recommend the Tender Offer; (ii) Magic enters into a different Acquisition Proposal (as defined in the Agreement); or (iii) Alcindor terminates the Tender Offer because of a failure of any conditions set forth in Annex I of the Agreement - Termination by Magic, if before Alcindor accepts for payment shares tendered in the offer (i) the Board of Directors advises the Company to enter into a Superior Proposal (as defined in the Agreement); or (ii) the offer expires without the requested number of shares being tendered to give Alcindor a majority ownership on a fully diluted basis - Termination fee for Alcindor of [ ] million, if (i) the Company terminates due to a third party Acquisition Proposal; (ii) Alcindor terminates because the Magic Board of Directors fails to recommend the Tender Offer or enters into a different Acquisition Proposal; or (iii) each of the following occurs: the Tender Offer expires without sufficient shares being tendered to Alcindor, the Merger Agreement is terminated because the merger is not consummated by [ ], 2001, a different Acquisition Proposal is received during that period, and, within 12 months following termination, Magic enters into [and consummates] a different Acquisition Proposal - ------------------------------------------------------------------------------------------------------------------------------------
[UBS Warburg logo] 4 Magic Overview - -------------------------------------------------------------------------------- SECTION 2 [UBS Warburg logo] Summary of Magic Actual and Projected Financial Results
53 weeks 53 weeks 2000-2005 Fiscal Years ending September 1/st/ 1999A 2000A LTM 2001E 2002E 2003E 2004E 2005E CAGR (%) - ----------------------------------------------------------------------------------------------------------------------- Operating Summary Revenue ($mm) 4,502 4,734 4,863 4,970 5,244 5,559 6,011 6,263 5.8 EBIT ($mm) 187 196 209 215 235 269 299 338 11.5 EBITDA ($mm) 272 280 296 300 320 355 390 429 8.9 Interest Expense ($mm) 87 84 80 78 74 71 54 43 - Net Income ($mm) 60 63 74 78 92 115 143 174 22.5 Capital Expenditures ($mm) 72 66 66 82 99 96 98 103 - FY EPS ($)/1/ 0.94 1.00 1.16 1.21 1.42 1.76 2.17 2.62 21.2 FY Cash EPS ($) 1.35 1.41 1.56 1.61 1.81 2.13 2.53 2.97 16.0 Margins Operating Margin (%) 6.7 6.7 6.9 6.9 7.2 7.5 7.6 8.1 - EBIT Margin (%) 4.2 4.1 4.3 4.3 4.5 4.8 5.0 5.4 - EBITDA Margin (%) 6.0 5.9 6.1 6.0 6.1 6.4 6.5 6.8 - Net Income Margin (%) 1.3 1.3 1.5 1.6 1.8 2.1 2.4 2.8 - Capital Expenditures (%) 1.6 1.4 1.4 1.6 1.9 1.7 1.6 1.6 - Growth Rates/2/ Revenue (%) - 7.2 - 5.0 5.5 6.0 6.1 6.2 - EBITDA (%) - 4.9 - 7.1 6.7 10.9 7.8 12.1 - Net Income (%) - 7.0 - 23.8 17.9 25.0 22.0 24.0 - - -----------------------------------------------------------------------------------------------------------------------
NOTES: 1 Management earnings estimates 2 Adjusted to reflect the additional week in fiscal 1999 and 2004 [UBS Warburg logo] 6
Historical Balance Sheet - ------------------------------------------------------------------------------------------- ($mm) 1999 2000 3/2/01 - ------------------------------------------------------------------------------------------- Cash 48 54 70 Accounts Receivable 445 463 515 Inventories 60 67 67 PP&E 85 96 95 Intangible Assets 535 497 478 Other Assets 174 187 196 - ------------------------------------------------------------------------------------------- Total Assets 1,347 1,364 1,421 - ------------------------------------------------------------------------------------------- Accounts Payable and Current Liabilities 585 684 728 Other Long Term Liabilities 113 112 110 Long Term Debt Revolving Credit Facility 52 -- -- Secured Credit Facility 430 350 310 Guaranteed Credit Facility 620 620 620 Senior Debt 6 6 6 Other 5 5 4 - ------------------------------------------------------------------------------------------- Total Debt 1,113 981 940 - ------------------------------------------------------------------------------------------- Convertible Sub. Debt 30 -- -- Shareholders' Equity (494) (413) (357) - ------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity 1,347 1,364 1,421 - -------------------------------------------------------------------------------------------
[UBS Warburg logo] 7 Magic Stock Price History--Last Twelve Months - -------------------------------------------------------------------------------- April 27, 2000 to April 27, 2001 [Graph depicting the daily closing stock price and the daily trading volume of Magic from April 27, 2000 to April 27, 2001. The graph has annotations A through G as described below. The graph also has a line at $32.00 per share for the proposed purchase price which demonstrates that the offer price is higher than any closing stock price over the time period presented.] SOURCE: Factset
