<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 AND RULE
13E-3 ((S)240.13E-3) THEREUNDER)
----------------
REXEL, INC.
(NAME OF ISSUER)
REXEL S.A.
INTERNATIONAL TECHNICAL DISTRIBUTORS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
969207109
(CUSIP NUMBER OF CLASS OF SECURITIES)
PIERRE CHAREYRE, REXEL S.A., 25 RUE DE CLICHY, 75009 PARIS, FRANCE
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING STATEMENT)
----------------
WITH COPIES TO:
JEAN-FRANCOIS CARRERAS, ESQ. DAVID A. KATZ, ESQ.
SOKOLOW, DUNAUD, MERCADIER & CARRERAS WACHTELL, LIPTON, ROSEN & KATZ
50 ROCKEFELLER PLAZA 51 W. 52ND STREET
NEW YORK, NY 10020-1605 NEW YORK, NY 10019
(212) 547-5584 (212) 403-1000
JOEL A. ADLER, ESQ.
MCDERMOTT, WILL & EMERY
50 ROCKEFELLER PLAZA
NEW YORK, NY 10020-1605
(212) 547-5400
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: [_]
----------------
CALCULATION OF FILING FEE
<TABLE>
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- -------------------------------------------------------------------
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------------------------------------------
<S> <C>
$304,245,000 $60,849
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
* Calculated by multiplying $22.50, the per share tender offer price, by
12,893,809, the sum of the number of shares of Common Stock sought in the
Offer and the 628,000 shares of Common Stock subject to options outstanding
as of October 16, 1997.
----------------
[X] Check box if any part of the fee is offset as provided by 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: $60,849
Form or Registration No.: Schedule 14D-1/Schedule 13D (Amendment No. 12)
Filing Party: Rexel S.A. and International Technical Distributors, Inc.
Date Filed: October 23, 1997
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- -------------------------------------------------------------------------------
<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-
3") is being filed by (i) Rexel S.A., a societe anonyme organized under the
laws of the Republic of France ("Parent"), and (ii) International Technical
Distributors, Inc., a New York corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and (iii) Rexel, Inc., a New York corporation (the
"Company"), pursuant to Section 13(e) of the Securities Exchange Act of 1934,
as amended, and Rule 13e-3 promulgated thereunder by the Securities and
Exchange Commission (the "SEC") in connection with the tender offer by
Purchaser for all the issued and outstanding shares (the "Shares") of common
stock, par value $1.00 per share, of the Company not already owned by
Purchaser or any of its affiliates, upon the terms and subject to the
conditions set forth in that certain Offer to Purchase dated October 23, 1997
(the "Offer to Purchase") and the related Letter of Transmittal (which,
together with the Offer to Purchase, each as amended or supplemented from time
to time, constitute the "Offer"), copies of which are filed as Exhibits (d)(1)
and (d)(2) hereto, respectively.
The following Cross Reference Sheet, prepared pursuant to General
Instruction F to Schedule 13E-3, shows the location in the Tender Offer
Statement on Schedule 14D-1 filed by Purchaser (the "Schedule 14D-1") with the
SEC on the date hereof of the information required to be included in this
Schedule 13E-3. The information set forth in the Schedule 14D-1, including all
exhibits thereto, is hereby expressly incorporated herein by reference as set
forth in the Cross Reference Sheet and the responses in this Schedule 13E-3,
and such responses are qualified in their entirety by reference to the
information contained in the Offer to Purchase and the annexes thereto.
The information contained in this Schedule 13E-3 concerning the Company,
including, without limitation, the information concerning the background of
the transactions, the deliberations of the Company's Board of Directors in
connection with the transaction, the opinion of the Company's financial
advisor and the Company's capital structure and historical financial
statements and projections, was supplied by the Company. Purchaser and Parent
take no responsibility for the accuracy of such information.
1
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
WHERE
ITEM IN LOCATED IN
SCHEDULE 13E-3 SCHEDULE 14D-1
- -------------- --------------
<S> <C>
Item 1(a).................................................... Item 1(a)
Item 1(b).................................................... Item 1(b)
Item 1(c).................................................... Item 1(c)
Item 1(d).................................................... Item 1(c)
Item 1(e).................................................... *
Item 1(f).................................................... Item 6
Item 2(a).................................................... Item 2(a)
Item 2(b).................................................... Item 2(b)
Item 2(c).................................................... Item 2(c)
Item 2(d).................................................... Item 2(d)
Item 2(e).................................................... Item 2(e)
Item 2(f).................................................... Item 2(f)
Item 2(g).................................................... Item 2(g)
Item 3(a).................................................... Item 3(a) and 3(b)
Item 3(b).................................................... Item 3(b)
Item 4....................................................... Item 5
Item 5....................................................... Item 5
Item 6(a).................................................... Item 4(a)
Item 6(b).................................................... Item 8
Item 6(c).................................................... Item 4(b)
Item 6(d).................................................... Item 4(c)
Item 7(a).................................................... Item 5
Item 7(b).................................................... *
Item 7(c).................................................... *
Item 7(d).................................................... *
Item 8....................................................... *
Item 9....................................................... *
Item 10(a)................................................... Item 6(a)
Item 10(b)................................................... Item 6(b)
Item 11...................................................... Item 7
Item 12(a)................................................... *
Item 12(b)................................................... *
Item 13...................................................... *
Item 14...................................................... *
Item 15(a)................................................... *
Item 15(b)................................................... Item 8
Item 16...................................................... Item 10(f)
Item 17...................................................... Item 11
</TABLE>
- --------
* The Item is located in the Schedule 13E-3 only.
2
<PAGE>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a)-(c) The response to Item 1(a)-(c) of the Schedule 14D-1 is incorporated
herein by reference.
(d) No dividends have been paid on the Shares during the past two years. The
information set forth in the Offer to Purchase under "THE TENDER OFFER--
Section 6. Price Range of Shares; Dividends" is incorporated herein by
reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase under "SPECIAL
FACTORS--INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER--Beneficial
Ownership of Shares" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by Parent and Purchaser. The
response to Item 2 of the Schedule 14D-1 is incorporated herein by reference.
The information concerning the name, state or other place of organization,
principal business and address of the principal office of Parent, Purchaser
and each person controlling Parent, and the information concerning the name,
business address, present principal occupation or employment and the name,
principal business and address of any corporation or other organization in
which such employment or occupation is conducted, material occupations,
positions, offices or employments during the last five years and citizenship
of each of the executive officers and directors of Parent and Purchaser is set
forth under "INTRODUCTION," "THE TENDER OFFER--Section 8. Certain Information
Concerning Parent and Purchaser" and Schedule I of the Offer to Purchase and
is incorporated herein by reference.
(e)-(f) The response to Item 2 of the Schedule 14D-1 is incorporated herein
by reference. During the last five years, neither Purchaser, Parent, nor, to
the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)-(b) The response to Item 3 of the Schedule 14D-1 is incorporated herein
by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The response to Item 5 of the Schedule 14D-1 is incorporated herein by
reference. The information set forth in the Offer to Purchase on the cover
page thereof and under "INTRODUCTION," "SPECIAL FACTORS--Background of the
Offer," "SPECIAL FACTORS--Rights of Shareholders in the Offer and the Merger;
Appraisal Rights," "SPECIAL FACTORS--The Merger Agreement," "THE TENDER
OFFER--Section 1. Terms of the Offer," "THE TENDER OFFER--Section 2.
Acceptance for Payment and Payment," "THE TENDER OFFER--Section 3. Procedures
for Tendering Shares," "THE TENDER OFFER--Section 4. Withdrawal Rights," "THE
TENDER OFFER--Section 10. Dividends and Distributions," "THE TENDER OFFER--
Section 12. Certain Conditions of the Offer," "THE TENDER OFFER--Section 13.
Extension of Tender Period; Amendment; Termination," "THE TENDER OFFER--
Section 14. Certain Legal Matters and Regulatory Approvals" and "THE TENDER
OFFER--Section 16. Miscellaneous" is incorporated herein by reference.
(b) Not applicable.
3
<PAGE>
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(e) The response to Item 5(a)-(e) of the Schedule 14D-1 is incorporated
herein by reference.
(f) and (g) The response to Item 5(f) and (g) of the Schedule 14D-1 is
incorporated herein by reference.
ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) The response to Item 4(a) of the Schedule 14D-1 is incorporated herein
by reference.
(b) The response to Item 8 of the Schedule 14D-1 is incorporated herein by
reference. The information set forth in the Offer to Purchase in "THE TENDER
OFFER--Section 15. Fees and Expenses" is incorporated herein by reference.
(c) The response to Item 4(b) of the Schedule 14D-1 is incorporated herein
by reference.
(d) Not applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) The response to Item 5 of the Schedule 14D-1 is incorporated herein by
reference.
(b) The information set forth in the Offer to Purchase under "SPECIAL
FACTORS--Background of the Offer," "SPECIAL FACTORS--Position of Parent and
Purchaser Regarding Fairness of the Merger", "SPECIAL FACTORS--Purpose and
Structure of the Offer; Reasons of Parent and Purchaser for the Offer and the
Merger" and "SPECIAL FACTORS--Plans for the Company; Certain Effects of the
Offer" is incorporated herein by reference.
(c)-(d) The information set forth in the Offer to Purchase under
"INTRODUCTION," "SPECIAL FACTORS--Background of the Offer," "SPECIAL FACTORS--
Purpose and Structure of the Offer; Reasons of Parent and Purchaser for the
Offer and the Merger," "SPECIAL FACTORS--Plans for the Company; Certain
Effects of the Offer," "THE TENDER OFFER--Section 5. Certain Federal Income
Tax Consequences" and "THE TENDER OFFER--Section 11. Effect of the Offer on
the Market for the Shares, the New York Stock Exchange, the Pacific Stock
Exchange and Exchange Act Registration" is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a)-(e) The information set forth in the Offer to Purchase under
"INTRODUCTION," "SPECIAL FACTORS--Background of the Offer," "SPECIAL FACTORS--
Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger" and "SPECIAL FACTORS--Purpose and Structure of the Offer; Reasons of
Parent and Purchaser for the Offer and the Merger," "SPECIAL FACTORS--Plans
for the Company; Certain Effects of the Offer" is incorporated herein by
reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a)-(c) The information set forth in the Offer to Purchase under "SPECIAL
FACTORS--Background of the Offer," "SPECIAL FACTORS--Recommendation of the
Company Board; Fairness of the Offer and the Merger," "SPECIAL FACTORS--
Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger" and in Schedule II is incorporated herein by reference. The opinion of
Wasserstein Perrella & Co., Inc. is attached to the Offer to Purchase as
Schedule II.
4
<PAGE>
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The response to Item 6(a) of the Schedule 14D-1 is incorporated herein
by reference.
(b) The response to Item 6(b) of the Schedule 14D-1 is incorporated herein
by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.
The response to Item 7 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD
TO THE OFFER AND THE MERGER.
(a)-(b) The information set forth in the Offer to Purchase under
"INTRODUCTION," "SPECIAL FACTORS--Background of the Offer," "SPECIAL FACTORS--
Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger," "SPECIAL FACTORS--Plans for the Company; Certain Effects of the
Offer" and "Interests of Certain Persons in the Offer and the Merger" is
incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE OFFER AND THE MERGER.
(a) The information set forth in the Offer to Purchase under "SPECIAL
FACTORS--Rights of Shareholders in the Offer and the Merger; Appraisal
Rights," "SPECIAL FACTORS--The Merger Agreement" and in Schedule III is
incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in the Offer to Purchase under "THE TENDER
OFFER--Section 7. Certain Information Concerning the Company" is incorporated
herein by reference. In addition, the Company's audited financial statements
for the fiscal years ended December 31, 1995 and December 31, 1996, and the
Company's unaudited financial statements for the period ended June 30, 1997,
are attached to the Offer to Purchase as Schedules IV and V thereto,
respectively.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in the Offer to Purchase under "INTRODUCTION,"
"SPECIAL FACTORS--Background of the Offer" and "SPECIAL FACTORS--Position of
Parent and Purchaser Regarding Fairness of the Offer and the Merger" is
incorporated herein by reference.
(b) The response to Item 8 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION.
The response to Item 10(f) of the Schedule 14D-1 is incorporated herein by
reference.
5
<PAGE>
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a) Not applicable.
(b)(1) Opinion of Wasserstein Perrella & Co., Inc. dated October 17, 1997
(attached as Schedule II to the Offer to Purchase).*
(b)(2) Presentation of Wasserstein Perrella & Co., Inc. dated October 17,
1997.
(b)(3) Presentation of J.P. Morgan Securities Inc. dated October 13, 1997.
(c)(1) Agreement and Plan of Merger dated October 17, 1997, among Purchaser,
Parent and Company.*
(c)(2) Purchase Agreement dated April 22, 1992 among Parent, Purchaser,
Company and Southern Electrical Supply Company, Inc. (incorporated by
reference to Exhibit 2 to the Initial Statement on Schedule 13D of Parent et
al. dated November 25, 1992).
(c)(3) Investment Agreement dated November 12, 1992 among Parent, Purchaser
and Company (incorporated by reference to Exhibit 4 to the Initial Statement
on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(4) Shareholders Agreement dated November 10, 1992 among Parent,
Purchaser and Robert M. Merson (incorporated by reference to Exhibit 5 to the
Initial Statement on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(5) Registration Rights Agreement dated November 12, 1992 between Parent
and Company (incorporated by reference to Exhibit 6 to the Initial Statement
on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(6) Purchase Agreement dated December 10, 1993 among Parent, Purchaser
and Company (incorporated by reference to Exhibit 7 to Amendment No. 2 to
Schedule 13D of Parent et al. dated June 24, 1994).
(c)(7) Amendment No. 1 to Investment Agreement dated March 1, 1994 among
Parent, Purchaser and Company (incorporated by reference to Exhibit 8 to
Amendment No. 2 to Schedule 13D of Parent et al. dated June 24, 1994).
(c)(8) Services Agreement dated as of November 1, 1995 between Parent and
Company (incorporated by reference to Exhibit 10.7 to Form 10-K of Company for
1995).
(c)(9) Form of Stock Option Agreement (incorporated by reference to Exhibit
10.2 to Form 10-K of Company for 1995).
(d)(1) Form of Offer to Purchase dated October 23, 1997.*
(d)(2) Form of Letter of Transmittal sent to holders of Shares.*
(d)(3) Form of Notice of Guaranteed Delivery.*
(d)(4) Form of Letter from J.P. Morgan Securities Inc. to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.*
(d)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.*
(d)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
6
<PAGE>
(d)(7) Summary Advertisement as published in The New York Times on October
23, 1997.*
(d)(8) Press Release issued by Parent and Company on October 20, 1997
(incorporated by reference to Exhibit B to Amendment No. 11 to the Schedule
13D of the Parent et al. dated October 20, 1997).
(d)(9) English translation of French-language press release published on
October 20, 1997 (incorporated by reference to Exhibit C to Amendment No. 11
to the Schedule 13D of Parent et al. dated October 20, 1997).
(d)(10) Press Release issued by Parent on August 29, 1997.*
(d)(11) Press Release issued by the Company on August 29, 1997.*
(d)(12) Press Release issued by the Company on October 21, 1997.*
(d)(13) Proposal letter dated August 29, 1997 to Rexel, Inc. from Rexel S.A.
(d)(14) Proposal letter dated August 29, 1997 to Mr. Guinchard from Rexel
S.A.
(e) Section 623 of the Business Corporation Law of the State of New York
(attached as Schedule III to the Offer to Purchase).*
(f) Not applicable.
- --------
* Incorporated by reference to the Statement on Schedule 14D-1 filed by
Purchaser on October 23, 1997.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, each of the
undersigned hereby certifies that the information set forth in this statement
is true, complete and correct.
October 23, 1997
Rexel S.A.
/s/ Alain Redheuil
By: _________________________________
Name: Alain Redheuil
Title: Chairman
International Technical
Distributors, Inc.
/s/ Alain Redheuil
By: _________________________________
Name: Alain Redheuil
Title: President
8
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
(a) Not applicable.
(b)(1) Opinion of Wasserstein Perrella & Co., Inc. dated October 17, 1997
(attached as Schedule II to the Offer to Purchase).*
(b)(2) Presentation of Wasserstein Perrella & Co., Inc. dated October 17,
1997.
(b)(3) Presentation of J.P. Morgan Securities Inc. dated October 13, 1997.
(c)(1) Agreement and Plan of Merger dated October 17, 1997, among Purchaser,
Parent and Company.*
(c)(2) Purchase Agreement dated April 22, 1992 among Parent, Purchaser,
Company and Southern Electrical Supply Company, Inc. (incorporated by
reference to Exhibit 2 to the Initial Statement on Schedule 13D of Parent et
al. dated November 25, 1992).
(c)(3) Investment Agreement dated November 12, 1992 among Parent, Purchaser
and Company (incorporated by reference to Exhibit 4 to the Initial Statement
on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(4) Shareholders Agreement dated November 10, 1992 among Parent,
Purchaser and Robert M. Merson (incorporated by reference to Exhibit 5 to the
Initial Statement on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(5) Registration Rights Agreement dated November 12, 1992 between Parent
and Company (incorporated by reference to Exhibit 6 to the Initial Statement
on Schedule 13D of Parent et al. dated November 25, 1992).
(c)(6) Purchase Agreement dated December 10, 1993 among Parent, Purchaser
and Company (incorporated by reference to Exhibit 7 to Amendment No. 2 to
Schedule 13D of Parent et al. dated June 24, 1994).
(c)(7) Amendment No. 1 to Investment Agreement dated March 1, 1994 among
Parent, Purchaser and Company (incorporated by reference to Exhibit 8 to
Amendment No. 2 to Schedule 13D of Parent et al. dated June 24, 1994).
(c)(8) Services Agreement dated as of November 1, 1995 between Parent and
Company (incorporated by reference to Exhibit 10.7 to Form 10-K of Company for
1995).
(c)(9) Form of Stock Option Agreement (incorporated by reference to Exhibit
10.2 to Form 10-K of Company for 1995).
(d)(1) Form of Offer to Purchase dated October 23, 1997.*
(d)(2) Form of Letter of Transmittal sent to holders of Shares.*
(d)(3) Form of Notice of Guaranteed Delivery.*
(d)(4) Form of Letter from J.P. Morgan Securities Inc. to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.*
(d)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.*
(d)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.*
<PAGE>
(d)(7) Summary Advertisement as published in The New York Times on October
23, 1997.*
(d)(8) Press Release issued by Parent and Company on October 20, 1997
(incorporated by reference to Exhibit B to Amendment No. 11 to the Schedule
13D of Parent et al. dated October 20, 1997).
(d)(9) English translation of French-language press release published on
October 20, 1997 (incorporated by reference to Exhibit C to Amendment No. 11
to the Schedule 13D of Parent et al. dated October 20, 1997).
(d)(10) Press Release issued by Parent on August 29, 1997.*
(d)(11) Press Release issued by the Company on August 29, 1997.*
(d)(12) Press Release issued by the Company on October 21, 1997.*
(d)(13) Proposal letter dated August 29, 1997 to Rexel, Inc. from Rexel
S.A.*
(d)(14) Proposal letter dated August 29, 1997 to Mr. Guinchard from Rexel
S.A.*
(e) Section 623 of the Business Corporation Law of the State of New York
(attached as Schedule III to the Offer to Purchase).*
(f) Not applicable.
- --------
* Incorporated by reference to the Statement on Schedule 14D-1 filed by
Purchaser on October 23, 1997.
2
<PAGE>
EXHIBIT 99(b)(2)
CONFIDENTIAL
================================================================================
REXEL, INC.
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
OCTOBER 17, 1997
===============================================================================
WASSERSTEIN PERELLA & CO., INC.
<PAGE>
REXEL, INC. TABLE OF CONTENTS
================================================================================
I. Background of the Proposed Transaction
II. Review of Rexel, Inc.
III. Review of Rexel, S.A.
IV. Valuation Analysis
A. Investment Return Analysis
B. Discounted Cash Flow Analysis
C. Comparable Company Trading Analysis
D. Comparable Company Acquisition Analysis
E. Premium Analysis
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-1-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
BACKGROUND OF THE
PROPOSED TRANSACTION
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-2-
<PAGE>
REXEL,INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Terms of Rexel, S.A. Proposal
. A purchase price of $22.50 per share implies the following market
capitalization and trading multiples
<TABLE>
<CAPTION>
---------------------------------------------------
IMPLIED MARKET CAPITALIZATION
---------------------------------------------------
<S> <C>
SA Offer Price $22.50
Total Shares Outstanding 26.06
Total Options outstanding 0.65
Average Strike Price of Options $8.56
EQUITY MARKET VALUE $595.3
Plus Net Debt/1/ 70.2
ADJUSTED MARKET VALUE $665.5
---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------
PRE-ANNOUNCEMENT PREMIUM (8/29/97)
---------------------------------------------------
1-DAY 30-DAY 60-DAY 90-DAY
----- ------ ------ ------
<S> <C> <C> <C>
19.2% 25.9% 25.9% 24.1%
---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
ADJUSTED MARKET VALUE AS MULTIPLE OF MARKET VALUE AS MULTIPLE OF
------------------------------------ ---------------------------
SALES EBITDA EBIT NET INCOME BOOK VALUE
----- ------ ---- ---------- ----------
<S> <C> <C> <C> <C> <C>
LTM 0.5x 9.2x 10.4x 17.7x 2.6x
FY 97 0.5x 9.1x 10.5x 18.4x 2.5x
FY 98 0.5x 8.0x 9.2x 15.2x 2.1x
---------------------------------------------------------------------------------------------------------------------
</TABLE>
_______________________________
/1/Based on projected 12/31/97 debt level
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Terms of Rexel, S.A. Proposal (Cont'd)
. SA's proposal is conditioned upon approval by the Company's Board of
Directors, including approval by the unaffiliated directors,
completion of satisfactory due diligence by SA and other customary
conditions. Financing is not a condition to the transaction
- SA has indicated that due diligence will be completed prior to
the signing of a merger agreement
. SA's proposal states that it is "not interested, under any
circumstances, in selling its interest in (the Company) and thus there
is no realistic prospect of a sale of a controlling interest in (the
Company) to a third party"
. The proposal contemplates a tender offer for all of the outstanding
shares of the Company not held by SA or ITD followed by a merger in
which the Company would become a wholly owned subsidiary of SA
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-4-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Ownership Structure -- Pre-Transaction
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------------------------------------------
PINAULT-PRINTEMPS -REDOUTE S.A.
--------------------------------------------------------
- ----------------
PUBLIC
SHAREHOLDERS 70.5%
- ----------------
--------------------------------------------------------
29.5% REXEL, S.A.
8,524,487 SHARES OF REXEL, INC. (32.74%)
--------------------------------------------------------
-------------------------------
50.55% REXEL, INC.
100% 26,055,290 SHARES OUTSTANDING
648,000 OPTIONS OUTSTANDING
-------------------------------
--------------------------------------------------------
INTERNATIONAL TECHNICAL DISTRIBUTORS, INC.
4,636,994 SHARES OF REXEL, INC. (17.81%)
--------------------------------------------------------
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-5-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Anticipated Ownership Structure -- Post-Transaction
-------------------------------------------
PINAULT-PRINTEMPS-REDOUTE S.A.
-------------------------------------------
-------------
PUBLIC
SHAREHOLDERS 70.5%
-------------
-------------------------------------------
29.5% REXEL, S.A.
21,808,968 SHARES OF REXEL, INC.(82.5%)
-------------------------------------------
-------------
100%
100% REXEL, INC.
-------------
-------------------------------------------
INTERNATIONAL TECHNICAL DISTRIBUTORS, INC.
4,636,994 SHARES OF REXEL, INC. (17.5%)
-------------------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-6-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Transaction Rationale
. Facilitate growth and enhance competitiveness
- Distribution of electrical parts and supplies is a highly
fragmented industry experiencing significant consolidation
- In the U.S., the largest distributor has approximately 5% of the
$60 billion market for electrical parts and supplies
- SA's financial resources are expected to enhance the Company's
ability to grow through acquisitions
- SA believes it can better exploit the U.S. market through 100%
ownership of the Company. SA does not want to use its resources
to develop the Company when half the benefit goes to someone
other than SA's shareholders
. Improve global purchasing power
. Create opportunity to provide global customer service
. Enhance ability to focus on long-term market share growth without
pressure of the public market to improve earnings on a quarterly basis
. Simplify decision making process by eliminating checks and balances that
are necessary when there are publicly held minority interests
. Eliminate SEC filing requirements and investor relations activities
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-7-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Review of Process-to-Date
. On August 29, 1997, SA sent a letter to the Company's Board of Directors
offering to buy all shares of the Company not owned by SA or ITD for $19.50
per share
. In September 1997, the Company appointed a Special Committee of independent
directors of the Company to consider SA's offer
. In September 1997, the Special Committee engaged Skadden Arps as its legal
advisor
. In September, 1997, the Special Committee selected SBC Warburg Dillon Read
to assist it in evaluating SA's proposal. However, due to a potential
conflict, SBC Warburg Dillon Read was not engaged by the Special Committee
. On September 29, 1997, the Special Committee met with WP&Co. to discuss the
transaction, the Committee's role and duties, and outline WP&Co's and the
Committee's proposed process and work schedule
. On September 29, 1997, WP&Co. was retained as independent financial advisor
to assist the Special Committee in its consideration of SA's offer,
received due diligence material of the Company from the Chairman of the
Special Committee and submitted an additional due diligence request list to
the Company
. On October 2, 1997, representatives of WP&Co. and Skadden Arps met with the
senior management of the Company at the Company's headquarters in Coral
Gables, Florida to conduct additional financial and legal due diligence
with respect to the Company's history, business, operations, relationship
with SA, financial performance and the electrical parts and supply industry
in general
. On October 6, 1997, WP&Co met with senior management of the Company at
WP&Co.'s New York office for detailed discussions of the Company's
financial projections including income and cash flow statements, the
balance sheet and future acquisition plans
. On October 6, 1997, WP&Co. met in New York with senior management of SA and
representatives of J.P. Morgan (financial advisor to SA and ITD) to discuss
SA's proposal and to conduct financial due diligence and business due
diligence with respect to the Company and SA
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-8-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Review of Process-to-Date
. On October 7, 1997, WP&Co. met with senior management of SA and J.P. Morgan
to discuss SA'S proposal and additional financial and business due
diligence items
. In addition, during the weeks of September 29th and October 6th, WP&Co. had
numerous telephone conversations with management of the Company to discuss
various due diligence items
. On October 9, 1997, WP&Co.'s internal fairness committee met to review the
potential range of fairness in connection with the proposed transaction.
WP&Co.'s internal fairness committee did not reach a definitive conclusion
. On October 12, WP&Co. met for the entire day with the Special Committee of
the Board of Directors to review WP&Co.'s work to date
. On October 13 and 14, representatives of WP&Co. and Skadden, Arps, along
with all of the members of the Special Committee, met with representatives
of SA, J.P. Morgan and Wachtell, Lipton, counsel to J.P. Morgan, to
negotiate terms of a potential transaction
Wasserstein Peralla & Co
- --------------------------------------------------------------------------------
-9-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
History of Rexel, S.A. Investment in Rexel, Inc.
. 1992 STOCK PURCHASE - RESULTED IN SA BENEFICIALLY OWNING 30% OF THE COMPANY
. April 22, 1992, the Company (formerly known as Willcox & Gibbs), SA
(formerly known as CDME) and ITD entered into a Purchase Agreement
pursuant to which:
- the Company issued 4,636,994 shares to ITD in exchange for all of the
outstanding stock of Southern Electric Supply Company (SES), a
subsidiary of ITD engaged in the distribution of electrical materials
- the Company issued 1,647,307 shares to SA for cash consideration of
approximately $10 million
- As a result of the transaction, SA and ITD together owned 30% of the
total outstanding shares of the Company
. In connection with the Purchase Agreement, the Company distributed as a
dividend (the "Distribution") to its stockholders (excluding SA and ITD)
all of the shares of its wholly-owned subsidiary Worldtex, Inc., a
manufacturer of covered yarn. As a result of the Distribution, Worldtex
became an independent entity no longer affiliated with the Company
. In connection with the Purchase Agreement, the Company, SA and ITD entered
into an Investment Agreement that:
- entitled SA to nominate 3 of the Company's 10 directors
- limited SA's and its affiliates' aggregate beneficial ownership of the
Company to 30% through 11/12/95, 35% through 11/12/96 and 40% through
11/12/97
. 1994 STOCK PURCHASE - RESULTED IN SA BENEFICIALLY OWNING 40% OF THE COMPANY
. In March, 1994 the Company sold 3,491,280 newly-issued shares to SA for
$31.4 million in cash ($9 per share), raising SA's beneficial ownership to
40%. This $9 per share price represented a premium of 18.0% above the
closing price 1-day prior to the announcement of the purchase, 30.9% 30
days prior to the announcement and 35.8% 60 days prior to the
announcement.
- On an LTM basis the $9 per share price represented 0.49x Sales, 9.8x
EBITDA, 14.1x EBIT, 38.5x Net Income and 2.07x Book Value
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-10-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
History of Rexel, S.A. Investment in Rexel, Inc.
. 1994 STOCK PURCHASE (CONT'D)
. In connection with this sale:
- The Company's Board was reduced to 9 directors with SA entitled to
nominate 5
- The 1992 Investment Agreement was amended so that the limitations on
the percentage of SA's beneficial ownership of the Company would
terminate December 31, 1994
- The Company's 1989 Rights Agreement ("Pill") was amended to expire
December 31, 1994
. OPEN MARKET PURCHASES - RESULTED IN SA ACQUIRING AN ADDITIONAL 15% OF THE
COMPANY
. 6/29/94 through 11/30/94, SA acquired 608,000 shares at an average
purchase price of approximately $6.48 per share
. 12/1/94 through 5/5/95, SA acquired 625,000 shares at an average purchase
price of approximately $6.34 per share
. On May 17, 1995, SA acquired 300,000 shares at an average purchase price
of approximately $7.86 per share
. 10/27/95 through 2/29/96, SA acquired 264,000 shares at an average
purchase price of approximately $12.48 per share
. 2/29/96 through 5/8/96, SA acquired 342,600 shares at an average purchase
price of approximately $11.90 per share
. 5/8/96 through 9/12/96, SA acquired 416,700 shares at an average purchase
price of approximately $13.87 per share
. 10/23/96 - 5/20/97, SA acquired 635,200 shares at an average purchase
price of approximately $16.22 per share
. SA has acquired an additional 194,400 shares, the average purchase price
of which is not yet available
. CURRENT OWNERSHIP INTEREST
. As of 8/29/97, SA directly held 8,542,487 shares of the Company or
approximately 32.74%
. As of 8/29/97, ITD (SA's wholly-owned subsidiary) directly held 4,636,994
shares of the Company or approximately 17.81%
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-11-
<PAGE>
REXEL, INC. Background of the Proposed Transaction
================================================================================
Rexel, Inc.-- Distribution of Volume at Various Prices Since 4/22/92
(CHART APPEARS HERE)
<TABLE>
- ----------------------------------
<S> <C> <C>
$3.50 - $7. 27401 38
- ----------------------------------
$7.50 - $1 18635 64
- ----------------------------------
$10.50 - $ 8609 75
- ----------------------------------
$13.50 - $ 9418 88
- ----------------------------------
$16.50 - $ 5883 97
- ----------------------------------
$19.50 - $ 2465 100
- ----------------------------------
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-12-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Analyst Expectations for Rexel, Inc.
<TABLE>
<CAPTION>
COMPANY ANALYST DATE COMMENT
- -------------- ------------------ ---------- ---------------------------------------------------------------------
<S> <C> <C> <C>
Merrill Lynch Stephanie Faibis 9/3/97 . "We think the deal makes sense strategically on the condition
that Rexel believes that it will give it the best access to a U.S
market which is growing strongly and if Rexel can pay for it
without hurting its capacity to make further acquisitions -
i.e., by issuing capital."
. "We believe that the purchase of the remaining stake makes
sense in the following cases:
1. Rexel believes that the U.S. market represents huge
Potential, as seen over the last five years, which it can
fully exploit only with full ownership of Rexel, Inc.
2. Rexel can finance the whole operation by increasing its
equity without needing to change its gearing ratio and so
putting its acquisition policy in jeopardy"
Cleary Gull Kenneth S. Salmon 7/28/97 . "STOCK REMAINS UNDERVALUED: Our target price is $24,
which is an enterprise value multiple of eight times projected
Glenn W. Primack 1998 EBITDA. We firmly believe that our 1998 estimates
will turn out to be conservative given the Company's
consolidation program. In the unlikely event that the pricing
environment causes management to back away from
some acquisitions, Rexel's strong free cash flow could then be
used to repurchase stock"
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-13-
<PAGE>
REXEL, INC. BACKGROUND OF THE PROPOSED TRANSACTION
================================================================================
Analyst Expectations for Rexel, Inc. (Cont'd)
<TABLE>
<CAPTION>
COMPANY ANALYST DATE COMMENT
- -------------- ------------------ ----------- ------------------------------------------------------------------
<S> <C> <C> <C>
Goldman, Sachs Victor E. Mandel 7/23/97 . "We are maintaining our 1997 and 1998 estimates of $1.30
& Co. and $1.50, respectively. We continue to rate the shares as
market performers."
. Based on this research, Goldman Sachs projects for 1998 -
2002 the following:
1. Net Sales growth of 4% per annum
2. Gross Margins to remain constant at 20.88%
3. S,G&A reduced by 0.25% per annum from 1998E level
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-14-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
REVIEW OF REXEL, INC.
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-15-
<PAGE>
REXEL, INC REVIEW OF REXEL, INC.
================================================================================
Rexel, Inc. - Company Overview
- ----------------------
BUSINESS DESCRIPTION . THE COMPANY DISTRIBUTES ELECTRICAL PARTS AND
- ----------------------
SUPPLIES FOR THE ELECTRICAL AND CONSTRUCTION
INDUSTRIES THROUGH 190 ELECTRICAL DISTRIBUTION
CENTERS IN 20 STATES AND THE BAHAMAS
- ----------------------
PRODUCTS . THE COMPANY MANAGES ITS BUSINESS THROUGH TWO
- ----------------------
PRINCIPAL REGIONAL ORGANIZATIONS: THE EASTERN
REGION AND THE WESTERN REGION
. The Eastern Region operates 97 distribution
centers in 11 states and the Bahamas
. The Western Region operates 82 locations in 9
states
. The Company's recently acquired Cable &
Connector Warehouse, Inc. subsidiary operates
11 distribution centers in 6 states
. Each of the Company's electrical distribution
locations serves an area with an
approximately 50 mile radius and meets the
needs of electrical contractors engaged in
commercial and residential construction
. THE COMPANY'S PRODUCT LINE INCLUDES: CABLES,
CORDS, BOXES, COVERS, WIRING DEVICES, CONDUIT,
RACEWAY DUCT, SAFETY SWITCHES, MOTOR CONTROLS,
BREAKERS, PANELS, LAMPS, FUSES AND SPECIAL
CABLES FOR COMPUTERS
. IN 1996, THE COMPANY SERVED OVER 82,000
CUSTOMERS. APPROXIMATELY 51% OF THE COMPANY'S
SALES ARE TO THE CONSTRUCTION-BASED ELECTRICAL
CONTRACTOR MARKET WITH THE REMAINDER BEING SOLD
TO A VARIETY OF OTHER MARKETS
- ----------------------
HEADQUARTERS . CORAL GABLES, FL
- ----------------------
- ----------------------
LABOR . 2,850 FULL-TIME EMPLOYEES
- ----------------------
- ----------------------
OWNERSHIP . REXEL, S.A. - 50.5%
- ----------------------
Wasserstein Perella & CO.
- --------------------------------------------------------------------------------
-16-
<PAGE>
REXEL, INC. REVIEW OF REXEL, INC.
================================================================================
Rexel, Inc. - Financial Summary ($MM)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
1994 1995 1996 LTM Estimate Estimate
FY 12/31 12/31/94 12/31/95 12/31/96 9/30/97 FY 97 FY 98
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SALES $1,065.5 $1,120.7 $1,159.4 $1,334.0 $1,368.4 $1,463.8
Less: Cost of Sales 853.0 890.6 917.9 1,059.3 1,084.8 1,156.4
----- ----- ----- ------- ------- -------
Gross Margin 212.5 230.1 241.5 274.7 283.6 307.4
Less: S,G & A Expens 187.4 184.7 185.7 210.8 220.3 235.0
----- ----- ----- ----- ----- -----
EBIT 25.1 45.4 55.8 64.0 63.3 72.4
Less: Interest Exp. 9.6 7.7 5.1 6.1 7.4 4.9
Less: Other Exp. (Inc.) (1.0) 0.0 (0.4) (0.1) 0.0 0.0
----- --- ----- ----- --- ---
EBT 16.5 37.7 51.1 58.0 55.9 67.5
Less: Income Tax Exp. 7.3 16.6 21.7 24.3 23.5 28.3
Less: Pref. Div. & Min. 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- ---
NET INCOME 9.3 21.1 29.4 33.6 32.4 39.1
- -----------------------------------------------------------------------------------------
EBIT $25.1 $45.4 $55.8 $64.0 $63.3 $72.4
Plus: Dep. & Amort. 9.7 8.9 8.5 8.5 9.9 10.6
--- --- --- --- --- ----
EBITDA 34.8 54.3 64.3 72.4 73.2 82.9
Less: Capital Exp. 12.1 5.1 4.6 4.9 5.3 10.7
---- --- --- --- --- ----
Free Cash Flow 22.7 49.3 59.7 67.6 67.9 72.3
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
MARGINS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Margin 19.9% 20.5% 20.8% 20.6% 20.7% 21.0%
EBITDA 3.3% 4.8% 5.5% 5.4% 5.3% 5.7%
EBIT 2.4% 4.1% 4.8% 4.8% 4.6% 4.9%
Net Income 0.9% 1.9% 2.5% 2.5% 2.4% 2.7%
Free Cash Flow 2.1% 4.4% 5.1% 5.1% 5.0% 4.9%
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
RATIOS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Book Value $131.5 $166.3 $196.1 $225.1 $236.0 $278.7
Ret. on Book Equity(2) 7.0% 12.7% 15.0% 14.9% 13.7% 14.0%
Total Book Assets 414.5 374.7 428.9 484.5 497.0 531.7
Ret. on Book Assets(2) 3.6% 6.9% 7.6% 7.7% 7.4% 7.9%
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Market Capitalization
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Stock Price (10/15/97) $21.50
52-Week High/Low: $22.25/$13.13
Shares Outstanding 26.06
Option Outstanding 0.65
Average Strike Price $8.56
EQUITY MARKET VALUE $568.6
Plus: Debt (1) $70.2
Plus: Preferred Stock 0.0
Plus: Post Ret. and Postemp. Benefits
or Min. Int. 0.0
Less: Cash & Equivalents 0.0
---
Net Debt 70.2
----
ADJUSTED MARKET VALUE $638.8
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
MARKET TRADING MULTIPLES
- -------------------------------------------------------------------
Adjusted Market Value as Market Value as
a multiple of: a multiple of:
Sales EBITDA EBIT FCF Net Inc. Book Val.
----- ------ ---- --- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
LTM 0.5x 8.8x 10.0x 9.5x 16.9x 2.5x
FY 97 0.5x 8.7x 10.1x 9.4x 17.5x 2.4x
FY 98 0.4x 7.7x 8.8x 8.8x 14.5x 2.0x
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
LTM CAPITALIZATION AND CREDIT RATIOS
- -------------------------------------------------------------------
Debt Coverage
EBITDA/Int. EBIT/Int. FCF/Int. Debt/EBITDA
----------- --------- -------- -----------
<S> <C> <C> <C>
11.8x 10.4x 11.0x 1.0x
- -------------------------------------------------------------------
<CAPTION>
Capitalization
BOOK RATIOS MARKET RATIOS
D/E D/(D+E) D/E D/(D+E)
--- ------- --- -------
<S> <C> <C> <C>
31.2% 23.8% 12.3% 11.0%
- -------------------------------------------------------------------
</TABLE>
_________________________
FOOTNOTES
_________________________
(1) Based on projected 12/31/97 debt level
(2) Assumes assets grow at the same rate as sales in FY97 and FY98
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-17-
<PAGE>
REXEL, INC. Review of Rexel, Inc.
================================================================================
Rexel, Inc. Branch Locations
[MAP APPEARS HERE]
[__] States where there are no Rexel branches
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-18-
<PAGE>
REXEL, INC. REVIEW OF REXEL, INC.
================================================================================
Acquisition History ($MM)
-----------
REXEL, INC.
-----------
<TABLE>
<CAPTION>
- --------------- ----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
SOUTHERN SACKS SUMMERS UTILITY CABLE &
ELECTRIC ELECTRICAL GROUP INC. PRODUCTS CONNECTOR
SUPPLY SUPPLY CO. SUPPLY WAREHOUSE,
COMPANY INC. (Adj. Purchase INC
(Adj. Purchase Price: $91.0) (Adj. Purchase
(Adj. Purchase Price: $13.4) Price: $6.8) (Adj. Purchase
Price: $29.0) (Sales $395.1) Price: $20.2)
(Sales $53.4) (Sales $29.2)
(Sales $114.5) (Sales $42.7)
- --------------- ----------------- ---------------- ----------------- ------------------
1992 1993 1996
<CAPTION>
- --------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
SOUTHLAND CHEMCO TAYLOR PACIFIC
ELECTRICAL ELECTRIC ELECTRIC ELECTRICAL
SUPPLY SUPPLY INC. SUPPLY INC. SUPPLY INC.
(Adj. Purchase (Adj. Purchase (Adj. Purchase (Adj. Purchase
Price: $25.0) Price: $6.9) Price: $11.1) Price: 30.5)
(Sales $61.7) (Sales $24.0) (Sales $51.3) (Sales $89.8)
- --------------- ----------------- ----------------- -----------------
1997
</TABLE>
Wasserstein Perella & Co.
- -------------------------------------------------------------------------------
-19-
<PAGE>
REXEL, INC. REVIEW OF REXEL, INC.
- --------------------------------------------------------------------------------
Shareholder Profile
($ in millions, shares in thousands)
<TABLE>
<CAPTION>
Market Value
Shares As of 10/15/97 %Held
---------- ---------------- --------
<S> <C> <C> <C>
5% BENEFICIAL OWNERS(1)
- ---------------------
Rexel, S.A 13,161.5 283.0 50.5%
INSTITUTIONS(2)
- ------------
13F INSTITUTION
Pioneering Management Corp. 878.6 18.9 3.4%
Investment Counselors 655.0 14.1 2.5%
California Public Employee Retirement 403.7 8.7 1.5%
Mellon Bank Corp. 394.8 8.5 1.5%
Barclays Bank PLC 366.6 7.9 1.4%
Nicholas-Applegate Capital 360.4 7.7 1.4%
RH Capital Associates 348.7 7.5 1.3%
Fidelity Management 298.8 6.4 1.1%
Dimensional Fund 296.7 6.4 1.1%
Vinik, Jeffrey N. 269.6 5.8 1.0%
Bankers Trust N.Y Corp. 225.9 4.9 0.9%
All Other (60) 2,912.9 62.6 11.2%
----------- ----------- ---------
TOTAL 7,411.8 159.4 28.4%
DOMESTIC MUTUAL FUNDS
Kent Small Company Growth 69.7 $ 1.5 0.3%
Convertible Holdings Inc. 64.2 1.4 0.2%
IDS Small Company Index 21.8 0.5 0.1%
Invesco Small Company Fund 16.8 0.4 0.1%
Consulting Growth - Small Cap. 11.1 0.2 0.0%
All Other (4) 26.5 0.6 0.1%
----------- ----------- ---------
TOTAL 210.1 4.5 0.8%
FOREIGN MUTUAL FUNDS
Obligest 127.8 $ 2.7 0.5%
Fructifrance 124.5 2.7 0.5%
Euro-Gan 47.0 1.0 0.2%
</TABLE>
Wasserstein Perella & Co.
- -------------------------------------------------------------------------------
-20-
<PAGE>
REXEL, INC. REVIEW OF REXEL, INC
================================================================================
Shareholder Profile (Cont'd)
($ in millions, shares in thousands)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES AS OF 10/15/97 % HELD
------ -------------- ------
<S> <C> <C> <C>
FOREIGN FUNDS (CONT'D)
Techno-Gan 40.0 0.9 0.2%
Ameri-Gan 30.0 0.6 0.1%
FCP Pluri-France 10.0 0.2 0.0%
All other (9) 28.7 0.6 0.1%
-------- ------- ------
TOTAL 408.0 8.8 1.6%
INSURANCE COMPANIES
Motors Insurance Corp. 12.8 0.3 0.0%
All Other (3) 19.6 0.4 0.1%
-------- ------- ------
TOTAL 32.4 0.7 0.1%
TOTAL INSTITUTIONS, INSIDERS AND BENEFICIAL HOLDERS 21,223.8 456.3 81.5%
OTHER SHAREHOLDERS 4,831.5 103.9 18.5%
-------- ------- ------
CURRENT TOTAL SHARES OUTSTANDING (3) 26,055.3 $ 560.2 100.0%
======== ======= ======
</TABLE>
____________________
(1) Based on 13D dated 8/29/97
(2) Based on CDA Spectrum dated 9/29/97
(3) As of 9/30/97 provided by the management
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-21-
<PAGE>
REXEL, INC. Review of Rexel, Inc.