Annotations Selected Statistics 1, 2 ($) - -------------------------------------------------------------------------------------------------------------------- A Reported Q3 results, including moderate growth (7/14/00) B Reported FY 2000 results (11/13/00) Pre-announcement Price (1/24/01) 24.88 C Reported Q1 results (1/12/01) 30 Day Average 22.58 D Alcindor announced bid of $27.00 (1/25/01) 90 Day Average 20.90 E UBS Warburg announced as advisor to Special Committee (2/27/01) 52 Week Average 16.31 F Announced the award of 2 Marine Corps Contracts (3/15/01) 52 Week High 25.69 G Reported Q2 results (4/12/01) 52 Week Low 10.31 - -------------------------------------------------------------------------------------------------------------------- NOTES: 1 Statistics for the periods denoted prior to the announcement date, January 25, 2001 2 Closing prices
[UBS Warburg logo] 8 Magic Price Performance Since the 1998 Transaction - -------------------------------------------------------------------------------- [Graph depicting the daily closing stock price and the daily trading volume of Magic from March 23, 1998 to April 27, 2001. The graph has annotations showing the all-time high stock price of $32.69 on 7/10/98 and the all-time low stock price of $10.31 on 2/15/00. The graph also has a line at $32.00 per share for the proposed purchase price which demonstrates that the offer price is higher than any closing stock price during the time period presented except for a few days during the middle of 1998 and early 1999.] [UBS Warburg logo] 9 Magic Relative Price Performance - -------------------------------------------------------------------------------- April 26, 2000 to April 27, 2001 [Graph depicting the relative price performance of Magic and Alcindor to an index of comparable companies from April 26, 2000 to April 27, 2001. The graph shows that Magic and Alcindor have outperformed the comparable companies index beginning in October 2000. The graph also shows that Magic outperformed the comparable companies index by a wide margin since the announcement by Alcindor of its proposal to purchase the remaining shares of Magic on January 25, 2001.] SOURCE: FactSet NOTE: Comparable Companies Index consists of: ABM, Autogrill, Chemed, Compass, Elior, ISS, Rentokil Initial and ServiceMaster [UBS Warburg logo] 10 Magic Trading Summary Prior to Announcement - -------------------------------------------------------------------------------- [Four graphs depicting how many shares traded at various per share stock prices during specific time periods prior to the announcement by Alcindor of its proposal to purchase the remaining shares of Magic on January 25, 2001. The tables below describe the information in those graphs.] Graph 1 One Month (12/26/00-1/24/01)
- -------------------------------------------------------------------------------- Stock Price Range Volume (`000s) % of Total Volume ----------------- -------------- ----------------- - -------------------------------------------------------------------------------- $20-$22 992 33.5% - -------------------------------------------------------------------------------- $22-$24 456 15.4% - -------------------------------------------------------------------------------- $24-$26 1,512 51.1% - --------------------------------------------------------------------------------
Graph 2 Three Months (10/23/00-1/24/01)
- -------------------------------------------------------------------------------- Stock Price Range Volume (`000s) % of Total Volume ----------------- -------------- ----------------- - -------------------------------------------------------------------------------- $18-$20 808 14.0% - -------------------------------------------------------------------------------- $20-$22 2,915 50.5% - -------------------------------------------------------------------------------- $22-$24 536 9.3% - -------------------------------------------------------------------------------- $24-$26 1,512 26.2% - --------------------------------------------------------------------------------
[UBS Warburg logo] Graph 3 Six Months (7/24/00-1/24/01)