===============================================================================
Stock Price and Volume History
(CHART APPEARS HERE)
<TABLE>
- ----------------------------
<S> <C> <C>
- ----------------------------
10/11/96 24.2 15.25
- ----------------------------
121.2 15.125
- ----------------------------
248.3 15
- ----------------------------
272.8 14
- ----------------------------
351.7 14.125
- ----------------------------
213.5 14
- ----------------------------
239.6 13.625
- ----------------------------
81.7 13.875
- ----------------------------
6-Dec 144.3 14.25
- ----------------------------
127.7 14.25
- ----------------------------
143.2 14.375
- ----------------------------
65.8 15.125
- ----------------------------
317.8 16.125
- ----------------------------
310.2 16.125
- ----------------------------
265.5 17
- ----------------------------
257.5 17.125
- ----------------------------
1/31/97 115.1 16.375
- ----------------------------
106 16.75
- ----------------------------
74.1 16.125
- ----------------------------
189 17.625
- ----------------------------
374.5 18
- ----------------------------
633.8 20.125
- ----------------------------
258.9 18.375
- ----------------------------
205.4 17
- ----------------------------
27-Mar 172.8 18.375
- ----------------------------
200 18.375
- ----------------------------
176.4 17.5
- ----------------------------
84 18.125
- ----------------------------
183.8 16.375
- ----------------------------
139.1 18.625
- ----------------------------
169.4 17.625
- ----------------------------
115 18
- ----------------------------
23-May 97.5 17.875
- ----------------------------
88 18.25
- ----------------------------
136.6 18.125
- ----------------------------
151.9 18.5
- ----------------------------
205 18.125
- ----------------------------
239.7 17.875
- ----------------------------
121.8 17.875
- ----------------------------
109.3 17.875
- ----------------------------
18-Jul 163.2 17.625
- ----------------------------
311.1 18.188
- ----------------------------
260.4 18.5
- ----------------------------
262.6 18.063
- ----------------------------
265.2 17.313
- ----------------------------
162.4 17.813
- ----------------------------
366.7 20.813
- ----------------------------
845.4 21.125
- ----------------------------
12-Sep 355.8 21.25
- ----------------------------
415.8 21.313
- ----------------------------
134.5 21.438
- ----------------------------
72.8 21.875
- ----------------------------
148 21.688
- ----------------------------
</TABLE>
WEEKLY FROM OCTOBER 10, 1996-OCTOBER 10, 1997
Prices in home currency. Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-22-
<PAGE>
REXEL, INC. REVIEW OF REXEL, INC.
================================================================================
Indexed Price History of Rexel, Inc. and Its Peer Group
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------
Date Rexel, Inc. S&P 500 Peer Group
- --------------------------------------------------------
<S> <C> <C> <C>
11-Oct 100 100 100
- --------------------------------------------------------
99.18 101.45 102.746
- --------------------------------------------------------
98.361 100.037 105.772
- --------------------------------------------------------
91.803 100.444 105.896
- --------------------------------------------------------
92.623 104.305 110.161
- --------------------------------------------------------
91.803 105.275 115.271
- --------------------------------------------------------
89.344 106.861 112.536
- --------------------------------------------------------
90.984 108.044 114.225
- --------------------------------------------------------
93.443 105.558 110.811
- --------------------------------------------------------
93.443 103.993 111.167
- --------------------------------------------------------
94.262 106.881 114.229
- --------------------------------------------------------
99.18 108.011 115.712
- --------------------------------------------------------
1/3/97 105.738 106.761 114.684
- --------------------------------------------------------
105.738 108.398 117.477
- --------------------------------------------------------
111.475 110.777 115.497
- --------------------------------------------------------
112.295 109.971 109.677
- --------------------------------------------------------
107.377 112.203 109.244
- --------------------------------------------------------
109.836 112.688 109.568
- --------------------------------------------------------
105.738 115.388 111.738
- --------------------------------------------------------
115.574 114.431 112.805
- --------------------------------------------------------
118.033 112.868 111.456
- --------------------------------------------------------
131.967 114.887 111.301
- --------------------------------------------------------
120.492 113.203 108.316
- --------------------------------------------------------
111.475 111.909 108.171
- --------------------------------------------------------
27-Mar 120.492 110.45 104.907
- --------------------------------------------------------
120.492 108.169 103.521
- --------------------------------------------------------
114.754 105.279 103.553
- --------------------------------------------------------
118.852 109.374 103.759
- --------------------------------------------------------
107.377 109.236 102.765
- --------------------------------------------------------
122.131 116.029 109.433
- --------------------------------------------------------
115.574 117.715 109.932
- --------------------------------------------------------
118.033 118.424 110.808
- --------------------------------------------------------
117.213 120.89 113.933
- --------------------------------------------------------
119.672 121.069 113.857
- --------------------------------------------------------
118.852 122.457 112.245
- --------------------------------------------------------
121.311 127.49 113.653
- --------------------------------------------------------
20-Jun 118.852 128.265 111.619
- --------------------------------------------------------
117.213 126.638 112.087
- --------------------------------------------------------
117.213 130.865 114.535
- --------------------------------------------------------
117.213 130.831 120.386
- --------------------------------------------------------
115.574 130.634 129.009
- --------------------------------------------------------
119.262 133.987 134.766
- --------------------------------------------------------
121.311 135.178 133.548
- --------------------------------------------------------
118.443 133.237 130.521
- --------------------------------------------------------
113.525 128.566 129.958
- --------------------------------------------------------
116.803 131.811 126.793
- --------------------------------------------------------
136.475 128.375 124.476
- --------------------------------------------------------
138.525 132.596 126.865
- --------------------------------------------------------
12-Sep 139.344 131.863 126.81
- --------------------------------------------------------
139.754 135.659 129.304
- --------------------------------------------------------
140.574 134.904 126.463
- --------------------------------------------------------
143.443 137.732 127.484
- --------------------------------------------------------
142.213 138.529 126.748
- --------------------------------------------------------
</TABLE>
Weekly from October 10,1996 - October 10,1997
(1) Includes Hughes Supply, Noland, W.W.
Grainger and Waxman Industries.
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-23-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
REVIEW OF REXEL, S.A.
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-24-
<PAGE>
REXEL, INC. REVIEW OF REXEL, S.A.
================================================================================
Rexel, S.A. - Company Overview
- ----------------------
BUSINESS DESCRIPTION . REXEL, S.A. IS A WORLD LEADER IN THE
- ---------------------- DISTRIBUTION OF ELECTRICAL PARTS AND SUPPLIES
FOR CONSTRUCTION, INDUSTRY AND SERVICES
- ----------------------
PRODUCTS . PRODUCTS INCLUDE: WIRES, CABLES, DUCTS,
- ---------------------- LIGHTING, HEATING, AND VENTILATION MATERIALS,
AND PRODUCTS FOR CONNECTING COMPUTER
PERIPHERALS AND LOCAL NETWORKS
. REXEL, S.A. USES DIFFERENT DISTRIBUTION
CHANNELS TO OFFER ITS CUSTOMERS A RANGE OF
PRODUCTS
. Rexel, S.A. is located in 16 countries and
operates through 83 companies with a total
of 909 sales outlets in Europe and the
United States
. In 1996, Rexel, S.A. generated 58.5% of its
sales outside of France
. Over the past five years, Rexel, S.A.'S
international development has increased
. REXEL, S.A.'S CUSTOMERS INCLUDE SMALL
ELECTRICAL FITTERS, CONTRACTORS AT THE LOCAL,
REGIONAL, AND NATIONAL LEVEL, INDUSTRIAL
COMPANIES, AND PUBLIC AGENCIES
- ----------------------
DEVELOPMENT . TO MAINTAIN AND EXPAND ITS LEADERSHIP POSITIONS
ORIENTATIONS IN EUROPE AND THE UNITED STATES, AND BEGIN TO
- --------------------- LOCATE IN THE MAJOR MARKETS WHERE REXEL, S.A.
IS NOT YET ACTIVE
. TO RAISE, BY CONSTANT, ONGOING EFFORT, THE
QUALITY OF SERVICE OFFERED CUSTOMERS
. TO IMPROVE THE OPERATING PROFITABILITY AND
FLEXIBILITY OF THE GROUP'S DISTRIBUTION
STRUCTURES
- ----------------------
HEADQUARTERS . PARIS, FRANCE
- ----------------------
- ----------------------
LABOR . 13,856 FULL-TIME EMPLOYEES
- ----------------------
- ----------------------
OWNERSHIP . PINAULT-PRINTEMPS-REDOUTE GROUP - 70.5%
- ----------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-25-
<PAGE>
REXEL, INC. REVIEW OF REXEL, S.A.
================================================================================
Rexel, S.A. - Financial Summary ($MM) (1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1995 1996 ESTIMATE ESTIMATE
FY 12/31 12/31/95 12/31/96 FY 97 FY 98
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $4,438.9 $4,781.3 $4,652.6 $5,232.2
Less: Cost of Sales 3,381.0 3,650.7 3,576.4 4,031.8
------- ------- ------- -------
Gross Margin 1,057.9 1,130.6 1,076.2 1,200.4
Less: S,G & A Expens 837.7 888.4 835.4 924.1
----- ----- ----- -----
EBIT 220.2 242.2 240.8 276.3
Less: Interest Exp. 16.9 5.4 11.5 11.0
Less: Other Exp. (Inc.) 14.1 14.8 17.1 20.8
---- ---- ---- ----
EBT 189.2 222.0 212.3 244.5
Less: Income Tax Exp. 67.3 79.9 75.7 87.5
Less: Pref. Div. & Min. 19.2 17.8 14.9 16.7
---- ---- ---- ----
NET INCOME 102.7 124.3 121.7 140.3
- -----------------------------------------------------------------
EBIT $220.2 $242.2 $240.8 $276.3
Plus: Dep. & Amort. 36.0 37.7 36.7 41.2
---- ---- ---- ----
EBITDA 256.2 279.9 277.5 317.6
Less: Capital Exp. 25.5 45.9 91.8 138.7
---- ---- ---- -----
FREE CASH FLOW 230.8 234.1 185.7 178.8
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARGINS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Margin 23.8% 23.6% 23.1% 22.9%
EBITDA 5.8% 5.9% 6.0% 6.1%
EBIT 5.0% 5.1% 5.2% 5.3%
Net Income 2.3% 2.6% 2.6% 2.7%
Free Cash Flow 5.2% 4.9% 4.0% 3.4%
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
RATIOS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Book Value $ 737.1 $ 817.3 $ 873.7 $1,051.5
Ret. on Book Equity 13.9% 15.2% 13.9% 13.3%
Total Book Assets 2,458.5 2,845.6 2,769.0 3,114.0
Ret. on Book Assets(3) 4.6% 4.5% 4.6% 4.7%
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARKET CAPITALIZATION
- -----------------------------------------------------------------
<S> <C> <C> <C>
STOCK PRICE (10/15/97) $281.35
52-Week High/Low: $310.96/$233.73
Shares Outstanding 11.26
EQUITY MARKET VALUE $3,167.4
Plus: Debt (2) $644.8
Plus: Preferred Stock 0.0
Plus: Post Ret. and Postemp. Benefits
or Min. Int. 0.0
Less: Cash & Equivalents 88.8
----
Net Debt 556.0
-----
ADJUSTED MARKET VALUE $3,723.5
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARKET TRADING MULTIPLES
- -----------------------------------------------------------------
ADJUSTED MARKET VALUE AS MARKET VALUE AS
A MULTIPLE OF: A MULTIPLE OF:
SALES EBITDA EBIT FCF NET INC. BOOK VAL.
----- ------ ---- --- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
LFY 0.8x 13.3x 15.4x 15.9x 25.5x 3.9x
FY 97 0.8x 13.4x 15.5x 20.0x 26.0x 3.6x
FY 98 0.7x 11.7x 13.5x 20.8x 22.6x 3.0x
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
NFY CAPITALIZATION AND CREDIT RATIOS
- -----------------------------------------------------------------
DEBT COVERAGE
EBITDA/INT. EBIT/INT. FCF/INT. DEBT/EBITDA
----------- --------- -------- -----------
<S> <C> <C> <C>
24.1x 21.0x 16.2x 2.0x
- -----------------------------------------------------------------
<CAPTION>
CAPITALIZATION
BOOK RATIOS MARKET RATIOS
D/E D/(D+E) D/E D/(D+E)
--- ------- --- -------
<S> <C> <C> <C>
78.9% 44.1% 20.4% 16.9%
- -----------------------------------------------------------------
</TABLE>
- -------------------------
FOOTNOTES
- -------------------------
(1) Exchange rates are based on annual averages for I/S items and year-end
rates for B/S items. Exchange rate for estimates and market data is the
current rate as of 10/15/97
(2) Book value of debt assumed to approximate market value
(3) Assumes book value of equity and assets grow at the same rate as sales in
FY97 and FY98
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-26-
<PAGE>
REXEL, INC. REVIEW OF REXEL, S.A.
================================================================================
Pinault-Printemps-Redoute - Financial Summary ($MM) (1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
1995 1996(2) Estimate(2) Estimate(2)
FY 12/31 12/31/95 12/31/96 FY 97 FY 98
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $15,637.6 $15,757.2 $14,580.1 $15,699.1
Less: Cost of Sales 10,611.2 NA NA NA
-------- -- -- --
Gross Margin 5,026.4 NA NA NA
Less: S,G & A Expens 4,470.0 NA NA NA
------- -- -- --
EBIT 556.4 649.7 663.7 783.7
Less: Interest Exp. 111.4 43.3 9.3 (19.9)
Less: Other Exp. (Inc.) 34.4 46.8 16.9 16.9
---- ---- ---- ----
EBT 410.6 559.6 637.5 786.7
Less: Income Tax Exp. 105.5 152.7 221.6 277.7
Less: Pref. Div. & Min. 0.4 2.2 6.9 9.0
--- --- --- ---
NET INCOME 304.7 404.7 409.0 500.1
- -----------------------------------------------------------------------
EBIT $556.4 $649.7 $663.7 $783.7
Plus: Dep. & Amort. 210.8 213.1 224.1 195.4
----- ----- ----- -----
EBITDA 767.2 862.8 887.8 979.0
Less: Capital Exp. 239.2 262.2 287.3 250.6
----- ----- ----- -----
FREE CASH FLOW 528.0 600.5 600.5 728.4
- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARGINS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Margin 32.1% NA NA NA
EBITDA 4.9% 5.5% 6.1% 6.2%
EBIT 3.6% 4.1% 4.6% 5.0%
Net Income 1.9% 2.6% 2.8% 3.2%
Free Cash Flow 3.4% 3.8% 4.1% 4.6%
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
RATIOS
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Book Value $2,759.9 $2,912.1 $2,841.4 $3,181.4
Ret. on Book Equity 11.0% 13.9% 14.4% 15.7%
Total Book Assets 11,152.9 8,856.4 8,031.4 8,417.0
Ret. on Book Assets(3) 3.3% 4.9% 5.2% 5.8%
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARKET CAPITALIZATION
- -----------------------------------------------------------------
<S> <C> <C>
Stock Price (10/15/97) $485.47
52-Week High/Low: $513.93/$312.99
Shares Outstanding 22.42
EQUITY MARKET VALUE $10,882.3
Plus: Debt (3) $2,086.1
Plus: Preferred Stock 0.0
Plus: Post Ret. and Postemp. Benefits
or Min. Int. 0.0
Less: Cash & Equivalents 0.0
---
Net Debt 2,086.1
-------
ADJUSTED MARKET VALUE $12,968.4
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
MARKET TRADING MULTIPLES
- -----------------------------------------------------------------
Adjusted Market Value as Market Value as
a multiple of: a multiple of:
Sales EBITDA EBIT FCF Net Inc. Book Val.
----- ------ ---- --- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
LFY 0.8x 15.0x 20.0x 21.6x 26.9x 3.7x
FY 97 0.9x 14.6x 19.5x 21.6x 26.6x 3.8x
FY 98 0.8x 13.2x 16.5x 17.8x 21.8x 3.4x
- -----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
NFY CAPITALIZATION AND CREDIT RATIOS
- -----------------------------------------------------------------
Debt Coverage
EBITDA/Int. EBIT/Int. FCF/Int. Debt/EBITDA
----------- --------- -------- -----------
<S> <C> <C> <C>
95.5x 71.4x 64.6x 2.3x
- -----------------------------------------------------------------
<CAPTION>
CAPITALIZATION
BOOK RATIOS MARKET RATIOS
D/E D/(D+E) D/E D/(D+E)
--- ------- --- -------
<S> <C> <C> <C>
71.6% 41.7% 19.2% 16.1%
- -----------------------------------------------------------------
</TABLE>
_________________________
FOOTNOTES
_________________________
(1) Exchange rates are based on annual averages for I/S items and year-end
rates for B/S items. Exchange rate for estimates and market data is the
current rate as of 10/15/97
(2) Based on Merrill Lynch research report dated 8/1/97
(3) Based on net debt number on Merrill Lynch research report and book value of
debt assumed to approximate market value
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-27-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
VALUATION ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-28-
<PAGE>
REXEL, INC.
================================================================================
VALUATION ANALYSIS TABLE OF CONTENTS
A. INVESTMENT RETURN ANALYSIS
B. DISCOUNTED CASH FLOW ANALYSIS
C. COMPARABLE COMPANY TRADING ANALYSIS
D. COMPARABLE COMPANY ACQUISITION ANALYSIS
E. PREMIUM ANALYSIS
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-29-
<PAGE>
REXEL, INC. VALUATION ANALYSIS
================================================================================
Summary Valuation Information
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
_________________________ -------------------------------
METHODOLOGY IMPLIED SHARE PRICE RANGE
------------------------- -------------------------------
<S> <C> <C> <C>
Current Trading Value (10/15/97) $21.50
Return from 12/15/92 Share Price to Offer Price of $22.50/(1)/ 42.9%
Discounted Cash Flow Analysis
Management Case $20.00 - $22.00
Management Case with Acquisitions $20.00 - $22.00
Management Case without Recession $21.00 - $23.00
Downside Case $16.00 - $18.00
June Plan Case $22.50 - $25.00
Comparable Acquisition Analysis $12.00 - $20.00
Comparable Company Analysis $22.00 - $26.00
Premium Analysis $21.50 - $22.10
INDICATIVE VALUATION RANGE $22.00 - $24.00
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________
/(1)/ Compound annual return
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. VALUATION ANALYSIS
================================================================================
Summary Valuation Range ($MM, except per share amounts)
<TABLE>
<CAPTION>
ENTERPRISE EQUITY EQUITY VALUE ENTERPRISE VALUE
- ---------------------------
METHODS AND ASSUMPTIONS VALUE VALUE PER SHARE AS A MULTIPLE OF 1997E
- --------------------------- -------------------------------------------
RANGE/(1)/ RANGE/(1)/ RANGE/(2)/ SALES EBITDA EBIT
-------------- -------------- --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT TRADING VALUATION/(3)/ $639 $569 $21.50 0.47X 8.7X 10.1X
- -------------------------
REXEL, S.A. OFFER
- -----------------
. Assuming all shares are $665 $595 $22.50 0.49x 9.1x 10.5x
valued at $22.50 per share
DISCOUNTED CASH FLOW ANALYSIS
- -----------------------------
. Management Case $599 - $652 $529 - $582 $20.00 - $22.00 0.44x - 0.48x 8.2x - 8.9x 9.5x - 10.3x
. Management Case $599 - $652 $529 - $582 $20.00 - $22.00 0.44x - 0.48x 8.2x - 8.9x 9.5x - 10.3x
with Acquisitions
. Management Case $625 - $679 $555 - $609 $21.00 - $23.00 0.46x - 0.50x 8.5x - 9.3x 9.9x - 10.7x
without Recession
. Downside Case $492 - $545 $422 - $475 $16.00 - $18.00 0.36x - 0.40x 6.7x - 7.4x 7.8x - 8.6x
. June Plan Case $665 - $732 $595 - $662 $22.50 - $25.00 0.49x - 0.54x 9.1x - 10.0x 10.5x - 11.6x
COMPARABLE ACQUISITION ANALYSIS
- -------------------------------
. Reflects benchmark transactions $385 - $599 $315 - $529 $12.00 - $20.00 0.28x - 0.44x 5.3x - 8.2x 6.1x - 9.5x
in the industry
COMPARABLE COMPANY ANALYSIS
- ---------------------------
. Company trading values based on $652 - $759 $582 - $689 $22.00 - $26.00 0.48x - 0.55x 8.9x - 10.4x 10.3x - 12.0x
public valuations of comparable
companies
PREMIUM ANALYSIS $639 - $655 $569 - $585 $21.50 - $22.10 0.47x - 0.48x 8.7x - 8.9x 10.1x - 10.3x
- ----------------
INDICATIVE VALUATION RANGE $652 - $706 $582 - $635 $22.00 - $24.00 0.48x - 0.52x 8.9x - 9.6x 10.3x - 11.2x
- --------------------------
<CAPTION>
EQUITY VALUE
- ---------------------------
METHODS AND ASSUMPTIONS AS A MULTIPLE OF 1997E
- --------------------------- ----------------------------------
NET INCOME BOOK VALUE
--------------- ----------------
<S> <C> <C>
CURRENT TRADING VALUATION/(3)/ 17.5x 2.4x
- -------------------------
REXEL, S.A. OFFER
- -----------------
. Assuming all shares are 18.4x 2.5x
valued at $22.50 per share
DISCOUNTED CASH FLOW ANALYSIS
- -----------------------------
. Management Case 16.3x - 18.0x 2.2x - 2.5x
. Management Case 16.3x - 18.0x 2.2x - 2.5x
with Acquisitions
. Management Case 17.1x - 18.8x 2.4x - 2.6x
without Recession
. Downside Case 13.0x - 14.7x 1.8x - 2.0x
. June Plan Case 18.4x - 20.4x 2.5x - 2.8x
COMPARABLE ACQUISITION ANALYSIS
- -------------------------------
. Reflects benchmark transactions 9.7x - 16.3x 1.3x - 2.2x
in the industry
COMPARABLE COMPANY ANALYSIS
- ---------------------------
. Company trading values based on 18.0x - 21.2x 2.5x - 2.9x
public valuations of comparable
companies
PREMIUM ANALYSIS
- ---------------- 17.5x - 18.0x 2.4x - 2.5x
INDICATIVE VALUATION RANGE 18.0x - 19.6x 2.5x - 2.7x
- --------------------------
</TABLE>
/(1)/ Assumes net debt of $70.2MM
/(2)/ Based on a total of 26.1MM shares outstanding and 0.6MM options with
average exercise price of $8.56/share
/(3)/ Based on 10/15/97 closing price
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. INVESTMENT RETURN ANALYSIS
================================================================================
------------------------------
INVESTMENT RETURN
ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-32-
<PAGE>
REXEL, INC. INVESTMENT RETURN ANALYSIS
================================================================================
Stock Price Return Analysis
<TABLE>
<CAPTION>
-------------- -------------- -------------
Opening Closing Compound
Price Level Price Level Annual
at 12/15/92/(1)/ at 10/15/97 Return
-------------- -------------- -------------
<S> <C> <C> <C>
Rexel, Inc. $4.00 $21.50 41.6%
S&P Industrials $505.75 $1,133.68 18.2%
</TABLE>
<TABLE>
<CAPTION>
--------------
Value
Required
--------------
<S> <C>
Assuming a Return Equivalent to the S&P Industrials $ 8.97
Current Rexel, S.A. Offer $22.50
Assuming a 20.0% Return $ 9.66
Assuming a 30.0% Return $14.22
Assuming a 40.0% Return $20.36
</TABLE>
_________________________________________
/(1)/ First trading day after the spin-off of Worldtex Inc.
/(2)/ Represent a 42.9% compound annual return to the 12/15/92 price and a 4.7%
return to the current price
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC.
================================================================================
------------------------------
DISCOUNTED CASH FLOW
ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-34-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Background of Discounted Cash Flow Analysis
. Five preliminary financial forecasts were developed following detailed
discussion with the Company's management on October 2, 1997 and October 6,
1997
. Initial assumptions were based on:
- the Company's historical operations and financial performance
- the current condition of the business and the electrical parts and
supplies industry in general
- the F.W. Dodge report dated March 1997 which provides forecasts of
market conditions for the commercial and industrial building industry
through 2001
- management estimates developed in June, 1997 for fiscal years 1997
-2000 assuming no additional acquisitions after 1997 with a recession
in 1999 and 2000 as projected by F.W. Dodge
- management estimates developed in June, 1997 for fiscal years 1997 -
2000 assuming additional acquisitions after 1997 with a recession in
1999 and 2000 as projected by F.W. Dodge
. The five financial forecasts developed were
- A "Management Case" that modifies the Company's three-year plan
developed in June, 1997 by using management's current estimates of
financial performance through the year 2002. The Management Case
assumes no additional acquisitions after 1997 and a market recession
in 1999 and 2000. The projections underlying the Management Case were
provided to WP&Co. by the Company's CEO during the week of October 6,
following announcement of proposed transaction. The Company's CEO
stated that these projections reflect his best current view of the
likely future financial performance of the Company based on his
additional experience as CEO of the Company and having had the time to
thoughtfully consider the Company's three-year plan developed in June,
1997. The Company's CEO subsequently reviewed the Management Case and
stated that it reflects his current best estimate of the Company's
future financial performance
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-35-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Background of Discounted Cash FLow Analysis
- A "Management Case With Acquisitions" that uses the Management Case
but assumes, for each year of the projection period, the acquisition
of businesses that contribute $100 million in sales, have EBITDA
margins of 5.3%, and acquisition prices of 6.0x EBITDA. The Company's
management has advised WP&Co. that it believes that $100 million of
additional sales from acquisitions would be difficult for the Company
to integrate effectively, that a 5.3% EBITDA margin is, on average,
appropriate to use for acquisitions and that most acquisitions made by
the Company can be made at or below 6.0x EBITDA
- A "Management Case Without Recession" that uses the Management Case
but assumes no recession during 1999 or 2000. The Management Case
Without Recession projections assume that the Company's sales grow at
an annual rate of 4%, which is approximately 1.5% above estimated real
GDP growth. 1% -1.5% is the rate above long-term GDP which the
Company's CEO has advised WP&Co. is appropriate to use as the
Company's long-term growth rate without acquisitions
- A "Downside Case" that uses the Management Case but projects out ten
years and assumes a more severe recession in 1999 and 2000 and a
second recession in the years 2003 and 2004. The projected effects of
these recessions on sales and margins are based on actual results of
certain of the Company's subsidiaries during the 1990-1991 recession
that were provided to WP&Co. by the Company
- A "June Plan Case" that uses the Company's 3-year plan developed in
June 1997, assumes no additional acquisitions after 1997, a market
recession in 1999 and 2000, and uses a five year forecast period.
Management of the Company has advised WP&Co. that the three-year plan
developed in June, 1997 was prepared quickly at the direction of
Rexel, S.A. Management states that the end result of the three-year
plan developed in June, 1997 was dictated by management of Rexel, S.A.
and does not reflect the best estimate of the Company's management of
the likely future financial results of the Company
. Based on historical payments under the Services Agreement between the
Company and SA dated November 1, 1995, service and consulting fees of
approximately $800,000 were included in S,G&A throughout the
projection period for all five financial forecasts
. On October 8, 1997, WP&Co. had a teleconference with the Company's
senior management to discuss in detail management's financial
forecasts and additional due diligence items
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-36-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Background of Discounted Cash Flow Analysis (Cont'd)
. As a result of those discussions, further refinements were made to the
five financial forecasts
- In developing these forecasts, WP&Co. was advised by senior
management of the Company that the 1998 division targets currently
under discussion use performance targets that are more optimistic
than the financial performance projected by the Management Case.
Management stated that the Management Case represents the operating
results that senior management anticipates the Company will likely
achieve
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-37-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Assumptions for Discounted Cash Flow Analysis
. MANAGEMENT CASE
. Modifies the June Plan Case by using management's current estimates of
future financial performance assuming no additional acquisitions after
1997 and a market recession in 1999 and 2000 based on the F.W. Dodge
report
- Assumes capital expenditures of $1 million per year from 1998
through 2002 for branch expansions and improvements (depreciated
over seven years) and an additional $3.5 million in both 1998 and
1999 for a new information system (depreciated over five years).
Year to date (YTD) sales growth and working capital figures are
annualized and exclude prepaid expenses
. Income Statement Assumptions
<TABLE>
<CAPTION>
YTD 9/97 1997 1998 1999 2000 2001 2002
-------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Growth 18.3% 18.0% 7.0% 1.2% (0.9)% 7.0% 4.0%
Gross Margins 20.6% 20.7% 21.0% 21.0% 21.0% 21.1% 21.2%
Operating Expense % of Sales 15.9% 16.1% 16.1% 16.2% 16.2% 16.1% 16.1%
Effective Tax Rate 42.5% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0%
</TABLE>
. Balance Sheet Assumptions
<TABLE>
<CAPTION>
YTD 9/97 1997 1998 1999 2000 2001 2002
-------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Working Capital % of Sales 12.9% 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Capital Expenditures % of Sales 0.4% 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Depreciation % of Sales NA 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Days Receivable 52.2 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 7.9x 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Days Payable 53.0 47.0 47.1 47.8 48.1 48.1 48.1
Net Working Capital Turns 7.8x 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-38-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - Management Case
($ in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31 (1) FORECAST (2)
-------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
- --------------
Net Sales Before Annual Acquisitions $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,481.4 $1,468.1 $1,570.8 $1,633.7
Annual Acquisitions NA NA NA 0.0 0.0 0.0 0.0 0.0 0.0
-- -- -- --- --- --- --- --- ---
Total Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,481.4 $1,468.1 $1,570.8 $1,633.7
Cost of Goods Sold 853.0 890.6 917.9 1,084.8 1,156.4 1,170.3 1,159.8 1,239.4 1,287.3
----- ----- ----- ------- ------- ------- ------- ------- -------
Gross Profit 212.5 230.1 241.5 283.6 307.4 311.1 308.3 331.4 346.3
SG&A (3) 187.4 184.7 185.7 220.3 235.0 240.2 238.2 253.3 263.6
EBIT 25.1 45.4 55.8 63.3 72.4 70.9 70.1 78.1 82.8
Depreciation 9.7 8.9 6.6 7.1 7.5 7.6 8.0 8.6 7.9
Amortization NA NA 1.9 2.8 3.0 3.0 3.1 3.1 3.1
-- -- --- --- --- --- --- --- ---
EBITDA 34.8 54.3 64.3 73.2 82.9 81.6 81.2 89.8 93.7
Capital Expenditures 12.1 5.1 4.6 5.3 10.7 10.7 7.2 7.6 7.9
---- --- --- --- ---- ---- --- --- ---
Free Cash Flow (4) 22.7 49.3 59.7 67.9 72.3 70.9 74.0 82.2 85.8
Margin (% of Sales):
- -------------------
Gross Profit 19.9% 20.5% 20.8% 20.7% 21.0% 21.0% 21.0% 21.1% 21.2%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.3% 79.0% 79.0% 79.0% 78.9% 78.8%
SG&A 17.6% 16.5% 16.0% 16.1% 16.1% 16.2% 16.2% 16.1% 16.1%
EBIT 2.4% 4.1% 4.8% 4.6% 4.9% 4.8% 4.8% 5.0% 5.1%
EBITDA 3.3% 4.8% 5.5% 5.3% 5.7% 5.5% 5.5% 5.7% 5.7%
Free Cash Flow 2.1% 4.4% 5.1% 5.0% 4.9% 4.8% 5.0% 5.2% 5.3%
Depreciation(5) 0.9% 0.8% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Capital Expenditures(5) 1.1% 0.5% 0.4% 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Growth Rates:
- ------------
Net Sales Bef. Acq/Total Net Sales Yr Before - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Total Net Sales - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
SG&A - (1.5%) 0.5% 18.6% 6.7% 2.2% (0.8%) 6.3% 4.1%
EBIT - 81.0% 23.0% 13.3% 14.4% (2.0%) (1.1%) 11.5% 5.9%
EBITDA - 56.2% 18.4% 13.8% 13.3% (1.6%) (0.5%) 10.6% 4.4%
</TABLE>
________________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5 MM capital expenditures for information systems
in 1998 and 1999, respectively, and these expenditures are depreciated over
5-year period
Also assumes $1.0MM for branch improvement and expansion depreciated
over 7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-39-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Balance Sheet & Unlevered Free Cash Flow - Management Case
($ in millions)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Fiscal Year Ends 12/31 (1) Forecast (2)
---------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ----------------------
Accounts Receivable $143.0 $138.6 $145.6 $188.7 $190.2 $191.8 $189.6 $202.8 $210.9
Inventory 111.3 102.2 117.7 136.3 146.4 146.2 143.3 153.2 159.1
Prepaid Expenses 8.9 8.3 10.4 11.3 12.1 12.3 12.1 13.0 13.5
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Assets 263.2 249.2 273.6 336.3 348.7 350.3 345.0 369.0 383.5
Accounts Payable 116.5 107.3 122.6 139.7 149.3 153.4 152.7 163.2 169.5
Accrued Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- --- --- --- ---
Total Current Liabilities 116.5 107.3 122.6 139.7 149.3 153.4 152.7 163.2 169.5
Net Working Capital (3) 146.7 141.8 151.0 196.6 199.4 196.9 192.3 205.8 214.0
Net Working Capital to Sales 13.8% 12.7% 13.0% 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Net Working Capital Turns (4) 7.3x 7.9x 7.7x 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
RATIOS:
- -------
Days Receivable 49.0 45.1 45.8 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 7.7x 8.7x 7.8x 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Prepaid Expense (% of sales) 0.8% 0.7% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
Days Payable 49.9 44.0 48.8 47.0 47.1 47.8 48.1 48.1 48.1
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Change in Net Working Capital - (3.3%) 6.5% 30.2% 1.5% (1.3%) (2.3%) 7.0% 4.0%
Total Net Sales Growth - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Change in Net W.C. to Change in Sales - (63.6%) 187.0% 167.4% 20.9% (106.5%) 260.1% 100.1% 100.2%
UNLEVERED FREE CASH FLOWS:
- --------------------------
EBIT 63.3 72.4 70.9 70.1 78.1 82.8
Less: Taxes on EBIT (5) 26.6 30.4 29.8 29.4 32.8 34.8
Plus: Depreciation and Amort. (6) 9.9 10.6 10.7 11.1 11.6 10.9
Less: Increase in Net Working Cap. 45.6 2.9 (2.5) (4.6) 13.5 8.2
Less: Capital Expenditures (6) 5.3 10.7 10.7 7.2 7.6 7.9
Less: Cash Paid for Acquisitions 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- ---
UNLEVERED FREE CASH FLOW (4.2) 39.0 43.7 49.2 35.9 42.8
</TABLE>
_________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Working Capital excludes cash and short-term debt
(4) Calculated as Total Net Sales divided by Net Working Capital
(5) 42.0% tax rate assumed
(6) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998 and 1999, respectively, and that these expenditures are
depreciated over a 5-year period. Also assumes $1.0MM per year for branch
improvement and expansion, depreciated over a 7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
Management Case ($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- -----------------------------
Terminal Value Multiple: Year 5 EBITDA Year 5 EBITDA $93.7
Discount Net Debt (1) 70.2
Rate 7.0x 8.0x 9.0x Shares Out (2) 26.4
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
$161.6 $161.6 $161.6 Present Value of Free Cash Flows
416.6 476.1 535.6 Present Value of Terminal Value
----- ----- -----
$578.2 $637.7 $697.2 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$508.0 $567.5 $627.0 Net Equity Value
$19.21 $21.46 $23.71 Implied Share Price
9.5%
2.8% 3.6% 4.2% Implied Perpetuity Growth Rate
0.4x 0.5x 0.5x Multiple of 1997E Sales
7.9x 8.7x 9.5x Multiple of 1997E EBITDA
9.1x 10.1x 11.0x Multiple of 1997E EBIT
$157.5 $157.5 $157.5 Present Value of Free Cash Flows
398.0 454.9 511.8 Present Value of Terminal Value
----- ----- -----
$555.6 $612.5 $669.3 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$485.4 $542.3 $599.1 Net Equity Value
10.5% $18.36 $20.51 $22.66 Implied Share Price
3.7% 4.5% 5.2% Implied Perpetuity Growth Rate
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.6x 8.4x 9.1x Multiple of 1997E EBITDA
8.8x 9.7x 10.6x Multiple of 1997E EBIT
$153.6 $153.6 $153.6 Present Value of Free Cash Flows
380.5 434.9 489.2 Present Value of Terminal Value
----- ----- -----
$534.1 $588.5 $642.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
11.5% $464.0 $518.3 $572.7 Net Equity Value
$17.54 $19.60 $21.65 Implied Share Price
4.7% 5.5% 6.1% Implied Perpetuity Growth Rate
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.3x 8.0x 8.8x Multiple of 1997E EBITDA
8.4x 9.3x 10.2x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 06.MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - Perpetuity Growth Rate (Management
Case)
($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- ------------------------------
Perpetuity Growth Rate: Year 5 Unlevered Free Cash Flow Year 5 FCF $42.8
Discount Net Debt (1) 70.2
Rate 3.5% 4.0% 4.5% Shares Out (2) 26.4
--------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
$161.6 $161.6 $161.6 Present Value of Free Cash Flows
469.1 514.2 568.3 Present Value of Perpetuity
----- ----- -----
$630.7 $675.8 $729.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
9.5% $560.5 $605.6 $659.8 Net Equity Value
$21.20 $22.90 $24.95 Implied Share Price
7.9x 8.6x 9.6x Implied Terminal EBITDA Multiplier
0.5x 0.5x 0.5x Multiple of 1997E Sales
8.6x 9.2x 10.0x Multiple of 1997E EBITDA
10.0x 10.7x 11.5x Multiple of 1997E EBIT
$157.5 $157.5 $157.5 Present Value of Free Cash Flows
384.2 415.7 452.6 Present Value of Perpetuity
----- ----- -----
$541.7 $573.3 $610.1 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
10.5% $471.5 $503.1 $539.9 Net Equity Value
$17.83 $19.02 $20.42 Implied Share Price
6.8x 7.3x 8.0x Implied Terminal EBITDA Multiplier
0.4x 0.4x 0.4x Multiple of 1997E Sales
7.4x 7.8x 8.3x Multiple of 1997E EBITDA
8.6x 9.1x 9.6x Multiple of 1997E EBIT
$153.6 $153.6 $153.6 Present Value of Free Cash Flows
321.4 344.4 370.8 Present Value of Perpetuity
----- ----- -----
$475.0 $498.1 $524.4 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$404.8 $427.9 $454.3 Net Equity Value
$15.31 $16.18 $17.18 Implied Share Price
11.5%
5.9x 6.3x 6.8x Implied Terminal EBIT Multiplier
0.3x 0.4x 0.4x Multiple of 1997E Sales
6.5x 6.8x 7.2x Multiple of 1997E EBITDA
7.5x 7.9x 8.3x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 06.MM options exercised
at weighted average price $8.56
WASSERSTEIN PERELLA & Co.
- --------------------------------------------------------------------------------
-42-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Assumptions for Discounted Cash Flow Analysis (Cont'd)
. MANAGEMENT CASE WITH ACQUISITIONS
. Uses the Management Case but assumes for each year from 1998 - 2002 the
acquisition of businesses having $100 million in sales, an acquisition
price of 6.0x EBITDA, and EBITDA margins of 5.3% that over the course of
two years improve to match the Company's core EBITDA margin set forth in
the Management Case
. Assumes a market recession in 1999 and 2000
. Assumes capital expenditures of $1 million per year from 1998 through 2002
for branch expansions and improvements (depreciated over seven years) and
an additional $3.5 million in both 1998 and 1999 for a new information
system (depreciated over five years)
. Income Statement Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales Growth 18.0% 14.3% 7.6% 5.0% 12.7% 9.0%
Gross Margins 20.7% 21.0% 21.0% 21.0% 21.1% 21.2%
Operating Expense % of Sales 16.1% 16.1% 16.2% 16.2% 16.1% 16.1%
Effective Tax Rate 42.0% 42.0% 42.0% 42.0% 42.0% 42.0%
</TABLE>
. Balance Sheet Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Working Capital % of Sales 14.3% 13.5% 13.5% 13.5% 13.5% 13.5%
Capital Expenditures % of Sales 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Depreciation % of Sales 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Days Receivable 50.3 47.8 47.8 47.8 47.8 47.8
Inventory Turns 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x
Days Payable 47.0 47.0 47.0 47.0 47.0 47.0
Net Working Capital Turns 7.0x 7.4x 7.4x 7.4x 7.4x 7.4x
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-43-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - Management Case with Acquisitions
($ in millions)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Fiscal Year Ends 12/31(1) Forecast(2)
---------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 20001E 20002E
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
- --------------
Net Sales Before Annual Acquisitions $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,582.6 $1,667.5 $1,891.2 $2,070.8
Annual Acquisitions N.A N.A N.A 0.0 100.0 100.0 100.0 100.0 100.0
--- --- --- --- ----- ----- ----- ----- -----
Total Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,563.8 $1,682.6 $1,767.5 $1,991.2 $2,170.8
Cost of Goods Sold 853.0 890.6 917.9 1,084.8 1,235.4 1,329.3 1,326.3 1,571.0 1,710.6
----- ----- ----- ------- ------- ------- ------- ------- -------