- -------------------------------------------------------------------------------- Stock Price Range Volume (`000,000s) % of Total Volume ----------------- ----------------- ----------------- - -------------------------------------------------------------------------------- $14-$16 0.3 0.3% - -------------------------------------------------------------------------------- $16-$18 29.1 33.4% - -------------------------------------------------------------------------------- $18-$20 8.1 9.3% - -------------------------------------------------------------------------------- $20-$22 29.2 33.5% - -------------------------------------------------------------------------------- $22-$24 5.4 6.2% - -------------------------------------------------------------------------------- $24-$26 15.1 17.4% - --------------------------------------------------------------------------------
Graph 4 One Year (1/24/00-1/24/01)
- -------------------------------------------------------------------------------- Stock Price Range Volume (`000,000s) % of Total Volume ----------------- ------------------ ----------------- - -------------------------------------------------------------------------------- $10-$12 47.3 26.2% - -------------------------------------------------------------------------------- $12-$14 10.4 5.8% - -------------------------------------------------------------------------------- $14-$16 25.9 14.4% - -------------------------------------------------------------------------------- $16-$18 36.5 20.2% - -------------------------------------------------------------------------------- $18-$20 10.9 6.0% - -------------------------------------------------------------------------------- $20-$22 29.2 16.1% - -------------------------------------------------------------------------------- $22-$24 5.4 3.0% - -------------------------------------------------------------------------------- $24-$26 15.1 8.4% - --------------------------------------------------------------------------------
[UBS Warburg logo] 11 Ownership Summary - -------------------------------------------------------------------------------- Ownership
Shares (`000s) % - -------------------------------------------------------------------------------- Alcindor 29,950 47.1 Transamerica Corp. 7,486 11.8 Other: Bank of America Corp. 2,078 3.3 Goldman Sachs Group 1,800 2.8 Fidelity 1,347 2.1 [pie chart depicting percentage ownership] Massachusetts Financial 1,112 1.8 Barclays Bank 636 1.0 Vanguard Group 415 0.7 Oppenheimer International 282 0.5 State Street Corp. 238 0.4 Other Holders 18,150 28.6 - -------------------------------------------------------------------------------- Total 63,537/1/ 100.0 - --------------------------------------------------------------------------------
SOURCE: Magic Proxy (12/1/00), 10-Q (4/12/00), CDA Spectrum 1 Reflects basic shares outstanding [UBS Warburg logo] 12 Valuation Analyses - -------------------------------------------------------------------------------- SECTION 3 [UBS Warburg logo] Valuation Techniques - -------------------------------------------------------------------------------- . UBS Warburg used the following methodologies to determine the appropriate Magic valuation
Methodology Description - ----------------------------------------------------------------------------------------------------------------------------------- . Comparable Companies Analysis Compares trading multiples (Total Enterprise Value/EBITDA and Price/Cash EPS) of companies similar to Magic to the proposed purchase price multiples for the Alcindor/Magic merger . Comparable Transactions Analysis Compares purchase price multiples of similar transactions to the proposed multiples for the Alcindor/Magic merger . Premiums Paid Analysis All Deals: Compares stock price premiums paid to other companies one day, one week and one month prior to transaction announcement to the proposed premiums for the Alcindor/Magic merger Minority Squeeze-Out Deals: Compares stock price premiums paid for companies that were acquired in minority squeeze-outs to the proposed premiums for the Alcindor/Magic merger Control Deals: Compares stock price premiums paid to acquire more than 50% of companies where the ownership before the transaction was less than 50% but greater than 5% to the proposed premiums for the Alcindor/Magic merger . Discounted Cash Flow Analysis Implies valuation ranges for Magic by taking free cash flow estimates and arriving at a terminal value by either (i) growing the free cash flow estimates by a growth rate into perpetuity and discounting them to the terminal year; or (ii) using a multiple of EBITDA - -----------------------------------------------------------------------------------------------------------------------------------
[UBS Warburg logo] 14 Valuation Issues - ------------------------------------------------------------------------------- . There are several issues that need to be considered when evaluating the Alcindor proposal, which are not entirely reflected in the valuation analyses