Gross Profit 212.5 230.1 241.5 283.6 328.4 353.3 371.2 420.1 460.2
SG&A (3) 187.4 184.7 185.7 220.3 251.5 273.3 287.0 321.5 350.4
EBIT 25.1 45.4 55.8 63.3 76.9 80.1 84.2 98.7 109.8
Depreciation 9.7 8.9 6.6 7.1 8.0 8.4 9.3 10.3 10.1
Amortization N.A N.A 1.9 2.8 3.4 3.7 4.0 4.1 4.2
--- --- --- --- --- --- --- --- ----
EBITDA 34.8 54.3 64.3 73.2 88.2 92.2 97.5 113.1 124.1
Capital Expenditures 12.1 5.1 4.6 5.3 11.1 11.5 8.4 9.4 10.1
--- --- --- --- --- --- --- --- ----
Free Cash Flow (4) 22.7 49.3 59.7 67.9 77.1 80.7 89.0 103.7 113.9
MARGIN (% OF SALES):
- --------------------
Gross Profit 19.9% 20.5% 20.8% 20.7% 21.0% 21.0% 21.0% 21.1% 21.2%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.3% 79.0% 79.0% 79.0% 78.9% 78.8%
SG&A 17.6% 16.5% 16.0% 16.1% 16.1% 16.2% 16.2% 16.1% 16.1%
EBIT 2.4% 4.1% 4.8% 4.6% 4.9% 4.8% 4.8% 5.0% 5.1%
EBITDA 3.3% 4.8% 5.5% 5.3% 5.6% 5.5% 5.5% 5.7% 5.7%
Free Cash Flow 2.1% 4.4% 5.1% 5.0% 4.9% 4.8% 5.0% 5.2% 5.2%
Depreciation (5) 0.9% 0.8% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Capital Expenditures 1.1% 0.5% 0.4% 0.7% 0.7% 0.7% 0.5% 0.5% 0.5%
GROWTH RATES:
- -------------
Net Sales Bef. Acq./Total Net
Sales Yr Before - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Total Net Sales - 5.2% 3.5% 18.0% 14.3% 7.6% 5.0% 12.7% 9.0%
SG&A - (1.5%) 0.5% 18.6% 14.2% 8.6% 5.0% 12.0% 9.0%
EBIT - 81.0% 23.0% 13.3% 21.5% 4.2% 5.1% 17.2% 11.3%
EBITDA - 56.2% 18.4% 13.8% 20.5% 4.5% 5.7% 16.0% 9.7%
</TABLE>
_________________________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998 and 1999, respectively, and these expenditures are depreciated over
5-year period
Also assumes $1.0MM for branch improvement and expansion depreciated over
7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Balance Sheet & Unlevered Free Cash Flow - Management Case with
Acquisitions
($ in millions)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31 (1) FORECAST (2)
----------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ----------------------
Accounts Receivable $143.0 $138.6 $145.6 $188.7 $204.9 $220.4 $231.5 $260.8 $284.3
Inventory 111.3 102.2 117.7 136.3 154.4 166.2 174.5 196.4 213.8
Prepaid Expenses 8.9 8.3 10.4 10.9 10.9 11.8 12.4 13.9 15.2
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Assets 263.2 249.2 273.6 335.9 370.3 398.3 418.4 471.1 513.3
Accounts Payable 116.5 107.3 122.6 139.7 159.1 171.2 179.8 202.3 220.3
Accrued Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- --- --- --- ---
Total Current Liabilities 116.5 107.3 122.6 139.7 159.1 171.2 179.8 202.3 220.3
Net Working Capital (3) 146.7 141.8 151.0 196.2 211.2 227.1 238.6 268.8 293.0
Net Working Capital to Sales 13.8% 12.7% 13.0% 14.3% 13.5% 13.5% 13.5% 13.5% 13.5%
Net Working Capital Turns (4) 7.3x 7.9x 7.7x 7.0x 7.4x 7.4x 7.4x 7.4x 7.4x
RATIOS:
- -------
Days Receivable 49.0 45.1 45.8 50.3 47.8 47.8 47.8 47.8 47.8
Inventory Turns 7.7x 8.7x 7.8x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x
Prepaid Expense (% of sales) 0.8% 0.7% 0.9% 0.8% 0.7% 0.7% 0.7% 0.7% 0.7%
Days Payable 49.9 44.0 48.8 47.0 47.0 47.0 47.0 47.0 47.0
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Change in Net Working Capital - (3.3%) 6.5% 29.9% 7.6% 7.5% 5.0% 12.7% 9.0%
Total Net Sales Growth - 5.2% 3.5% 18.0% 14.3% 7.6% 5.0% 12.7% 9.0%
Change in Net W.C. to Change in Sales - (63.6%) 187.0% 166.0% 53.5% 99.3% 100.0% 100.0% 100.0%
UNLEVERED FREE CASH FLOWS:
- --------------------------
EBIT 63.3 76.9 80.1 84.2 98.7 109.8
Less: Taxes on EBIT (5) 26.6 32.3 33.6 35.4 41.4 46.1
Plus: Depreciation and Amort. (6) 9.9 11.4 12.1 13.3 14.4 14.3
Less: Increase in Net Working Cap. 45.2 15.0 15.9 11.5 30.2 24.3
Less: Capital Expenditures (6) 5.3 11.1 11.5 8.4 9.4 10.1
Less: Cash Paid for Acquisitions (7) 0.0 31.8 31.8 31.8 31.8 31.8
--- ---- ---- ---- ---- ----
UNLEVERED FREE CASH FLOW (3.8) (1.9) (0.7) 10.4 0.3 11.8
</TABLE>
______________________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Working Capital excludes cash and short-term debt
(4) Calculated as Total Net Sales divided by Net Working Capital
(5) 42.0% tax rate assumed
(6) Assumes the Company has $3.5MM of capital expenditures for information
systems in 1998 and 1999, respectively, and that these expenditures are
depreciated over a 5-year period Also assumes $1.0MM per year for branch
improvement and expansion, depreciated over a 7-year period
(7) Assumes the acquisitions have EBITDA margins of 5.3% and the Company pays
6.0x EBITDA multiple as acquisition price
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - Before Acquisition (Management Case with
Acquisitions)
($ in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31 (1) FORECAST (2)
-------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
- --------------
Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,481.4 $1,468.1 $1,570.8 $1,633.7
Cost of Goods Sold 853.0 890.6 917.9 1,084.8 1,156.4 1,170.3 1,159.8 1,239.4 1,287.3
----- ----- ----- ------- ------- ------- ------- ------- -------
Gross Profit 212.5 230.1 241.5 283.6 307.4 311.1 308.3 331.4 346.3
SG&A (3) 187.4 184.7 185.7 220.3 235.0 240.2 238.2 253.3 263.6
EBIT 25.1 45.4 55.8 63.3 72.4 70.9 70.1 78.1 82.8
Depreciation 9.7 8.9 6.6 7.1 7.5 7.6 8.0 8.6 7.9
Amortization NA NA 1.9 2.8 3.0 3.0 3.1 3.1 3.1
-- -- --- --- --- --- --- --- ---
EBITDA 34.8 54.3 64.3 73.2 82.9 81.6 81.2 89.8 93.7
Capital Expenditures 12.1 5.1 4.6 5.3 10.7 10.7 7.2 7.6 7.9
---- --- --- --- ---- ---- --- --- ---
Free Cash Flow (4) 22.7 49.3 59.7 67.9 72.3 70.9 74.0 82.2 85.8
Margin (% of Sales):
- -------------------
Gross Profit 19.9% 20.5% 20.8% 20.7% 21.0% 21.0% 21.0% 21.1% 21.2%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.3% 79.0% 79.0% 79.0% 78.9% 78.8%
SG&A 17.6% 16.5% 16.0% 16.1% 16.1% 16.2% 16.2% 16.1% 16.1%
EBIT 2.4% 4.1% 4.8% 4.6% 4.9% 4.8% 4.8% 5.0% 5.1%
EBITDA 3.3% 4.8% 5.5% 5.3% 5.7% 5.5% 5.5% 5.7% 5.7%
Free Cash Flow 2.1% 4.4% 5.1% 5.0% 4.9% 4.8% 5.0% 5.2% 5.3%
Depreciation (5) 0.9% 0.8% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Capital Expenditures (5) 1.1% 0.5% 0.4% 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Growth Rates:
- ------------
Net Sales - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
SG&A - (1.5%) 0.5% 18.6% 6.7% 2.2% (0.8%) 6.3% 4.1%
EBIT - 81.0% 23.0% 13.3% 14.4% (2.0%) (1.1%) 11.5% 5.9%
EBITDA - 56.2% 18.4% 13.8% 13.3% (1.6%) (0.5%) 10.6% 4.4%
</TABLE>
________________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998 and 1999, respectively, and these expenditures are depreciated over
5-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
46
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - New Acquisition (Management Case with
Acquisitions)
($ in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------
FORECAST (2)
-------------------------------------------------------------
1997E 1998E 1999E 2000E 20001E 20002E
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
- --------------
Net Sales Before Annual Acquisition 0.0 0.0 $101.2 $199.4 $320.3 $437.2
Annual Acquisition 0.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- -----
Total Net Sales $0.0 $100.0 $201.2 $299.4 $420.3 $537.2
Cost of Goods Sold 0.0 79.0 158.9 236.5 331.7 423.3
----- ----- ----- ----- ----- -----
Gross Profit 0.0 21.0 42.3 62.9 88.7 113.9
SG&A (3) 0.0 16.5 33.1 48.8 68.2 86.9
EBIT 0.0 4.5 9.2 14.1 20.5 27.0
Depreciation 0.0 0.5 0.8 1.3 1.8 2.3
Amortization 0.0 0.3 0.6 1.0 1.0 1.1
----- ----- ----- ----- ----- -----
EBITDA 0.0 5.3 10.6 16.3 23.3 30.4
Capital Expenditures 0.0 0.4 0.8 1.3 1.8 2.3
Free Cash Flow (4) 0.0 4.9 9.8 15.0 21.6 28.1
MARGIN (% OF SALES):
- --------------------
Gross Profit - 21.0% 21.0% 21.0% 21.1% 21.2%
Cost of Goods Sold - 79.0% 79.0% 79.0% 78.9% 78.8%
SG&A - 16.5% 16.4% 16.3% 16.2% 16.2%
EBIT - 4.5% 4.6% 4.7% 4.9% 5.0%
EBITDA - 5.3% 5.3% 5.4% 5.5% 5.7%
Free Cash Flow - 4.9% 4.9% 5.0% 5.1% 5.2%
Depreciation (5) - 0.5% 0.4% 0.4% 0.4% 0.4%
Capital Expenditures (5) - 0.4% 0.4% 0.4% 0.4% 0.4%
GROWTH RATES:
- -------------
Net Sales Before Annual Acquisition - - 1.2% (0.9%) 7.0% 4.0%
Total Net Sales - - 101.2% 48.8% 40.4% 27.8%
SG&A - - 100.6% 47.5% 39.7% 27.4%
EBIT - - 103.5% 53.7% 45.8% 31.7%
EBITDA - - 101.0% 53.6% 43.1% 30.3%
</TABLE>
_________________________________
(1) 1994,1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998 and 1999, respectively, and these expenditures are depreciated over
5-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
Management Case with Acquisitions with $100.0MM Sales in Acquisition/Yr ($ in
millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- ------------------------------
Terminal Value Multiple: Year 5 EBITDA Year 5 EBITDA $124.1
Discount Net Debt (1) 70.2
Rate 7.0x 8.0x 9.0x Shares Out (2) 26.4
--------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
$13.3 $13.3 $13.3 Present Value of Free Cash Flows
551.7 630.5 709.3 Present Value of Terminal Value
----- ----- -----
$565.0 $643.8 $722.6 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$494.8 $573.6 $652.4 Net Equity Value
$18.71 $21.69 $24.67 Implied Share Price
9.5%
8.0% 8.2% 8.4% Implied Perpetuity Growth Rate
0.4x 0.5x 0.5x Multiple of 1997E Sales
7.7x 8.8x 9.9x Multiple of 1997E EBITDA
8.9x 10.2x 11.4x Multiple of 1997E EBIT
$12.7 $12.7 $12.7 Present Value of Free Cash Flows
527.2 602.5 677.8 Present Value of Terminal Value
----- ----- -----
$539.9 $615.2 $690.5 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$469.7 $545.0 $620.4 Net Equity Value
10.5% $17.76 $20.61 $23.46 Implied Share Price
9.0% 9.2% 9.3% Implied Perpetuity Growth Rate
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.4x 8.4x 9.4x Multiple of 1997E EBITDA
8.5x 9.7x 10.9x Multiple of 1997E EBIT
$12.2 $12.2 $12.2 Present Value of Free Cash Flows
504.0 576.0 647.9 Present Value of Terminal Value
----- ----- -----
$516.2 $588.2 $660.2 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
11.5% $446.0 $518.0 $590.0 Net Equity Value
$16.87 $19.59 $22.31 Implied Share Price
10.0% 10.2% 10.3% Implied Perpetuity Growth Rate
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.1x 8.0x 9.0x Multiple of 1997E EBITDA
8.2x 9.3x 10.4x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Assumptions for Discounted Cash Flow Analysis (Cont'd)
. MANAGEMENT CASE WITHOUT RECESSION
. Uses the Management Case but assumes no recession. Also assumes no
additional acquisitions after 1997
- Assumes capital expenditures of $1 million per year from 1998
through 2002 for branch expansions and improvements (depreciated
over seven years) and an additional $3.5 million in both 1998 and
1999 for a new information system (depreciated over five years)
. Income Statement Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales Growth 18.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Gross Margins 20.7% 21.0% 21.1% 21.2% 21.2% 21.3%
Operating Expense % of Sales 16.1% 16.1% 16.1% 16.1% 16.0% 16.0%
Effective Tax Rate 42.0% 42.0% 42.0% 42.0% 42.0% 42.0%
</TABLE>
. Balance Sheet Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Working Capital % of Sales 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Capital Expenditures % of Sales 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Depreciation % of Sales 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Days Receivable 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Days payable 47.0 47.1 47.8 48.1 48.1 48.1
Net Working Capital Turns 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-49-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - Management Case without Recession
($ in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31 (1) FORECAST (2)
-------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
- --------------
Net Sales Before Annual Acquisitions $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,423.1 $1,480.0 $1,539.3 $1,600.8 $1,664.9
Annual Acquisitions NA NA NA 0.0 0.0 0.0 0.0 0.0 0.0
-- -- -- --- --- --- --- --- ---
Total Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,423.1 $1,480.0 $1,539.3 $1,600.8 $1,664.9
Cost of Goods Sold 853.0 890.6 917.9 1,084.8 1,124.3 1,167.8 1,212.9 1,261.4 1,310.2
----- ----- ----- ------- ------- ------- ------- ------- -------
Gross Profit 212.5 230.1 241.5 283.6 298.9 312.3 326.3 339.4 354.6
SG&A (3) 187.4 184.7 185.7 220.3 228.5 238.5 248.1 256.5 266.9
EBIT 25.1 45.4 55.8 63.3 70.3 73.8 78.2 82.9 87.7
Depreciation 9.7 8.9 6.6 7.1 6.6 7.6 8.3 8.7 8.0
Amortization NA NA 1.9 2.8 3.0 3.0 3.1 3.1 3.1
-- -- --- --- --- --- --- --- ---
EBITDA 34.8 54.3 64.3 73.2 80.0 84.5 89.6 94.6 98.8
Capital Expenditure 12.1 5.1 4.6 5.3 10.5 10.7 7.5 7.7 8.0
---- --- --- --- ---- ---- --- --- ---
Free Cash Flow (4) 22.7 49.3 59.7 67.9 69.5 73.8 82.1 86.9 90.8
Margin (% of Sales):
- -------------------
Gross Profit 19.9% 20.5% 20.8% 20.7% 21.0% 21.1% 21.2% 21.2% 21.3%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.3% 79.0% 78.9% 78.8% 78.8% 78.7%
SG&A 17.6% 16.5% 16.0% 16.1% 16.1% 16.1% 16.1% 16.0% 16.0%
EBIT 2.4% 4.1% 4.8% 4.6% 4.9% 5.0% 5.1% 5.2% 5.3%
EBITDA 3.3% 4.8% 5.5% 5.3% 5.6% 5.7% 5.8% 5.9% 5.9%
Free Cash Flow 2.1% 4.4% 5.1% 5.0% 4.9% 5.0% 5.3% 5.4% 5.5%
Depreciation (5) 0.9% 0.8% 0.6% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Capital Expenditures (5) 1.1% 0.5% 0.4% 0.4% 0.7% 0.7% 0.5% 0.5% 0.5%
Growth Rates:
- ------------
Net Sales Bef. Acq./Total Net Sales Yr
Before - 5.2% 3.5% 18.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Total Net Sales - 5.2% 3.5% 18.0% 4.0% 4.0% 4.0% 4.0% 4.0%
SG&A - (1.5%) 0.5% 18.6% 3.7% 4.4% 4.0% 3.4% 4.1%
EBIT - 81.0% 23.0% 13.3% 11.1% 4.9% 6.0% 6.0% 5.8%
EBITDA - 56.2% 18.4% 13.8% 9.3% 5.6% 6.0% 5.7% 4.4%
</TABLE>
________________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998 and 1999, respectively, and these expenditures are depreciated over
5-year period
Also assumes $1.0MM for branch improvement and expansion depreciated
over 7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-50-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOWS ANALYSIS
================================================================================
Rexel, Inc. Balance Sheet & Unlevered Free Cash Flow - Management Case without
Recession
($ in millions)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31(1) FORECAST (2)
----------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ---------------------
Accounts Receivable $143.0 $138.6 $145.6 $188.7 $184.9 $191.6 $198.7 $206.7 $215.0
Inventory 111.3 102.2 117.7 136.3 142.3 145.9 149.9 155.9 161.9
Prepaid Expenses 8.9 8.3 10.4 11.3 11.8 12.2 12.7 13.2 13.8
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Assets 263.2 249.2 273.6 336.3 339.0 349.8 361.4 375.8 390.6
Accounts Payable 116.5 107.3 122.6 139.7 145.1 153.1 159.7 166.1 172.5
Accrued Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Liabilities 116.5 107.3 122.6 139.7 145.1 153.1 159.7 166.1 172.5
Net Working Capital (3) 146.7 141.8 151.0 196.6 193.9 196.7 201.6 209.7 218.1
Net Working Capital to Sales 13.8% 12.7% 13.0% 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Net Working Capital Turns (4) 7.3x 7.9x 7.7x 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
RATIOS:
- ------
Days Receivable 49.0 45.1 45.8 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 7.7x 8.7x 7.8x 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Prepaid Expense (% of sales) 0.8% 0.7% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
Days Payable 49.9 44.0 48.8 47.0 47.1 47.8 48.1 48.1 48.1
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Change in Net Working Capital - (3.3%) 6.5% 30.2% (1.4%) 1.5% 2.5% 4.0% 4.0%
Total Net Sales Growth - 5.2% 3.5% 18.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Change in Net W.C. to Change in Sales - (63.6%) 187.0% 167.4% (34.1%) 36.5% 62.4% 100.0% 100.2%
UNLEVERED FREE CASH FLOWS:
- -------------------------
EBIT 63.3 70.3 73.8 78.2 82.9 87.7
Less: Taxes on EBIT (5) 26.6 29.5 31.0 32.8 34.8 36.8
Plus: Depreciation and Amort. (6) 9.9 9.7 10.7 11.4 11.8 11.1
Less: Increase in Net Working Cap. 45.6 (2.7) 2.8 4.9 8.1 8.4
Less: Capital Expenditures (6) 5.3 10.5 10.7 7.5 7.7 8.0
Less: Cash Paid for Acquisitions 0.0 0.0 0.0 0.0 0.0 0.0
---- ---- ---- ---- ---- ----
Unlevered Free Cash Flow (4.2) 42.7 40.0 44.3 44.0 45.5
</TABLE>
_____________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Working Capital excludes cash and short-term debt
(4) Calculated as Total Net Sales divided by Net Working Capital
(5) 42.0% tax rate assumed
(6) Assumes the Company has $3.5MM of capital expenditures for information
systems in 1998 and 1999, respectively, and that these expenditures are
depreciated over a 5-year period
Also assumes $1.0MM per year for branch improvement and expansion,
depreciated over a 7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
Management Case without Recession ($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- -----------------------------
Terminal Value Multiple: Years 5 EBITDA Year 5 EBITDA $98.8
Discount Net Debt (1) 70.2
Rate 7.0x 8.0x 9.0x Shares Out. (2) 26.4
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
$165.6 $165.6 $165.6 Present Value of Free Cash Flows
439.2 501.9 564.6 Present Value of Terminal Value
----- ----- -----
$604.8 $667.5 $730.2 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$534.6 $597.3 $660.1 Net Equity Value
$20.21 $22.59 $24.96 Implied Share Price
9.5%
2.7% 3.5% 4.2% Implied Perpetuity Growth Rate
0.4x 0.5x 0.5x Multiple of 1997E Sales
8.3x 9.1x 10.0x Multiple of 1997E EBITDA
9.6x 10.5x 11.5x Multiple of 1997E EBIT
$161.4 $161.4 $161.4 Present Value of Free Cash Flows
419.6 479.6 539.5 Present Value of Terminal Value
----- ----- -----
$581.0 $641.0 $700.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$510.8 $570.8 $630.7 Net Equity Value
10.5% $19.32 $21.58 $23.85 Implied Share Price
3.7% 4.5% 5.1% Implied Perpetuity Growth Rate
0.4x 0.5x 0.5x Multiple of 1997E Sales
7.9x 8.8x 9.6x Multiple of 1997E EBITDA
9.2x 10.1x 11.1x Multiple of 1997E EBIT
$157.3 $157.3 $157.3 Present Value of Free Cash Flows
401.2 458.5 515.8 Present Value of Terminal Value
----- ----- -----
$558.5 $615.8 $673.1 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
11.5% $488.3 $545.6 $602.9 Net Equity Value
$18.46 $20.63 $22.80 Implied Share Price
4.6% 5.4% 6.1% Implied Perpetuity Growth Rate
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.6x 8.4x 9.2x Multiple of 1997E EBITDA
8.8x 9.7x 10.6x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 06.MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - Perpetuity Growth Rate (Management
Case without Recession)