Methodology Issues - ------------------------------------------------------------------------------------------------------------------------------------ . Comparable Company Analysis - Magic has lower EBITDA margins and lower expected revenue growth than its comparables - Magic operates in the relatively mature North American market, whereas many of the highly valued comparables operate in the faster growing European market - Unlike many of the comparables, Magic is not a global business, it operates solely in the North American market - Many of the higher multiple comparables trade on foreign exchanges . Comparable Transaction Analysis - Alcindor already exercises de facto control over Magic's operations. Alcindor assists the Company in purchasing activities, catering and site support services, marketing, management and administration, legal and financial matters, human relations, communications and cash management - There are no expected material synergies as a result of this transaction . Premiums Paid Analysis - The pre-announcement stock prices may have been impacted by speculation of an impending offer from Alcindor for the remaining interest in Magic - Given Alcindor's current ownership position, minority squeeze out premiums may be more applicable . Discounted Cash Flow Analysis - Alcindor's guarantee of a substantial portion of Magic's debt results in an artificially low cost of debt - ------------------------------------------------------------------------------------------------------------------------------------
[UBS Warburg logo] 15 Comparable Company Analysis - -------------------------------------------------------------------------------
Equity Value/ Stock Total Equity Debt/ LTM TEV/ ----------------- Price Enterprise Market Total LTM EBITDA LTM CY2001E CY2002E I/B/E/S (4/27/01) Value Value Enterprise Revenue LTM EBITDA Margin EBITDA Cash EPS Cash EPS Growth Rate Company Name ($) ($mm) ($mm) Value (%) ($mm) ($mm) (%) (x) (x)/2/ (x)/2/ (%) - ------------------------------------------------------------------------------------------------------------------------------------ ABM Industries 33.00 878.9 834.9 4.5 1,849.4 101.7 5.5 8.6 13.0 11.8 12.0 Autogrill 11.13 3,975.9 2,831.4 28.3 2,837.1 348.1 12.3 11.4 13.7 12.2 14.6 Chemed 34.31 437.7 363.2 18.9 500.7 59.3 11.8 7.4 11.6 -- 22.5 Compass Group/1/ 7.69 18,177.2 17,087.3 5.8 11,821.6 1,183.4 10.0 15.4 18.3 17.0 14.7 Elior 12.32 1,587.8 1,266.6 35.5 1,606.0 135.6 8.4 11.7 17.8 -- -- ISS 58.29 2,849.2 2,329.6 18.2 3,584.4 230.2 6.4 12.4 20.6 17.7 (2.5) Rentokil Initial 2.73 6,698.9 6,212.8 23.0 3,801.7 887.3 23.3 7.5 14.3 13.1 9.9 ServiceMaster 10.14 4,713.8 3,057.9 37.3 5,970.6 574.6 9.6 8.2 12.4 11.7 12.0 Mean/3/ 9.8 10.0 14.9 13.5 12.6 Median 9.8 10.0 14.0 12.7 12.0 High 23.3 15.4 20.6 17.7 22.5 Low 5.5 7.4 11.6 11.7 (2.5) Magic 32.00 2,986.7 2,116.7 31.5 4,863.0 296.0 6.1 10.1 19.1 16.7 14.5 Alcindor 49.31 7,682.1 6,647.3 23.2 9,577.2 645.4 6.7 11.9 28.0 25.6 10.5 - ------------------------------------------------------------------------------------------------------------------------------------
NOTES: 1 Pro forma for acquisition of Morrison Management Services and Selecta Group and for sale of Hotel Group for an estimated $5.0 billion after tax from MSDW research 2 I/B/E/S earnings estimates with the exception of Compass (MSDW), Autogrill (Merrill), ISS (Dresdner), Magic (Management) and Alcindor (UBSW) all adjusted to exclude amortization of goodwill 3 Excludes high and low [UBS Warburg logo] 16 Comparable Company Business Descriptions - --------------------------------------------------------------------------------
Company Business Description - ------------------------------------------------------------------------------------------------------------------------------------ ABM Industries Largest public facility services contractor with over 60,000 employees. Provides air conditioning, elevator, engineering, janitorial and parking and security services to thousands of customers throughout North America. Autogrill Operator of restaurants along highways and in airports throughout Europe and America. Also operates self service restaurants across Italy. Chemed Provides plumbing and drain cleaning services through Roto-Rooter Inc. Also offers home healthcare services and air-conditioning repair. Compass Group International food service operator, providing contract and concession catering services to businesses, airports, healthcare institutions, schools and universities. Elior Supplier of food to restaurants located near highways, at airports, in rail stations, in schools and in hospitals. Services over 7,400 restaurants in France, the U.K., the Netherlands and Italy. ISS Provider of cleaning and maintenance services primarily in Europe for the food processing and healthcare sectors. Also provides landscaping, security, linen and catering services. Rentokil Initial Services include pest control, landscaping, hospital waste disposal, cleaning services and facilities management operations. Also provides staffing, delivery and security services. ServiceMaster Provides housecleaning, pest control, and landscaping services. Also supplies facilities management, housekeeping and food services to healthcare and education facilities. - ------------------------------------------------------------------------------------------------------------------------------------