($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- -----------------------------
Perpetuity Growth Rate: Year 5 Unlevered Free Cash Flow Year 5 FCF $45.5
Discount Net Debt (1) 70.2
Rate 3.5% 4.0% 4.5% Shares Out (2) 26.4
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
$165.6 $165.6 $165.6 Present Value of Free Cash Flows
498.8 546.8 604.3 Present Value of Perpetuity
----- ----- -----
$664.4 $712.4 $770.0 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
9.5% $594.2 $642.2 $699.8 Net Equity Value
$22.47 $24.28 $26.46 Implied Share Price
8.0x 8.7x 9.6x Implied Terminal EBITDA Multiplier
0.5x 0.5x 0.6x Multiple of 1997E Sales
9.1x 9.7x 10.5x Multiple of 1997E EBITDA
10.5x 11.3x 12.2x Multiple of 1997E EBIT
$161.4 $161.4 $161.4 Present Value of Free Cash Flows
408.5 442.1 481.2 Present Value of Perpetuity
----- ----- -----
$569.9 $603.5 $642.6 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
10.5% $499.7 $533.3 $572.4 Net Equity Value
$18.90 $20.17 $21.65 Implied Share Price
6.8x 7.4x 8.0x Implied Terminal EBITDA Multiplier
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.8x 8.2x 5.8x Multiple of 1997E EBITDA
9.0x 9.5x 10.2x Multiple of 1997E EBIT
$157.3 $157.3 $157.3 Present Value of Free Cash Flows
341.7 366.3 394.3 Present Value of Perpetuity
----- ----- -----
$499.0 $523.6 $551.6 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$428.8 $453.4 $481.4 Net Equity Value
$16.22 $17.14 $18.20 Implied Share Price
11.5%
6.0x 6.4x 6.9x Implied Terminal EBIT Multiplier
0.4x 0.4x 0.4x Multiple of 1997E Sales
6.8x 7.2x 7.5x Multiple of 1997E EBITDA
7.9x 8.3x 8.7x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-53-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Assumptions for Discounted Cash Flow Analysis (Cont'd)
. DOWNSIDE CASE
. Uses the Management Case but projects out ten years and assumes a more
severe recession in 1999 and 2000 and a second recession in the years 2003
and 2004
. Assumes capital expenditures of $1 million per year from 1998 through 2008
for branch expansions and improvements (depreciated over seven years) and
an additional $3.5 million in 1998, 1999, 2003, and 2004 for a new
information system (depreciated over five years)
. Income Statement Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Growth 18.0% 7.0% (2.0)% (4.0)% 7.0% 4.0% (2.0)% (4.0)% 7.0% 4.0% 4.0%
Gross Margins 20.7% 21.0% 21.0% 21.0% 21.1% 21.2% 21.1% 21.1% 21.2% 21.2% 21.2%
Operating Expense % of Sales 16.1% 16.1% 16.6% 16.6% 16.1% 16.1% 16.7% 16.7% 16.2% 16.2% 16.2%
Effective Tax Rate 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0% 42.0%
. Balance Sheet Assumptions
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Working Capital % of Sales 14.4% 13.7% 13.8% 13.8% 13.8% 13.8% 13.8% 13.8% 13.8% 13.8% 13.8%
Capital Expenditures % of Sales 0.4% 0.7% 0.7% 0.5% 0.5% 0.5% 0.7% 0.7% 0.5% 0.5% 0.5%
Depreciation % of Sales 0.5% 0.5% 0.5% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.5%
Days Receivable 50.3 47.8 47.9 47.9 47.9 47.9 47.9 47.9 47.9 47.9 47.9
Inventory Turns 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x
Days Payable 47.0 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5 46.5
Net Working Capital Turns 7.0x 7.3x 7.3x 7.3x 7.3 7.3x 7.3x 7.3x 7.3x 7.3 7.3x
</TABLE>
Wasserstein Perella & Co
- --------------------------------------------------------------------------------
-54-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - Downside Case
($ in millions)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Fiscal Year Ends 12/31 (1)
--------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
- --------------
Net Sales Before Annual Acquisitions $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,143.8 $1,434.6
Annual Acquisitions NA NA NA 0.0 O.O 0.0
-------- -------- -------- -------- -------- --------
Total Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,434.6
Cost of Goods Sold 853.0 890.6 917.9 1,084.8 1,156.4 1,133.3
-------- -------- -------- -------- -------- --------
Gross Profit 212.5 230.1 241.5 283.6 307.4 301.3
SG&A (3) 187.4 184.7 185.7 220.3 235.0 238.4
EBIT 25.1 45.4 55.8 63.3 72.4 62.9
Depreciation 9.7 8.9 6.6 7.1 7.5 7.4
Amortization NA NA 1.9 2.8 3.0 3.0
-------- -------- -------- -------- -------- --------
EBITDA 34.8 54.3 64.3 73.2 82.9 73.4
Capital Expenditures 12.1 5.1 4.6 5.3 10.7 10.5
-------- -------- -------- -------- -------- --------
Free Cash Flow (4) 22.7 49.3 59.7 67.9 72.3 62.9
MARGIN (% OF SALES):
- --------------------
Gross Profit 19.9% 20.5% 20.8% 20.7% 21.0% 21.0%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.3% 79.0% 79.0%
SG&A 17.6% 16.5% 16.0% 16.1% 16.1% 16.6%
EBIT 2.4% 4.1% 4.8% 4.6% 4.9% 4.4%
EBITDA 3.3% 4.8% 5.5% 5.3% 5.7% 5.1%
Free Cash Flow 2.1% 4.4% 5.1% 5.0% 4.9% 4.4%
Depreciation (5) 0.9% 0.8% 0.6% 0.5% 0.5% 0.5%
Capital Expenditure 1.1% 0.5% 0.4% 0.4% 0.7% 0.7%
GROWTH RATES:
- -------------
Net Sales Bef.Acq/Total Net Sales Yr Before - 5.2% 3.5% 18.0% 7.0% (2.0%)
Total Net Sales - 5.2% 3.5% 18.0% 7.0% (2.0%)
SG&A - (1.5%) 0.5% 18.6% 6.7% 1.4%
EBIT - 81.0% 23.0% 13.3% 14.4% (13.1%)
EBITDA - 56.2% 18.4% 13.8% 13.3% (11.5%)
<CAPTION>
------------------------------------------------------------------------------------
Forecast (2)
------------------------------------------------------------------------------------
2000E 2001E 2002E 2003E 2004E 2005E 2006E 2007E
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
- --------------
Net Sales Before Annual Acquisition $1,377.2 $1,473.6 $1,532.5 $1,501.9 $1,441.8 $1,542.7 $1,604.4 $1,668.6
Annual Acquisition O.O 0.0 0.0 0.0 0.0 0.0 0.0 0.0
-------- -------- -------- -------- -------- -------- -------- --------
Total Net Sales $1,377.2 $1,473.6 $1,532.5 $1,501.9 $1,441.8 $1,542.7 $1,604.4 $1,668.6
Cost of Goods Sold 1,088.0 1,162.7 1,207.6 1,185.0 1,137.6 1,215.7 1,264.3 1,314.9
-------- -------- -------- -------- -------- -------- -------- --------
Gross Profit 289.2 310.9 324.9 316.9 304.2 327.1 340.1 353.7
SG&A (3) 229.1 237.7 247.4 250.1 240.2 249.2 259.2 269.6
EBIT 60.1 73.2 77.5 66.8 64.0 77.8 80.9 84.2
Depreciation 7.6 8.2 8.6 8.4 8.3 8.9 9.1 8.0
Amortization 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1
-------- -------- -------- -------- -------- -------- -------- --------
EBITDA 70.8 84.4 89.1 78.3 75.4 89.8 93.1 95.2
Capital Expenditures 6.8 7.2 7.4 10.8 10.6 7.5 7.7 8.0
-------- -------- -------- -------- -------- -------- -------- --------
Free Cash Flow (4) 64.0 77.2 81.7 67.5 64.8 82.3 85.4 87.2
MARGIN (% OF SALES):
- --------------------
Gross Profit 21.0% 21.1% 21.2% 21.1% 21.1% 21.2% 21.2% 21.2%
Cost of Goods Sold 79.0% 78.9% 78.8% 78.9% 78.9% 78.8% 78.8% 78.8%
SG&A 16.6% 16.1% 16.1% 16.7% 16.7% 16.2% 16.2% 16.2%
EBIT 4.4% 5.0% 5.1% 4.4% 4.4% 5.0% 5.0% 5.0%
EBITDA 5.1% 5.7% 5.8% 5.2% 5.2% 5.8% 5.8% 5.7%
Free Cash Flow 4.6% 5.2% 5.3% 4.5% 4.5% 5.3% 5.3% 5.2%
Depreciation (5) 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% 0.5%
Capital Expenditure 0.5% 0.5% 0.5% 0.7% 0.7% 0.5% 0.5% 0.5%
GROWTH RATES:
- -------------
Net Sales Bef.Acq/Total Net Sales Yr Before (4.0%) 7.0% 4.0% (2.0%) (4.0%) 7.0% 4.0% 4.0%
Total Net Sales (4.0%) 7.0% 4.0% (2.0%) (4.0%) 7.0% 4.0% 4.0%
SG&A (3.9%) 3.8% 4.1% 1.1% (3.9%) 3.8% 4.0% 4.0%
EBIT (4.3%) 21.7% 5.9% (13.8%) (4.2%) 21.6% 4.0% 4.0%
EBITDA (3.5%) 19.2% 5.6% (12.1%) (3.7%) 19.1% 3.8% 2.3%
</TABLE>
_________________________________
(1) 1994,1995 and 1996 based on 10Ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees. Bonus
expenses included in SG&A are assumed to stay at 1996 0.7% sales ratio
throughout the projection period
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
(5) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998, 1999, 2003 and 2004, respectively, and these expenditures are
depreciated over 5-year period
Also assumes $1.0MM for branch improvement and expansion depreciated over 7-
year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Balance Sheet & Unlevered Free Cash Flow - Downside Case
($ in millions)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Fiscal Year Ends 12/31 (1) Forecast (2)
---------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ----------------------
Accounts Receivable $ 143.0 $ 138.6 $ 145.6 $ 188.7 $ 191.8 $ 188.3 $ 180.7 $ 193.4 $ 201.1
Inventory 111.3 102.2 117.7 136.3 144.6 141.7 136.0 145.3 151.0
Prepaid Expenses 8.9 8.3 10.4 11.3 12.1 11.9 11.4 12.2 12.7
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Assets 263.2 249.2 273.6 336.3 348.5 341.8 328.1 350.9 364.7
Accounts Payable 116.5 107.3 122.6 139.7 147.3 144.4 138.6 148.1 153.8
Accrued Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- --- --- --- ---
Total Current Liablilities 116.5 107.3 122.6 139.7 147.3 144.4 138.6 148.1 153.8
Net Working Capital (3) 146.7 141.8 151.0 196.6 201.1 197.4 189.5 202.8 210.9
Net Working Capital to Sales 13.8% 12.7% 13.0% 14.4% 13.7% 13.8% 13.8% 13.8% 13.8%
Net Working Capital Turns (4) 7.3x 7.9x 7.7x 7.0x 7.3x 7.3x 7.3x 7.3x 7.3x
RATIOS:
- -------
Days Receivable 49.0 45.1 45.8 50.3 47.8 47.9 47.9 47.9 47.9
Inventory Turns 7.7x 8.7x 7.8x 8.0x 8.0x 8.0x 8.0x 8.0x 8.0x
Prepaid Expense (% of sales) 0.8% 0.7% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
Days Payable 49.9 44.0 48.8 47.0 46.5 46.5 46.5 46.5 46.5
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% change in Net Working Capital - (3.3%) 6.5% 30.2% 2.3% (1.9%) (4.0%) 7.0% 4.0%
Sales Growth - 5.2% 3.5% 18.0% 7.0% (2.0%) (4.0%) 7.0% 4.0%
Change in Net W.C. to Change in Sales - (63.6%) 187.0% 167.4% 33.2% 92.5% 100.0% 100.0% 100.0%
UNLEVERED FREE CASH FLOWS:
- --------------------------
EBIT 63.3 72.4 62.9 60.1 73.2 77.5
Less: Taxes on EBIT (5) 26.6 30.4 26.4 25.3 30.7 32.5
Plus: Depreciation and Amort. (6) 9.9 10.6 10.5 10.7 11.2 11.6
Less: Increase in Net Working Cap. 45.6 4.6 (3.7) (7.9) 13.3 8.1
Less: Capital Expenditures (6) 5.3 10.7 10.5 6.8 7.2 7.4
Less: Cash Paid for Acquisitions 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- ---
UNLEVERED FREE CASH FLOW (4.2) 37.3 40.2 46.7 33.2 41.0
<CAPTION>
--------------------------------------------------
Forecast (2)
--------------------------------------------------
2003E 2004E 2005E 2006E 2007E
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ----------------------
Accounts Receivable $ 197.1 $ 189.2 $ 202.5 $ 210.6 $ 219.0
Inventory 148.1 142.2 152.0 158.0 164.4
Prepaid Expenses 12.4 11.9 12.8 13.3 13.8
---- ---- ---- ---- ----
Total Current Assets 357.6 343.3 367.2 381.9 397.1
Accounts Payable 151.0 144.9 154.9 161.1 167.5
Accrued Expenses 0.0 0.0 0.0 0.0 0.0
--- --- --- --- ---
Total Current Liablilities 151.0 144.9 154.9 161.1 167.5
Net Working Capital (3) 206.7 198.4 212.3 220.8 229.6
Net Working Capital to Sales 13.8% 13.8% 13.8% 13.8% 13.8%
Net Working Capital Turns (4) 7.3x 7.3x 7.3x 7.3x 7.3x
RATIOS:
- -------
Days Receivable 47.9 47.9 47.9 47.9 47.9
Inventory Turns 8.0x 8.0x 8.0x 8.0x 8.0x
Prepaid Expense (% of sales) 0.8% 0.8% 0.8% 0.8% 0.8%
Days Payable 46.5 46.5 46.5 46.5 46.5
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0%
% Change in Net Working Capital (2.0%) (4.0%) 7.0% 4.0% 4.0%
Sales Growth (2.0%) (4.0%) 7.0% 4.0% 4.0%
Change in Net W.C. to Change in Sales 100.1% 100.0% 100.0% 100.0% 100.0%
UNLEVERED FREE CASH FLOWS:
- --------------------------
EBIT 66.8 64.0 77.8 80.9 84.2
Less: Taxes on EBIT (5) 28.1 26.9 32.7 34.0 35.4
Plus: Depreciation and Amort. (6) 11.5 11.4 11.9 12.2 11.1
Less: Increase in Net Working Cap. (4.2) (8.3) 13.9 8.5 8.8
Less: Capital Expenditures (6) 10.8 10.6 7.5 7.7 8.0
Less: Cash Paid for Acquisitions 0.0 0.0 0.0 0.0 0.0
--- --- --- --- ---
UNLEVERED FREE CASH FLOW 43.6 46.2 35.7 42.9 43.0
</TABLE>
_________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Working Capital excludes cash and short-term debt
(4) Calculated as Net Sales divided by Net Working Capital
(5) 42.0% tax rate assumed
(6) Assumes the Company has $3.5MM capital expenditures for information systems
in 1998, 1999, 2003 and 2004, respectively, and these expenditures are
depreciated over 5-year period.
Also assumes $1.0MM for branch improvement and expansion depreciated over
7-year period
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
________________________________________________________________________________
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
Downside Case
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------- --------------------------------------
TERMINAL VALUE MULTIPLE: YEAR 10 EBITDA YEAR 10 EBITDA $95.2
DISCOUNT NET DEBT (1) 70.2
RATE 7.0x 8.0x 9.0x SHARES OUT (2) 26.4
------------------------------------------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
$255.7 $255.7 $255.7 Present Value of Free Cash Flows
269.0 307.4 345.9 Present Value of Terminal Value
----- ----- -----
$524.7 $563.1 $601.6 Net Enterprises Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$454.5 $492.9 $531.4 Net Equity Value
$17.19 $18.64 $20.09 Implied Share Price
9.5 %
2.9% 3.6% 4.3% Implied Perpetuity Growth Rate
0.4x 0.4x 0.4x Multiple of 1997E Sales
7.2x 7.7x 8.2x Multiple of 1997E EBITDA
8.3x 8.9x 9.5x Multiple of 1997E EBIT
$244.8 $244.8 $244.8 Present Value of Free Cash Flows
245.6 280.7 315.8 Present Value of Terminal Value
----- ----- -----
$490.4 $525.5 $560.6 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$420.2 $455.3 $490.4 Net Equity Value
10.5 % $15.89 $17.22 $18.54 Implied Share Price
3.8% 4.6% 5.2% Implied Perpetuity Growth Rate
0.4x 0.4x 0.4x Multiple of 1997E Sales
6.7x 7.2x 7.7x Multiple of 1997E EBITDA
7.8x 8.3x 8.9x Multiple of 1997E EBIT
$234.6 $234.6 $234.6 Present Value of Free Cash Flows
224.5 256.5 288.6 Present Value of Terminal Value
----- ----- -----
$459.0 $491.1 $523.2 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
11.5 % $388.8 $420.9 $453.0 Net Equity Value
$14.70 $15.92 $17.13 Implied Share Price
4.7% 5.5% 6.2% Implied Perpetuity Growth Rate
0.3x 0.4x 0.4x Multiple of 1997E Sales
6.3x 6.7x 7.1x Multiple of 1997E EBITDA
7.3x 7.8x 8.3x Multiple of 1997E EBIT
</TABLE>
______________________________________________
NOTE: VALUATION IS FROM 01/01/98 TO 12/31/07
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Wassertein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - Perpetuity Growth Rate (Downside
Case)
($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- ------------------------------
Perpetuity Growth Rate: Year 10 Unlevered Free Cash Flow Year 10 FCF $43.0
Discount Net Debt (1) 70.2
Rate 3.5% 4.0% 4.5% Shares Out (2) 26.4
--------------------------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
$255.7 $255.7 $255.7 Present Value of Free Cash Flows
299.6 328.4 363.0 Present Value of Perpetuity
----- ----- -----
$555.2 $584.1 $618.6 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
9.5% $485.1 $513.9 $548.5 Net Equity Value
$18.34 $19.43 $20.74 Implied Share Price
5.3x 5.8x 6.4x Implied Terminal EBITDA Multiplier
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.6x 8.0x 8.5x Multiple of 1997E EBITDA
8.8x 9.2x 9.8x Multiple of 1997E EBIT
$244.8 $244.8 $244.8 Present Value of Free Cash Flows
234.5 253.7 276.2 Present Value of Perpetuity
----- ----- -----
$479.2 $498.5 $520.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
10.5% $409.0 $428.3 $450.8 Net Equity Value
$15.47 $16.20 $17.04 Implied Share Price
4.3x 4.7x 5.1x Implied Terminal EBITDA Multiplier
0.4x 0.4x 0.4x Multiple of 1997E Sales
6.5x 6.8x 7.1x Multiple of 1997E EBITDA
7.6x 7.9x 8.2x Multiple of 1997E EBIT
$234.6 $234.6 $234.6 Present Value of Free Cash Flows
187.5 200.9 216.3 Present Value of Perpetuity
----- ----- -----
$422.0 $435.5 $450.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$351.8 $365.3 $380.7 Net Equity Value
$13.30 $13.81 $14.40 Implied Share Price
11.5%
3.6x 3.9x 4.2x Implied Terminal EBIT Multiplier
0.3x 0.3x 0.3x Multiple of 1997E Sales
5.8x 5.9x 6.2x Multiple of 1997E EBITDA
6.7x 6.9x 7.1x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/07
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-58-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Historical Performance of Southern Electric Supply and Summers Group ($MM)
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SOUTHERN ELECTRIC SUPPLY
Sales $ 76.1 $ 83.1 $102.9 $109.3 $ 98.9
% Growth -- 9.3% 23.9% 6.2% (9.5%)
Gross Margin 16.0 17.9 22.2 22.8 20.1
% of Gross Margin 21.1% 21.6% 21.6% 20.9% 20.3%
EBIT 4.3 3.6 4.2 4.6 2.8
% of EBIT Margin 5.7% 4.3% 4.1% 4.2% 2.9%
SUMMERS GROUP
Sales $343.4 $359.4 $374.3 $365.5 $375.9 (1)
% Growth -- 4.7% 4.1% (2.3%) 2.9%
Gross Margin 59.1 67.4 77.8 75.5 80.4 (1)
% of Gross Margin 17.2% 18.7% 20.8% 20.7% 21.4%
EBITA 11.9 16.8 20.3 14.8 12.8 (1)
% of EBITA Margin 3.5% 4.7% 5.4% 4.0% 3.4%
COMMERCIAL AND INDUSTRIAL BUILDINGS INDUSTRY GROWTH BASED ON F.W. DODGE REPORT
East North Central Region (25.0%)
South Atlantic (26.0%)
East South Central 1.0%
West South Central (3.0%)
------
Average Growth Rates (13.3%)
U.S. Real GDP Growth Rates (1.0%)
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SOUTHERN ELECTRIC SUPPLY
Sales $115.3 $110.4 $175.3 $185.0 $193.2 $208.3
% Growth 16.5% (4.3%) 58.8% 5.6% 4.4% 7.8%
Gross Margin 22.7 23.2 34.7 37.4 41.2 42.7
% of Gross Margin 19.6% 21.1% 19.8% 20.2% 21.3% 20.5%
EBIT 4.8 4.9 7.1 9.3 11.9 12.4
% of EBIT Margin 4.2% 4.4% 4.0% 5.0% 6.2% 6.0%
SUMMERS GROUP
Sales $397.2 $456.3 $529.6 $550.1 $576.0 $483.8 (2)
% Growth 5.7% 14.9% 16.1% 3.9% 4.7% NM
Gross Margin 78.8 92.4 103.0 111.5 115.0 95.1 (2)
% of Gross Margin 19.9% 20.3% 19.4% 20.3% 20.0% 19.7%
EBITA 9.0 14.6 12.6 27.2 27.9 26.0 (2)
% of EBITA Margin 2.3% 3.2% 2.4% 4.9% 4.8% 5.4%
COMMERCIAL AND INDUSTRIAL BUILDINGS INDUSTRY GROWTH BASED ON F.W. DODGE REPORT
East North Central Region 1.0% 3.0% 23.0% 7.0% 3.0% 4.0%
South Atlantic (1.0%) 8.0% 23.0% 22.0% 4.0% 6.0%
East South Central (10.0%) 18.0% 42.0% 5.0% 25.0% (12.0%)
West South Central 15.0% (1.0%) 21.0% 27.0% (7.0%) 22.0%
----- ------ ----- ----- ------ -----
Average Growth Rates 1.3% 7.0% 27.3% 15.3% 6.3% 5.0%
U.S. Real GDP Growth Rates 2.7% 2.2% 3.5% 2.0% 2.5% 3.0%
</TABLE>
______________________________
(1) UPD was acquired in 1991
(2) 1997 data are based on YTD September 1997 data provided by the management
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-59-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Assumptions for Discounted Cash Flow Analysis (Cont'd)
. JUNE PLAN CASE
. Uses the Company's three-year plan developed in June, 1997 which assumes
no additional acquisitions after 1997 and a market recession in 1999 and
2000 based on the F.W.Dodge report.
- The years 2001 and 2002 were developed with management input and assume
a market recovery during 2001 (based on F.W. Dodge) and steady growth in
2002 which management estimates to be roughly 4.0%
. Income Statement Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales Growth 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Gross Margins 20.9% 21.4% 21.8% 22.1% 22.1% 22.1%
Operating Expense % of Sales 16.0% 16.0% 16.0% 15.9% 15.9% 15.9%
Effective Tax Rate 42.0% 42.0% 42.0% 42.0% 42.0% 42.0%
</TABLE>
. Balance Sheet Assumptions
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Working Capital % of Sales 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Capital Expenditures % of Sales 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
Depreciation % of Sales 0.5% 0.5% 0.4% 0.4% 0.4% 0.4%
Days Receivable 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Days Payable 47.0 47.1 47.8 48.1 48.1 48.1
Net Working Capital Turns 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
</TABLE>
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-60-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Overview of Rexel, Inc. Operations - June Plan Case
($ in millions)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDS 12/31 (1) FORECAST (2)
-------------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
- --------------
Net Sales Before Annual Acquisitions $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,481.4 $1,468.1 $1,570.8 $1,633.7
Annual Acquisitions NA NA NA 0.0 0.0 0.0 0.0 0.0 0.0
-- -- -- --- --- --- --- --- ---
Total Net Sales $1,065.5 $1,120.7 $1,159.4 $1,368.4 $1,463.8 $1,481.4 $1,468.1 $1,570.8 $1,633.7
Cost of Goods Sold 853.0 890.6 917.9 1,082.2 1,151.1 1,158.6 1,144.1 1,224.2 1,273.2
----- ----- ----- ------- ------- ------- ------- ------- -------
Gross Profit 212.5 230.1 241.5 286.2 312.7 322.8 323.9 346.6 360.5
SG&A (3) 187.4 184.7 185.7 219.3 233.6 237.3 234.0 250.4 260.4
EBIT 25.1 45.4 55.8 66.9 79.1 85.5 89.9 96.2 100.1
Depreciation 9.7 8.9 6.6 7.1 6.7 6.0 6.2 6.6 6.9
Amortization NA NA 1.9 2.8 3.0 3.0 3.1 3.1 3.1
-- -- --- --- --- --- --- --- ---
EBITDA 34.8 54.3 64.3 76.9 88.9 94.5 99.2 105.9 110.0
Capital Expenditures 12.1 5.1 4.6 5.3 6.2 6.2 6.2 6.6 6.9
---- --- --- --- --- --- --- --- ---
Free Cash Flow (4) 22.7 49.3 59.7 71.6 82.7 88.4 93.0 99.3 103.1
MARGIN (% OF SALES):
- -------------------
Gross Profit 19.9% 20.5% 20.8% 20.9% 21.4% 21.8% 22.1% 22.1% 22.1%
Cost of Goods Sold 80.1% 79.5% 79.2% 79.1% 78.6% 78.2% 77.9% 77.9% 77.9%
SG&A 17.6% 16.5% 16.0% 16.0% 16.0% 16.0% 15.9% 15.9% 15.9%
EBIT 2.4% 4.1% 4.8% 4.9% 5.4% 5.8% 6.1% 6.1% 6.1%
EBITDA 3.3% 4.8% 5.5% 5.6% 6.1% 6.4% 6.8% 6.7% 6.7%
Free Cash Flow 2.1% 4.4% 5.1% 5.2% 5.6% 6.0% 6.3% 6.3% 6.3%
Depreciation 0.9% 0.8% 0.6% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4%
Capital Expenditures 1.1% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4%
GROWTH RATES:
- ------------
Net Sales Bef. Acq/Total Net Sales Yr Before - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Total Net Sales - 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
SG&A - (1.5%) 0.5% 18.1% 6.5% 1.6% (1.4%) 7.0% 4.0%
EBIT - 81.0% 23.0% 19.9% 18.2% 8.1% 5.1% 7.0% 4.0%
EBITDA - 56.2% 18.4% 19.5% 15.6% 6.4% 4.9% 6.8% 3.9%
</TABLE>
________________________
(1) 1994, 1995 and 1996 based on 10ks
(2) Management estimates
(3) Includes fees for use of the Rexel name and additional services fees
(4) Free Cash Flow is defined as EBITDA less Capital Expenditures
Note: LIFO Adjustment is included in Cost
of Goods Sold and Amortization Expense
is included in SG&A Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
61
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Balance Sheet & Unlevered Free Cash Flow - June Plan Case
($ in millions)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Fiscal Year Ends 12/31 (1) Forecast (2)
-----------------------------------------------------------------------------------------
1994 1995 1996 1997E 1998E 1999E 2000E 2001E 2002E
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WORKING CAPITAL ITEMS:
- ----------------------
Accounts Receivable $143.0 $138.6 $145.6 $188.7 $190.2 $191.8 $189.6 $202.8 $210.9
Inventory 111.3 102.2 117.7 136.0 145.7 144.8 141.4 151.3 157.3
Prepaid Expenses 8.9 8.3 10.4 11.3 12.1 12.3 12.1 13.0 13.5
--- --- ---- ---- ---- ---- ---- ---- ----
Total Current Assets 263.2 249.2 273.6 336.0 348.1 348.8 343.1 367.1 381.8
Accounts Payable 116.5 107.3 122.6 139.4 148.6 151.9 150.7 161.2 167.7
Accrued Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--- --- --- --- --- --- --- --- ---
Total Current Liabilities 116.5 107.3 122.6 139.4 148.6 151.9 150.7 161.2 167.7
Net Working Capital (3) 146.7 141.8 151.0 196.6 199.5 197.0 192.4 205.9 214.1
Net Working Capital to Sales 13.8% 12.7% 13.0% 14.4% 13.6% 13.3% 13.1% 13.1% 13.1%
Net Working Capital Turns (4) 7.3x 7.9x 7.7x 7.0x 7.3x 7.5x 7.6x 7.6x 7.6x
RATIOS:
- ------
Days Receivable 49.0 45.1 45.8 50.3 47.4 47.3 47.1 47.1 47.1
Inventory Turns 7.7x 8.7x 7.8x 8.0x 7.9x 8.0x 8.1x 8.1x 8.1x
Prepaid Expense (% of sales) 0.8% 0.7% 0.9% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
Days Payable 49.9 44.0 48.8 47.0 47.1 47.8 48.1 48.1 48.1
Accrued Expenses (% of sales) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% change in Net Working Capital - (3.3%) 6.5% 30.2% 1.5% (1.2%) (2.3%) 7.0% 4.0%
Total Net Sales Growth 5.2% 3.5% 18.0% 7.0% 1.2% (0.9%) 7.0% 4.0%
Change in Net W.C. to Change in Sales - (63.6%) 187.0% 167.4% 20.9% (104.0%) 256.9% 100.0% 100.0%
UNLEVERED FREE CASH FLOWS:
- --------------------------
EBIT 66.9 79.1 85.5 89.9 96.2 100.1
Less: Taxes on EBIT (5) 28.1 33.2 35.9 37.8 40.4 42.0
Plus: Depreciation and Amort. 9.9 9.7 9.0 9.2 9.7 9.9
Less: Increase in Net Working Cap. 45.6 2.9 (2.5) (4.6) 13.5 8.2
Less: Capital Expenditures 5.3 6.2 6.2 6.2 6.6 6.9
Less: Cash Paid for Acquisitions 0.0 0.0 0.0 0.0 0.0 0.0
--- ---- ---- ---- ---- ----
UNLEVERED FREE CASH FLOW (2.1) 46.6 54.9 59.8 45.4 52.9
</TABLE>
_________________
(1) 1994, 1995 and 1996 based on 10Ks
(2) Management estimates
(3) Working Capital excludes cash and short-term debt
(4) Calculated as Total Net Sales divided by Net Working Capital
(5) 42.0% tax rate assumed
Wasserstein Perella & CO.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
June Plan Case ($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- -----------------------------
Terminal Value Multiple: Year 5 EBITDA Year 5 EBITDA $110.0
Discount Net Debt (1) 70.2
Rate 7.0x 8.0x 9.0x Shares Out (2) 26.4
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
$199.0 $199.0 $199.0 Present Value of Free Cash Flows
489.2 559.1 629.0 Present Value of Terminal Value
----- ----- -----
$688.2 $758.1 $828.0 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$618.1 $687.9 $757.8 Net Equity Value
$23.37 $26.01 $28.66 Implied Share Price
9.5%
2.5% 3.3% 3.9% Implied Perpetuity Growth Rate
0.5x 0.6x 0.6x Multiple of 1997E Sales
9.0x 9.9x 10.8x Multiple of 1997E EBITDA
10.3x 11.3x 12.4x Multiple of 1997E EBIT
$194.0 $194.0 $194.0 Present Value of Free Cash Flows
467.5 534.2 601.0 Present Value of Terminal Value
----- ----- -----
$661.4 $728.2 $795.0 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$591.3 $658.0 $724.8 Net Equity Value
10.5% $22.36 $24.88 $27.41 Implied Share Price
3.4% 4.2% 4.9% Implied Perpetuity Growth Rate
0.5x 0.5x 0.6x Multiple of 1997E Sales
8.6x 9.5x 10.3x Multiple of 1997E EBITDA
9.9x 10.9x 11.9x Multiple of 1997E EBIT
$189.1 $189.1 $189.1 Present Value of Free Cash Flows
446.9 510.7 574.5 Present Value of Terminal Value
----- ----- -----
$636.0 $699.8 $763.7 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
----- ---- ----
11.5% $565.8 $629.7 $693.5 Net Equity Value
$21.40 $23.81 $26.22 Implied Share Price
4.3% 5.2% 5.8% Implied Perpetuity Growth Rate
0.5x 0.5x 0.6x Multiple of 1997E Sales
8.3x 9.1x 9.9x Multiple of 1997E EBITDA
9.5x 10.5x 11.4x Multiple of 1997E EBIT
-----------
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 06.MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
Rexel, Inc. Discounted Cash Flow Analysis - EBITDA Terminal Multiple
Management Case ($ in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------- -----------------------------
Perpetuity Growth Rate: Year 5 Unlevered Free Cash Flow Year 5 FCF $52.9
Discount Net Debt (1) 70.2
Rate 3.5% 4.0% 4.5% Shares Out (2) 26.4
--------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C>
$199.0 $199.0 $199.0 Present Value of Free Cash Flows
579.3 635.0 701.9 Present Value of Perpetuity
----- ----- -----
$778.4 $834.1 $901.0 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
9.5% $708.2 $763.9 $830.8 Net Equity Value
$26.78 $28.89 $31.41 Implied Share Price
8.3x 9.1x 10.0x Implied Terminal EBITDA Multiplier
0.6x 0.6x 0.7x Multiple of 1997E Sales
10.1x 10.9x 11.7x Multiple of 1997E EBITDA
11.6x 12.5x 13.5x Multiple of 1997E EBIT
$194.0 $194.0 $194.0 Present Value of Free Cash Flows
474.5 513.5 558.9 Present Value of Perpetuity
----- ----- -----
$668.5 $707.5 $752.9 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
10.5% $598.3 $637.3 $682.7 Net Equity Value
$22.62 $24.10 $25.82 Implied Share Price
7.1x 7.7x 8.4x Implied Terminal EBITDA Multiplier
0.5x 0.5x 0.6x Multiple of 1997E Sales
8.7x 9.2x 9.8x Multiple of 1997E EBITDA
10.0x 10.6x 11.2x Multiple of 1997E EBIT
$189.1 $189.1 $189.1 Present Value of Free Cash Flows
396.9 425.4 458.0 Present Value of Perpetuity
----- ----- -----
$586.0 $614.5 $647.1 Net Enterprise Value
70.2 70.2 70.2 Less: Net Debt
---- ---- ----
$515.8 $544.4 $576.9 Net Equity Value
$19.51 $20.58 $21.82 Implied Share Price
11.5%
6.2x 6.7x 7.2x Implied Terminal EBIT Multiplier
0.4x 0.4x 0.5x Multiple of 1997E Sales
7.6x 8.0x 8.4x Multiple of 1997E EBITDA
8.8x 9.2x 9.7x Multiple of 1997E EBIT
</TABLE>
________________________
Note: Valuation is from 01/01/98 to 12/31/02
(1) Based on projected 12/31/97 debt level
(2) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-64-
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
================================================================================
WACC Model
UNLEVERED BETAS (1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTED MARKET
CURRENT MARKET VALUE OF DEBT/
LEVERED VALUE EQUITY EQUITY UNLEVERED
COMPANY TICKER BETA (2) ($MM) ($MM) RATIO BETA (3)
------- ------ ---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Rexel RXL 0.48 $568.4 $498.2 13.4% 0.45
Anicom Inc. ANIC 0.71 280.0 294.4 1.3% 0.70
Anixter Intl. Inc. AXE 0.58 1,358.2 895.8 53.3% 0.44
Hughes Supply HUG 0.55 843.7 587.0 45.6% 0.44
Noland Co. MI 0.43 145.0 86.5 57.8% 0.32
W.W. Grainger Inc. GWW 0.65 4,724.6 4,517.2 5.3% 0.63
Waxman Industries, Inc. SEC 0.12 160.1 43.3 109.4% 0.07
- ------------------------------------------------------------------------------------------------------------------------------------
Averages 0.51 $1,251.9 $1,070.7 45.5% 0.43
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_______________
(1) Assumes book value of debt approximates market value
(2) Beta calculated over half year as of 9/29/97; source: Bloomberg
(3) Unlevered Beta = Levered Beta/ {1 + (Debt* (1 - Tax Rate)/ Equity}
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
<PAGE>
REXEL, INC. DISCOUNTED CASH FLOW ANALYSIS
- -------------------------------------------------------------------------------
WACC Model (Continued)
<TABLE>
<CAPTION>
WEIGHTED AVERAGE COST-OF-CAPITAL(1)
-------------------------------------------------------------------------
CAPITAL STRUCTURE COST OF EQUITY COST OF DEBT WTD. AVG.
------------------ -------------------- ----------------
DEBT/ DEBT/ RELEVERED COST OF BEFORE AFTER COST OF
CAPITAL EQUITY BETA (2) EQUITY TAX TAX CAPITAL
------- --------- --------- ------- ------ ----- --------
<S> <C> <C> <C> <C> <C> <C>
0% 0% 0.43 10.14% 8.00% 4.64% 10.14%
10% 11% 0.45 10.26% 8.20% 4.76% 9.71%
20% 25% 0.46 10.39% 8.40% 4.87% 9.29%
30% 43% 0.48 10.52% 8.60% 4.99% 8.86%
40% 67% 0.49 10.66% 8.80% 5.10% 8.44%
50% 100% 0.51 10.80% 9.00% 5.22% 8.01%
60% 150% 0.53 10.96% 9.20% 5.34% 7.58%
70% 233% 0.55 11.14% 9.40% 5.45% 7.16%
- ----------------------------------------------------------------------------
ASSUMPTIONS
--------------------------------------------------------------------------
MARGINAL TAX RATE 42.0% RISK FREE RATE(3) 6.40% MARKET RISK PREMIUM 8.60%
--------------------------------------------------------------------------
</TABLE>
_______________________
(1) Based on the Weighted Average Cost of Capital and Capital Asset Pricing
Models and WP & Co. calculations
(2) Relevered Beta=Unlevered Beta + ((Unlevered Beta - Debt Beta)*(Debt/Equity
Ratio)*(1 - Tax Rate))
(3) 5 Year U.S. Treasury as of 9/26/97
(4) Market risk premium is calculated as the arithmetic difference between the
long-term rate of return on common stocks from 1926 - 1993 and short-term
treasury bill returns, calculated annually
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-66-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
COMPARABLE COMPANY
TRADING ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-67-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - LTM
($ in millions, except per share data)
<TABLE>
<CAPTION>
ADJUSTED MARKET ADJUSTED MARKET VALUE
MARKET VALUE OF AS A MULTIPLE OF :
COMPANY BUSINESS DESCRIPTION VALUE (1) EQUITY (1) SALES EBITDA EBIT
- ------ -------------------- --------- ---------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies $568.4 $498.2 0.4x 8.2x 9.4x
Hughes Supply Operate wholesale outlets and sell electrical, $843.7 $587.0 0.5x 9.4x 11.7x
plumbing and industrial supplies
Noland Co. Distributor of plumbing/heating, air conditioning, $145.0 $ 86.5 0.3x 13.0x NM
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commerical equipment $4,759.0 $4,517.2 1.2x 10.7x 12.9x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security $160.1 $ 43.3 1.3x NM NM
hardware and other products to the repair and
remodeling market
---------------------------------------------------------
Median 0.9x 10.7x 12.3x
REXEL DATA $1,269.6 $69.1 $60.6
IMPLIED EQUITY VALUE (2) $1,039.9 $667.2 $674.3
IMPLIED SHARE PRICE (3) $39.32 $25.23 $25.50
=========================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribution communications related wire, cable, $280.0 $294.4 1.6x NM NM
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and $1,352.0 $895.8 0.5x 10.8x 14.1x
internetworking products
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MV of Equity
As a Multiple of:
COMPANY BUSINESS DESCRIPTION Net Income Book Value
- ------ -------------------- ------------ ------------
<S> <C> <C> <C>
Rexel Distribute electrical parts and supplies 15.5x 2.3x
Hughes Supply Operate wholesale outlets and sell electrical, 15.5x 1.9x
plumbing and industrial supplies
Noland Co. Distributor of plumbing/heating, air conditioning, 19.2x 0.7x
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commerical equipment 20.4x 3.5x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security NM NM
hardware and other products to the repair and
remodeling market
----------------------------------------------------------
Median 19.2x 1.9x
REXEL DATA $32.2 $215.9
IMPLIED EQUITY VALUE (2) $617.6 $412.1
IMPLIED SHARE PRICE (3) 23.35 15.58
==========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribution communications related wire, cable, NM 3.2x
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and 22.9x 2.0x
internetworking products
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________
(1) Market value as of 10/15/97 except Rexel's market value is based on 8/28/97
share price, one day prior to the announcement that Rexel, S.A. offered to
pay $19.50 for the shares it did not already own
(2) Based on projected 12/31/97 debt level
(3) Based on 26.1MM shares outstanding and assuming all 0.6MM options
exercised at weighted average price $8.56
Note: Anicom and Anixter are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purpose only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Note: All figures based on twelve months data ended on 6/30/97
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-68-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - LTM
($ in millions, except per share data)
<TABLE>
<CAPTION>
NET
GROSS EBITDA EBIT INCOME CAPEX/
COMPANY BUSINESS DESCRIPTION MARGIN MARGIN MARGIN MARGIN D&A
- ------ -------------------- ------ ------ ------ ------ ---
<S> <C> <C> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies 20.6% 5.4% 4.8% 2.5% 0.5 x
Hughes Supply Operate wholesale outlets and sell electrical, 21.4% 5.4% 4.4% 2.3% 1.5 x
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, 19.7% 2.4% 1.0% 1.0% 1.5 x
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commerical equipment 35.9% 11.6% 9.6% 5.8% 1.1 x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security 28.0% 1.1% (1.1%) (7.9%) 0.9 x
hardware and other products to the repair and
remodeling market
-----------------------------------------------------
Mean 26.3% 5.1% 3.5% 0.3% 1.2 x
Median 24.7% 3.9% 2.7% 1.6% 1.3 x
=====================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, cable, 23.7% 3.5% 2.6% 1.6% 1.3 x
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and 24.9% 4.8% 3.6% 1.5% 0.9 x
internetworking products
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
I/B/E/S
LONG-TERM DEBT/ DEBT/
COMPANY BUSINESS DESCRIPTION GROWTH EST. EQUITY CAPITAL
- ------ -------------------- ---------- ------ -------
<S> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies 16.0% 13.4% 11.8%
Hughes Supply Operate wholesale outlets and sell electrical, 12.5% 45.6% 31.7%
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, NA 73.0% 43.5%
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commercial equipment 12.0% 5.3% 5.0%
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security NA 292.0% 79.0%
hardware and other products to the repair and
remodeling market
-----------------------------------------
Mean 12.3% 104.0% 39.8%
Median 12.3% 59.3% 37.6%
=========================================
- -----------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, cable, 30.0% 1.3% 1.4%
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and 21.3% 53.3% 35.3%
internetworking products
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
Note: Anicom and Anixter are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purpose only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Note: All figures based on twelve months'
data ended on 6/30/97 Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-69-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - FY1997
($ in millions, except per share data)
<TABLE>
<CAPTION>
Adjusted Market
Market Value of
Company Business Description Value (1) Equity (1)
- ------ -------------------- --------- ----------
<S> <C> <C> <C>
Rexel Distribute electrical parts and supplies $ 568.4 $ 498.2
Hughes Supply Operate wholesale outlets and sell electrical, $ 843.7 $ 587.0
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, $ 145.0 $ 86.5
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commercial equipment $4,724.6 $4,517.2
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security $ 160.1 $43.3
hardware and other products to the repair and
remodeling market
- -----------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, $ 280.0 $294.4
cable, fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking
and internetworking products $1,358.2 $895.8
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Adjusted Market Value MV of Equity
As a Multiple of: As a Multiple of:
Company Business Description Sales EBITDA EBIT Net Income Book Value
- ------ -------------------- ----- ------ ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies 0.4x 7.8x 9.0x 15.4x 2.1x
Hughes Supply Operate wholesale outlets and sell electrical, 0.5x 10.0x 12.8x 15.1x 1.8x
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, NA NA NA NA NA
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commercial equipment 1.2x 9.8x 11.8x 19.6x 3.0x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security NA NA NA NA NA
hardware and other products to the repair and
remodeling market
------------------------------------------------------------------------------------
Median 0.8x 9.9x 12.3x 17.3x 2.4x
Rexel Data $1,368.4 $ 73.2 $ 63.3 $ 32.4 $236.0
Implied Equity Value (2) $1,048.1 $654.8 $710.8 $562.3 $572.8
Implied Share Price (3) $ 39.63 $24.76 $26.88 $21.26 $21.66
====================================================================================
- ---------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, 1.2x 25.4x 31.1x NM 4.5x
cable, fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking
and Internetworking products 0.5x 11.9x 16.2x 20.8x 1.8x
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) Market value as of 10/15/97 except Rexel's market value is based on 8/28/97
share price, one day prior to the announcement that Rexel, S.A. offered to
pay $19.50 for the shares it did not already own
(2) Based on projected 12/31/97 debt level
(3) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Note: Anicom and Anixter are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purposes only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-70-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - FY1997
($ in millions, except per share data)
<TABLE>
<CAPTION>
NET
GROSS EBITDA EBIT INCOME CAPEX/
COMPANY BUSINESS DESCRIPTION MARGIN MARGIN MARGIN MARGIN D&A
- ------ -------------------- ------ ------ ------ ------ ---
<S> <C> <C> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies 20.7% 5.3% 4.6% 2.4% 0.5x
Hughes Supply Operate wholesale outlets and sell electrical, 21.0% 4.8% 3.8% 2.2% 1.5x
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, NA NA NA NA NA
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commercial equipment 35.9% 11.8% 9.7% 5.6% 1.2x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security NA NA NA NA NA
hardware and other products to the repair and
remodeling market
-----------------------------------------------------
Mean 28.5% 8.3% 6.7% 3.9% 1.4x
Median 28.5% 8.3% 6.7% 3.9% 1.4x
=====================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, cable, 23.3% 4.7% 3.9% 2.3% 1.3x
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and 24.9% 4.0% 2.9% 1.5% 1.6x
internetworking products
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
Note: Anicom and Anixler are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purpose only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-71-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - FY1998
($ in millions, except per share data)
<TABLE>
<CAPTION>
ADJUSTED MARKET ADJUSTED MARKET VALUE
MARKET VALUE OF AS A MULTIPLE OF :
COMPANY BUSINESS DESCRIPTION VALUE (1) EQUITY (1) SALES EBITDA EBIT
- ------- -------------------- --------- ---------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C>
REXEL DISTRIBUTE ELECTRICAL PARTS AND SUPPLIES $568.4 $498.2 (1) 0.4x 6.9x 7.9x
HUGHES SUPPLY Operate wholesale outlets and sell electrical, $843.7 $587.0 0.4x 9.1x 11.5x
plumbing and industrial fixtures
NOLAND CO. Distributor of plumbing/heating, air conditioning, $145.0 $ 86.5 NA NA NA
industrial and electrical supplies
W.W. GRAINGER INC. Distribute industrial and commerical equipment $4,724.6 $4,517.2 1.1x 9.0x 11.0x
and supplies
WAXMAN INDUSTRIES, INC. Leading supplier of specialty plumbing, security $160.1 $ 43.3 NA NA NA
hardware and other products to the repair and
remodeling market
-------------------------------------------------------
MEDIAN 0.8X 9.0X 11.3X
REXEL DATA $1,463.8 $82.9 $72.4
IMPLLED EQUITY VALUE (2) $1,040.7 $679.8 $745.4
IMPLLED SHARE PRICE (3) $39.35 $25.71 $28.19
=======================================================
- -----------------------------------------------------------------------------------------------------------------------------------
ANICOM INC. Distribute communications related wire, cable, $280.0 $294.4 0.9x 15.6x 18.3x
fiber optics and computer network
ANIXTER INTL. INC. Distribute wiring systems, networking and $1,358.2 $895.8 0.4x 14.0x 21.9x
internetworking products
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MV OF EQUITY
AS A MULTIPLE OF:
COMPANY BUSINESS DESCRIPTION NET INCOME BOOK VALUE
- ------ -------------------- ------------ ------------
<S> <C> <C> <C>
REXEL DISTRIBUTE ELECTRICAL PARTS AND SUPPLIES 12.7x 1.8x
HUGHES SUPPLY Operate wholesale outlets and sell electrical, 13.0x 1.6x
plumbing and industrial fixtures
NOLAND CO. Distributor of plumbing/heating, air conditioning, NA NA
industrial and electrical supplies
W.W. GRALNGER INC. Distribute industrial and commerical equipment 18.1x 2.7x
and supplies
WAXMAN INDUSTRIES, INC. Leading supplier of specialty plumbing, security NA NA
hardware and other products to the repair and
remodeling market
------------------------------------------------------
MEDIAN 15.6X 2.1X
REXEL DATA $39.1 $278.7
IMPLLED EQUITY VALUE (2)$608.7 $597.0
IMPLLED SHARE PRICE (3) $23.02 $22.57
=====================================================
- ------------------------------------------------------------------------------------------------------------------------------------
ANICOM INC. Distribute communications related wire, cable, 32.9x 4.0x
fiber optics and computer network
ANIXTER INTL. INC. Distribute wiring systems, networking and 17.9x 1.6x
internetworking products
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________
(1) Market value as of 10/15/97 except Rexel's market value is based on 8/28/97
share price, one day prior to the announcement that Rexel, S.A. offered to
pay $19.50 for the shares it did not already own
(2) Based on projected 12/31/97 debt level
(3) Based on 26.1MM shares outstanding and assuming all 0.6MM options
exercised at weighted average price $8.56
Note: Anicom and Anixter are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purpose only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-72-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Analysis - FY1998
($ in millions, except per share data)
<TABLE>
<CAPTION>
NET
GROSS EBITDA EBIT INCOME CAPEX/
COMPANY BUSINESS DESCRIPTION MARGIN MARGIN MARGIN MARGIN D&A
- ------ -------------------- ------ ------ ------ ------ ---
<S> <C> <C> <C> <C> <C> <C>
Rexel Distribute electrical parts and supplies 21.0% 5.7% 4.9% 2.7% 1.0x
Hughes Supply Operate wholesale outlets and sell electrical, 21.1% 4.9% 3.9% 2.4% 1.5x
plumbing and industrial fixtures
Noland Co. Distributor of plumbing/heating, air conditioning, NA NA NA NA NA
industrial and electrical supplies
W.W. Grainger Inc. Distribute industrial and commercial equipment 33.4% 11.9% 9.7% 5.7% 1.1x
and supplies
Waxman Industries, Inc. Leading supplier of specialty plumbing, security NA NA NA NA NA
hardware and other products to the repair and
remodeling market
-----------------------------------------------------
Mean 27.2% 8.4% 6.8% 4.0% 1.3x
Median 27.2% 8.4% 6.8% 4.0% 1.3x
=====================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Anicom Inc. Distribute communications related wire, cable, 23.3% 5.9% 5.0% 2.9% 1.3x
fiber optics and computer network
Anixter Intl. Inc. Distribute wiring systems, networking and 24.9% 2.9% 1.9% 1.5% 1.4x
internetworking products
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
Note: Anicom and Anixter are in the data communications industry which
represents less than 10% of the Company's business mix. These companies
are shown for demonstration purpose only because the data communications
industry has a significantly higher growth rate than the other markets
served by the Company
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-73-
<PAGE>
REXEL, INC. COMPARABLE COMPANY TRADING ANALYSIS
================================================================================
Comparable Company Public Float Analysis
----------------------------------------------------------------
AVERAGE DAILY TRADING VOLUME AS A % OF PUBLIC FLOAT
----------------------------------------------------------------
[GRAPH APPEARS HERE]
<TABLE>
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Average Daily 44,263 68,100 714 106,597 19,651
Trading Volume /(1)/
Public Float /(2)/ 12,394,619 17,030,717 745,826 34,418,048 5,519,460
Public Float as a 47.6% 93.0% 20.2% 69.2% 46.0%
% of Shares Outstanding
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Average daily trading volume from 10/3/96 to 10/3/97.
(2) Equals shares outstanding less shares held by 5%+ shareholders and
corporate insiders.