[UBS Warburg logo] 17 Comparable Transaction Analysis
Premium to Stock Price(%) Trans- Implied Target Target TEV/ Equity/ ------------------------- action Enterprise LTM LTM LTM LTM Cash One One One Date Target Acquiror Consid- Value Revenue EBITDA EBITDA Earnings Day Week Month Announced Name Name eration ($mm) ($mm) ($mm) (x) (x)/1/ Prior Prior Prior - ---------------------------------------------------------------------------------------------------------------------------------- 3/29/01 LSG SkyChefs/2/ Lufthansa Cash 2,662.5 -- 186.3 14.3 -- -- -- -- 2/12/01 Selecta Group/2/ Compass Group Cash 775.3 510.4 82.7 9.4 21.4 30.1 33.3 38.5 2/6/01 Morrison Mgmt. Specialists Compass Group Cash 633.6 509.3 36.2 17.5 33.4 20.8 21.0 25.6 12/7/00 Henkel-Ecolab/2/ Ecolab Cash/ 969.4 900.2 127.4 7.6 18.2 -- -- -- Stock 5/17/00 Compass Group Granada Group Stock 10,096.7 8,138.4 687.3 17.6/3/ 36.3 3.5 (11.4) (8.9) 7/26/99 Host Marriott Services Autogrill Cash 947.1 1,436.6 132.2 7.2 28.7 61.5 78.7 111.8 11/2/98 LandCare ServiceMaster Stock 279.7 304.0 31.0 9.0 14.6 30.4 30.4 60.5 --------------------------------------------------------- Mean/4/ 11.6 25.4 27.1 28.2 41.5 Median 9.4 25.1 30.1 30.4 38.5 High 17.6 36.3 61.5 78.7 111.8 Low 7.2 14.6 3.5 (11.4) (8.9) - ---------------------------------------------------------------------------------------------------------------------------------- 1/24/01 Magic Alcindor Cash 2,986.7 4,863.0 296.0 10.1 21.2 28.6 30.9 53.8 - ----------------------------------------------------------------------------------------------------------------------------------
NOTES: 1 Excludes goodwill amortization 2 Pending 3 17.6x TEV/EBITDA excludes expected synergies of $112 million, 14.7x TEV/EBITDA including the synergies 4 Excludes high and low [UBS Warburg logo] 18
Comparable Transaction Target Business Descriptions - ------------------------------------------------------------------------------------------------------------------------------------ Company Name Business Description - ------------------------------------------------------------------------------------------------------------------------------------ Compass Group International food service operator, providing contract and concession catering services to businesses, airports, healthcare institutions, schools and universities. Henkel-Ecolab European joint venture between Ecolab and Henkel. Provider of cleaning products and services. Host Marriott Services Operates food, beverage, and merchandise concessions at US airports, toll road travel plazas, shopping malls and entertainment venues. LandCare Offers landscape maintenance, landscape installation and tree services to the commercial and institutional markets. LSG SkyChefs The world's largest inflight catering alliance. Previously jointly owned by Lufthansa and Onex Corp. Morrison Mgmt. Specialists Second largest outsourcing provider in the healthcare and senior living industries. Only national publicly held company that specializes exclusively in providing food, nutrition and dining services to the healthcare and senior living markets. Selecta Group Largest operator of vending machines in Europe. The company sells and leases machines as well as offering repair and maintenance services. - ------------------------------------------------------------------------------------------------------------------------------------
[UBS Warburg logo] 19 Premiums Paid Analysis/1/
- --------------------------------------------------------------------------------------------------------------------- Completed Transactions Premium to Stock Price (%) --------------------------------------- One Day One Week One Month Number of Deals Prior Prior Prior -------------------------------------------------------------------------------------------------------------------- Deals Announced in 2001 Cash Deals 27 20.0 23.2 40.7 Other Deals 6 42.4 51.9 54.7 All Deals 33 24.3 28.4 43.2 Deals Announced in 2000 Cash Deals 104 35.2 41.3 46.0 Other Deals 69 33.5 38.1 42.5 All Deals 173 34.5 40.0 44.6 Deals Announced in 1999 Cash Deals 116 29.2 33.8 40.9 Other Deals 58 34.9 46.0 58.7 All Deals 174 31.1 37.9 46.8 Combined Averages Cash Deals 247 30.8 35.8 43.0 Other Deals 133 34.5 42.2 50.1 All Deals 380 32.1 38.0 45.5 - --------------------------------------------------------------------------------------------------------------------- Premium of Offer Price to Magic Stock Price /2/, /3/ 28.6 30.9 53.8 - ---------------------------------------------------------------------------------------------------------------------
NOTES: 1 Excludes financial company targets, transactions involving less than 10% of the target and targets of less than $50 million in equity value 2 Based on Magic one day prior, one week prior, and four weeks prior stock prices of $24.88, $24.44, and $20.81, respectively 3 Assumes offer price of $32.00 per share [UBS Warburg logo] 20 Discounted Cash Flow Analysis
- --------------------------------------------------------------------------------------------- ($mm unless specified otherwise) 2001 2002 2003 2004 2005 - --------------------------------------------------------------------------------------------- EBIT 215 235 269 299 338 Less: Tax Effect @ 43.0% (92) (101) (116) (129) (145) Plus: Depreciation and Amortization 85 85 86 91 91 Less: Capital Expenditures (82) (99) (96) (98) (103) Change in Working Capital 33 24 22 30 28 Unlevered Free Cash Flows 159 144 165 193 209 - ---------------------------------------------------------------------------------------------
Implied Stock Price Sensitivity Analysis /1/
- ----------------------------------------------------------------------------------- Terminal Growth Rate - ----------------------------------------------------------------------------------- 2.5% 3.0% 3.5% ------------------------------ Weighted Average Cost of Capital 9.0% 29.26 32.12 35.51 9.5% 26.13 28.55 31.36 10.0% 23.43 25.48 27.85 ---------------------------------------- Terminal EBITDA Multiple - ----------------------------------------------------------------------------------- 8.0x 9.0x 10.0x ------------------------------ Weighted Average Cost of Capital 9.0% 30.65 34.87 39.08 9.5% 29.75 33.87 37.99 10.0% 28.87 32.90 36.93 - -----------------------------------------------------------------------------------
NOTE: 1 Calculated using 66.1 million fully-diluted shares outstanding based on proposed Magic acquisition price of $32.00 [UBS Warburg logo] 21 Weighted Average Cost of Capital Analysis
- ---------------------------------------------------------------------------------------------------------- Adjusted Market Value Equity of Equity Total Debt Tax Rate Unlevered Company Name Beta /1/ ($mm) ($mm) (%) Beta /2/ - ---------------------------------------------------------------------------------------------------------- ServiceMaster 0.40 3,045.6 1,756.8 40.0 0.25 ABM Industries 0.40 758.3 39.5 40.0 0.38 Autogrill 0.72 2,860.1 1,126.6 48.0 0.52 Chemed 0.47 335.6 82.6 40.0 0.38 ISS 0.88 2,325.7 519.6 32.0 0.72 - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- Mean 0.45 Median 0.38 High 0.72 Low 0.25 - ----------------------------------------------------------------------------------------------------------
Market Weighted Value of Unlevered Equity Cost Debt Cost Average Implied Equity Total Debt Tax Rate Industry of Capital of Capital Cost of Equity Beta ($mm) ($mm) (%) Beta (%)/3/ (%) Capital (%) - ------------------------------------------------------------------------------------------------------------------------------------ Magic /4/ 0.67 1,925.8 940.0 43.0 0.45 11.56 6.81 9.04 Compass Group 0.48 17,214.2 1,058.8 27.0 0.45 9.53 6.65 9.26 Elior /4/ 0.65 1,291.8 563.9 36.0 0.45 11.37 5.47 8.98 ServiceMaster /4/ 0.71 3,045.6 1,756.8 40.0 0.45 11.88 9.11 9.53 Alcindor 0.57 6,440.6 1,786.0 40.0 0.45 10.30 6.75 8.94 - ------------------------------------------------------------------------------------------------------------------------------------
NOTES: 1 Adj. Beta = 0.33 + 0.67*Raw Beta. Raw Beta calculated using weekly data from 4/30/99 - 4/20/01 against local market index 2 Beta Unlevered = Beta Equity / [1 + (D / E) ] 3 Equity Cost of Capital = Risk Free Rate (5.71%) + Equity Beta * Market Risk Premium (8.0%) 4 0.5% mid-cap premium added to Equity Cost of Capital [UBS Warburg logo] 22 Contact information - -------------------------------------------------------------------------------- UBS Warburg LLC 1999 Avenue of the Stars, 15th Floor Los Angeles, CA 90067 Tel: 310-556-6700 www.ubswarburg.com UBS Warburg LLC is a subsidiary of UBS AG UBS Warburg is a business group of UBS AG [UBS Warburg logo] -----END PRIVACY-ENHANCED MESSAGE-----