(3) Includes 2,148,946 Class B shares which are not publicly held.
Wasserstein Perella & Co.
- -------------------------------------------------------------------------------
-74-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
COMPARABLE ACQUISITION
ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-75-
<PAGE>
REXEL, INC. COMPARABLE ACQUISITION ANALYSIS
================================================================================
Comparable Acquisition Analysis (1)
($ in millions, except per share data)
<TABLE>
<CAPTION>
ADJUSTED EQUITY
DATE ACQUIROR NAME/ PURCHASE PURCHASE
ANN. TARGET NAME TARGET BUSINESS DESCRIPTION PRICE PRICE
- ---- ----------- --------------------------- -------- --------
<S> <C> <C> <C> <C>
10/31/96 Hughes Supply/ Wholesale electrical equipment NA NA
Wholesale Electric Supply
6/23/95 Hughes Supply/ Wholesale electrical appliances NA NA
Moore Electric Supply
3/31/95 Hughes Supply/ Wholesale electrical supplies and equipment NA NA
Port City Electrical Supply
2/16/94 Clayton Dubilier & Rice Inc./ Wholesale electrical apparatus and equipment $340.00 $340.00
Westinghouse Electric Supply
11/23/93 Willcox & Gibbs Inc./ Wholesale electrical parts $ 90.95 $ 90.95
Summers Electric Co
</TABLE>
<TABLE>
<CAPTION>
PURCHASE PRICE
ADJUSTED PURCHASE PRICE AS A MULTIPLE OF:
DATE ACQUIROR NAME/ AS A MULTIPLE OF: NET BOOK
ANN. TARGET NAME SALES EBITDA EBIT INCOME VALUE
- ---- ----------- ----- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C> <C>
10/31/96 Hughes Supply/ NA NA NA NA NA
Wholesale Electric Supply
6/23/95 Hughes Supply/ NA NA NA NA NA
Moore Electric Supply
3/31/95 Hughes Supply/ NA NA NA NA NA
Port City Electrical Supply
2/16/94 Clayton Dubilier & Rice Inc./ 0.2x NA NA NA NA
Westinghouse Electric Supply
11/23/93 Willcox & Gibbs Inc./ 0.2x 7.4x 10.5x 15.5x 1.9x
Summers Electric Co
</TABLE>
<TABLE>
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mean 0.2x 7.4x 10.5x 15.5x 1.9x
Median 0.2x 7.4x 10.5x 15.5x 1.9x
Rexel Data $1,334.0 $ 72.5 $ 64.0 $ 33.6 $225.1
Implied Equity Value (3) $ 220.8 $468.9 $602.9 $522.8 $434.3
Implied Share Price (4) $ 8.35 $17.73 $22.80 $19.77 $16.42
------------------------------------------------------------------------
</TABLE>
__________________________________
(1)Source: Securities Data Company, news reports and merger proxies
(2)Deal withdrawn
(3)Based on projected 12/31/97 debt level
(4)Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
NOTE: All figures based on last twelve months' data ("LTM") when available
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-76-
<PAGE>
REXEL, INC. COMPARABLE ACQUISITION ANALYSIS
================================================================================
Company's Acquisitions (1)
<TABLE>
<CAPTION>
ADJUSTED EQUITY
EFF. PURCHASE PURCHASE
DATE TARGET NAME TARGET BUSINESS DESCRIPTION PRICE PRICE
---- ----------- --------------------------- ----- -----
<S> <C> <C> <C> <C>
9/23/97 Pacific Electrical Supply Inc. Electrical parts distributors $30.5 $30.5
9/23/97 Taylor Electric Supply Inc. Electrical parts distributors $11.1 $11.1
5/1/97 Chemco Electric Supply Inc. Distributes electrical parts and supplies $6.9 $6.9
1/20/97 Southland Electrical Supply Distributes electrical parts and supplies $25.0 $25.0
11/12/96 Cable & Connector Warehouse, Inc. Distributor of electronic wire and cable $20.2 $20.2
8/7/96 Uililty Products Supply Distributor of electrical products to the $6.8 $6.8 (2)
utilily industries with locations in
Colorado, Arizona, California and Kansas
12/17/93 Summers Group Inc. Distributor of electrical parts and $91.0 $91.0
supplies with locations principally in
Texas, Oklahoma, Louisiana, California
and Arkansas
4/93 Sacks Electrical Supply Co. Distributor of electrical supplies and $13.4 $13.4
components with three locations in
Ohio
4/22/92 Southern Electric Supply Distributor of electrical materials $29.0 $29.0
Company Inc.
<CAPTION>
PURCHASE PRICE
ADJUSTED PURCHASE PRICE AS A MULTIPLE OF
EFF. AS A MULTIPLE OF: NET BOOK
DATE TARGET NAME TARGET BUSINESS DESCRIPTION SALES EBITDA EBIT INCOME VALUE
---- ----------- --------------------------- ----- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
9/23/97 Pacific Electrical Supply Inc. Electrical parts distributors 0.3x NA 7.0x 8.5x 3.0x
9/23/97 Taylor Electric Supply Inc. Electrical parts distributors 0.2x NA 5.0x 9.2x 0.9x
5/1/97 Chemco Electric Supply Inc. Distributes electrical parts and supplies 0.3x NA 6.1x NM 3.8x
1/20/97 Southland Electrical Supply Distributes electrical parts and supplies 0.4x NA 6.8x 9.5x 3.0x
11/12/96 Cable & Connector Distributor of electronic wire and cable 0.5x NA 6.3x 10.5x 2.9x
Warehouse, Inc.
8/7/96 Uililty Products Supply Distributor of electrical products to the 0.2x NA 6.0x 14.1x 2.5x
utility industries with locations in
Colorado, Arizona, California and Kansas
12/17/93 Summers Group Inc. Distributor of electrical parts and 0.2x 7.4x 10.5x 15.5x 1.9x
supplies with locations principally in
Texas, Oklahoma, Louisiana, California
and Arkansas
4/93 Sacks Electrical Supply Co. Distributor of electrical supplies and 0.3x NA 4.6x 7.0x 2.4x
components with three locations in
Ohio
4/22/92 Southern Electric Supply Distributor of electrical materials 0.3x NA 5.6x 16.6x 1.5x
Company Inc.
----------------------------------------------------------------------------------------
Mean 0.3x NM 6.4x 11.4x 2.4x
Median 0.3x NM 6.1x 10.0x 2.5x
Rexel Data $1,334.0 $72.5 $64.0 $33.6 $225.1
Implied Equity Value (3) $267.8 NM $321.0 $336.3 $554.2
Implied Share Price (4) $10.13 NM $12.14 $12.72 $20.96
----------------------------------------------------------------------------------------
</TABLE>
__________________________________________________
(1) Source: Data are provided by the management
(2) Includes 0.1MM contingent bonus
(3) Based on projected 12/31/97 debt level
(4) Based on 26.1MM shares outstanding and assuming all 0.6MM options exercised
at weighted average price $8.56
Note: Figures based on last twelve months' data ("LTM") when available.
Otherwise next fiscal year data is utilized
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
77
<PAGE>
REXEL, INC. COMPARABLE ACQUISITION ANALYSIS
================================================================================
Company's Acquisitions (1)
<TABLE>
<CAPTION>
LTM DATA
--------------------------------------
EFF. NET BOOK
DATE TARGET NAME TARGET BUSINESS DESCRIPTION SALES EBITDA EBIT INCOME VALUE
- ---- ----------- --------------------------- ----- ------ ---- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
9/23/97 Pacific Electrical Supply Inc. Electrical parts distributors $89.8 NA $4.3 $3.6 $10.1
9/23/97 Taylor Electric Supply Inc. Electrical parts distributors 51.3 NA 2.2 1.2 12.7
5/1/97 Chemco Electric Supply Inc. Distributes electrical parts and supplies 24.0 NA 1.1 0.1 1.8
1/20/97 Southland Electrical Supply Distributes electrical parts and supplies 61.7 NA 3.7 2.6 8.4
11/12/96 Cable & Connector Distributor of electronic wire, cable, connectors 42.7 NA 3.2 1.9 6.9
Warehouse, Inc. and related apparatus to manufacturers of data
and telecommunication products with locations
8/7/96 Utility Products Supply Distributor of electrical products to the utility 29.2 NA 1.1 0.5 2.8
industries with locations in Colorado, Arizona,
California and Kansas
12/17/93 Summers Group Inc. Distributor of electrical parts and supplies with 395.1 12.2 8.6 5.9 47.1
locations principally in Texas, Oklahoma,
Louisiana, California and Arkansas
4/93 Sacks Electrical Supply Co. Distributor of electrical supplies and 53.4 NA 2.9 1.9 5.7
components with three locations in Ohio
4/22/92 Southern Electric Supply Distributor of electrical materials 114.5 NA 5.2 1.8 18.8
Company Inc.
</TABLE>
_________________________________________________
(1) Source: Data are provided by the management
WASSERSTEIN PERELLA & CO.
- --------------------------------------------------------------------------------
-78-
<PAGE>
REXEL, INC.
================================================================================
------------------------------
PREMIUM ANALYSIS
------------------------------
Wasserstein Perella & Co.
- --------------------------------------------------------------------------------
-79-
<PAGE>
REXEL, INC. PREMIUM ANALYSIS
================================================================================
Premium Analysis for Acquisitions by Majority Shareholders with Deal Sizes
between $100MM - $550MM(1)
<TABLE>
<CAPTION>
ANN. DEAL PER SHARE
ANN. VALUE ACQ. % BEGIN
ACQUIROR SELLER DATE ($MM) PRICE ACQUIRED
- -------- ------ ---- ----- ----- --------
<S> <C> <C> <C> <C> <C>
Rexel, S.A. Rexel, Inc. 8/29/97 $369.3 $22.50 49.5%
Investor Group BBT Holdings Inc. 9/11/97 288.0 $48.00 38.8%
Anthem Inc. Acordia Inc. 6/2/97 172.7 40.00 33.2%
Enron Corp. Enron Global Power & Pipelines 5/14/97 443.5 35.00 48.0%
St. Joe Paper Co. Florida East Coast Industries 5/5/97 428.4 102.00 46.0%
Monsanto Co. Calgene Inc. 1/28/97 242.6 8.00 43.7%
Zurich Versicherungs Zurich Reinsurance Center 1/13/97 319.0 36.00 34.0%
Novartis AG SyStemix Inc. 5/27/96 119.4 19.50 26.8%
COBE Laboratories Inc. REN Corp. - USA 7/14/95 177.7 20.00 47.0%
Foundation Health Corp. Intergroup Healthcare Corp. 7/29/94 255.7 65.00 37.4%
Medco Containment Medical Marketing Group 10/13/93 122.5 27.75 45.8%
Rust International Brand Cos. 11/13/92 185.0 18.75 44.0%
BHP Holdings Hamilton Oil Corp. 2/5/91 530.0 40.00 50.1%
Murphy Oil Corp. Ocean Drilling & Exploration 1/3/91 391.8 19.39 39.0%
Renault Vehicules Industriels Mack Trucks Inc. 7/6/90 103.7 6.25 40.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Mean 41.0%
Median 41.8%
Maximum 50.1%
Minimum 26.8%
Rexel Data
Implied Share Price Based on Median
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELLER CLOSING PRICE PRE-ANNOUNCEMENT/
ACQUISITION PREMIUM
- ------------------------------------------------------------------------------------------------------------------------------------
1-DAY 30-DAY 60-DAY 90-DAY 120-DAY
ACQUIROR SELLER PREM. PREM. PREM. PREM. PREM.
- -------- ------ ----- ----- ----- ----- -----
<S> <C> <S> <C> <C> <C> <C>
Rexel, S.A. Rexel, Inc. 19.2% 25.9% 25.9% 24.1% 32.4%
Investor Group BBT Holdings Inc. 17.1% 21.9% 45.2% 39.1% 71.4%
Anthem Inc. Acordia Inc. 12.7% 26.5% 25.5% 26.0% 43.5%
Enron Corp. Enron Global Power & Pipelines 15.7% 25.0% 23.3% 16.7% 28.4%
St. Joe Paper Co. Florida East Coast Industries 14.9% 9.7% 4.9% 8.1% 17.6%
Monsanto Co. Calgene Inc. 45.5% 60.0% 45.5% 64.1% 60.0%
Zurich Versicherungs Zurich Reinsurance Center 17.1% 12.1% 15.7% 18.5% 17.1%
Novartis AG SyStemix Inc. 77.3% 59.2% 48.6% 39.3% 52.9%
COBE Laboratories Inc. REN Corp. - USA 27.0% 35.6% 29.0% 35.6% 29.6%
Foundation Health Corp. Intergroup Healthcare Corp. 36.8% 47.7% 42.1% 44.8% 21.2%
Medco Containment Medical Marketing Group (17.8%) (6.7%) (5.1%) (5.9%) 29.1%
Rust International Brand Cos. 4.9% 10.3% 10.3% 27.1% 15.4%
BHP Holdings Hamilton Oil Corp. 18.5% 23.1% 25.0% 16.8% 5.3%
Murphy Oil Corp. Ocean Drilling & Exploration 14.1% 9.2% 14.1% (12.4%) (13.8%)
Renault Vehicules Industriels Mack Trucks Inc. 19.0% 22.0% 11.1% (5.7%) (9.1%)
- ------------------------------------------------------------------------------------------------------------------------------------
Mean 21.6% 25.4% 23.9% 22.3% 26.3%
Median 17.1% 22.5% 24.2% 22.3% 24.8%
Maximum 77.3% 60.0% 48.6% 64.1% 71.4%
Minimum (17.8%) (6.7%) (5.1%) (21.4%) (13.8%)
Rexel Data $18.88 $17.88 $17.88 $18.13 $17.00
Implied Share Price Based on Median $22.10 $21.90 $22.20 $22.16 $21.2?
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________________________________
(1) Source: Securities Data Company
Note: Unless noted, days referred to are calendar days.
Wasserstein Perella & Co
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99(b)(3)
October 13,1997 Highly confidential
J.P. Morgan Securities Inc.
================================================================================
Rexel S.A.
Rexel, Inc. - Perspectives on Valuation
JPMorgan
<PAGE>
This presentation was prepared exclusively for the benefit and internal use of
Rexel S.A., in order to indicate, on a preliminary basis, the feasibility of a
possible transaction or transactions with Rexel, Inc. and does not carry any
right of publication or disclosure to any other party. This presentation is
incomplete without reference to, and should be viewed solely in conjunction
with, the oral briefing provided by J.P. Morgan. Neither this presentation nor
any of its contents may be used for any other purpose without the prior written
consent of J.P. Morgan.
The information in this presentation is based upon public information and
management projections that reflect prevailing conditions and our views as of
this date, all of which are accordingly subject to change. In preparing this
presentation, we have relied upon and assumed, without independent verification,
the accuracy and completeness of all information available from public sources
or otherwise furnished to J.P. Morgan. In addition, our analyses are not and do
not purport to be appraisals of the assets, stock, or business of either Rexel
S.A., or Rexel, Inc. ("Rexel").
<PAGE>
AGENDA
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
. Valuation summary
- --------------------------------------------------------------------------------
. Valuation of Rexel
- Discounted cash flow analysis
- Comparable trading analysis
- Comparable transaction analysis
. Stock price performance of Rexel
. Review of selected minority transactions
JP Morgan
1
<PAGE>
VALUATION SUMMARY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
$ MILLIONS MULTIPLES OF LTM, 1997E, 1998F
------------------------------
IMPLIED EQUITY
VALUATION METHOD VALUE PER SHARE(1) FIRM VALUE(2)(3) REVENUES EBITDA EBIT NET INCOME
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Discounted cash flow
Management case $21.70-$27.85 $590-$755 0.5x 0.6x 8.5x 11.2x 9.7x 12.8x 18.3x 24.1x
0.4 0.6 7.6 10.0 8.8 11.6 17.3 22.7
0.4 0.5 5.9 7.8 6.8 8.9 12.9 16.9
Revised management case $20.20-$24.70 $550-$670 0.4 0.5 8.0 9.4 9.1 10.7 17.0 20.1
0.4 0.5 7.1 8.3 8.2 9.2 16.0 18.9
0.4 0.4 6.0 7.0 6.8 8.0 12.3 14.6
Upside case $19.40-$23.90 $530-$650 0.4 0.5 7.7 9.4 8.7 10.7 16.3 20.1
0.4 0.5 6.8 8.4 7.9 9.7 15.4 19.0
0.4 0.4 5.9 7.2 6.7 8.2 12.2 15.0
Base case $18.10-$22.00 $495-$600 0.4 0.5 7.2 8.7 8.2 9.9 15.2 18.6
0.4 0.4 6.4 7.7 7.4 9.0 14.4 17.5
0.3 0.4 6.0 7.2 6.9 8.4 12.7 15.4
Comparable company $19.80-$25.80 $540-$700 0.4 0.6 7.8 10.1 8.9 11.6 16.7 21.7
0.4 0.5 6.9 9.0 8.1 10.5 15.7 20.5
0.4 0.5 6.0 7.7 6.8 8.8 12.4 16.2
Comparable transactions $17.60-$23.20 $480-$630 0.4 0.5 6.9 9.1 7.9 10.4 14.8 19.5
0.4 0.5 6.2 8.1 7.2 9.4 13.9 18.4
0.3 0.4 5.3 7.0 6.1 8.0 11.0 14.5
--------------------------------------------------------------------------------------------
Stand-alone value range $18.90-$23.70 $515-$645 0.4 0.5 7.5 9.3 8.5 10.6 15.9 20.0
Pre-announcement price $18.88-$18.88 0.4 0.5 6.6 8.3 7.7 9.6 15.0 18.8
Prem/(disc) to pre-
announcement price 0.1% 25.6% 0.3 0.4 5.7 7.1 6.5 8.1 11.8 14.9
Prem/(disc) to 1 week pre-
announcement 6.1% 33.1%
- ---------------------------------------------------------------- -----------------------------------------------------
FIRM VALUE ADJUSTMENTS(1), (2), (3) REXEL FINANCIALS - UPSIDE CASE (4)
REVENUES EBITDA EBIT NET INCOME
------------------------------------------
(-) Debt $67.2 (+) Option proceeds $5.5 LTM $1,269.6 $69.1 $60.6 $31.7
1997E 1,368.4 77.8 66.9 33.6
(+) Cash 22.1 (+) Sale of utility(2) 27.7 1998F 1,463.8 90.5 79.2 42.5
- ---------------------------------------------------------------- -----------------------------------------------------
</TABLE>
1 Shares outstanding are based on common shares outstanding of 26.03 million
and 0.65 million options with a weighted average exercise price of $8.56 per
option
2 Firm values are adjusted to reflect the sale of the Utility division for
$30.0 million, with a $24.8 million tax basis and an effective tax rate of
35.0%, resulting in after-tax cash proceeds of $27.7 million, a per share
impact of $1.04
3 Does not include potential continuing liabilities associated with the sale of
Apparel or potential environmental liabilities
4 Implied multiples for the Upside case, comparable company, comparable
transactions, and the stand-alone value range above are based on Upside case
financials
<PAGE>
IMPLIED PREMIA AND MULTIPLES AT VARIOUS PRICES
- --------------------------------------------------------------------------------
$ MILLIONS
<TABLE>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Share price $18.88 $19.50 $20.00 $20.50 $21.00 $21.50 $22.00 $22.50
- --------------------------------------------------------------------------------------------------------------
IMPLIED PREMIA TO PRE-ANNOUNCEMENT PRICE
- --------------------------------------------------------------------------------------------------------------
Premium to:
Previous days close ($18.88) 0.0% 3.3% 6.0% 8.6% 11.3% 13.9% 16.6% 19.2%
1 week prior($17.81) 6.0% 9.5% 12.3% 15.1% 17.9% 20.7% 23.5% 26.3%
30 day average ($17 87) 5.6% 9.1% 11.9% 14.7% 17.5% 20.3% 23.1% 25.9%
60 day average ($17.98) 5 0% 8.4% 11.2% 14.0% 16.8% 19.5% 22.3% 25.1%
90 day average ($17.93) 5.3% 8.7% 11.5% 14.3% 17.1% 19.9% 22.7% 25.5%
1 year average ($16.62) 13.6% 17.3% 20.3% 23.3% 26.3% 29.4% 32.4% 35.4%
- --------------------------------------------------------------------------------------------------------------
IMPLIED FIRM VALUE $543.1 $559.8 $573.1 $586.5 $599.8 $613.2 $626.5 $639.8
- --------------------------------------------------------------------------------------------------------------
Rexel
IMPLIED MULTIPLES ($MM)(1)
EBITDA
- LTM $69.1 7.9 8.1 8.3 8.5 8.7 8.9 9.1 9.3
- 1997E 77.8 7.0 7.2 7.4 7.5 7.7 7.9 8.1 8.2
- 1998F 90.5 6.0 6.2 6.3 6.5 6.6 6.8 6.9 7.1
EBIT
- LTM 60.6 9.0 9.2 9.5 9.7 9.9 10.1 10.3 10.6
- 1997E 66.9 8.1 8.4 8.6 8.8 9.0 9.2 9.4 9.6
- 1998F 79.2 6.9 7.1 7.2 7.4 7.6 7.7 7.9 8.1
NET INCOME
- LTM 31.7 15.9 16.4 16.8 17.3 17.7 18.1 18.5 18.9
- 1997E 33.6 15.0 15.5 15.9 16.3 16.7 17.1 17.5 17.9
- 1998F 42.5 11.8 12.2 12.6 12.9 13.2 13.5 13.8 14.1
</TABLE>
(1) Rexel financials are based on the Upside case
JP Morgan Note: Shares outstanding are based on common shares outstanding of
26.03 million and 0.65 million options with an weighted
average exercise price of $8.56 per option
Assumes net debt of $39.5 miliion adjusted for option
proceeds of $5.5 million
Equity value based multiples do not include an adjustment
for the sale of the Utility division
3
<PAGE>
AGENDA
. Valuation summary
- --------------------------------------------------------------------------------
. Valuation of Rexel
- Discounted cash flow analysis
- Comparable trading analysis
- Comparable transaction analysis
- --------------------------------------------------------------------------------
. Stock price performance of Rexel
. Review of selected minority transactions
JPMorgan
4
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS: ASSUMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGEMENT CASE REVISED MANAGEMENT CASE UPSIDE CASE BASE CASE
-----------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
5-year CAGR 12.8% 6.8% 6.3% 6.3%
7-year CAGR 9.8% 5.7% 5.3% 5.3%
Operating margins
5-year average 5.3% 5.3% 5.2% 4.9%
7-year average 5.4% 5.3% 5.2% 4.9%
- ----------------------------------------------------------------------------------------------------------
Capex as % revenues (7-year average)(1) 0.5% 0.6% 0.6% 0.6%
Depreciation as % revenues (7-year average) 0.5% 0.6% 0.6% 0.6%
NWI as % revenues (7-year average) 10.6% 9.3% 9.4% 9.4%
Effective tax rate
1997-2003 average 41.5% 42.0% 42.0% 42.0%
Terminal value EBITDA exit multiple 6.0x-8.0x 6.0x-8.0x 6.0x-8.0x 6.0x-8.0x
Implied terminal value growth rate 1.2%-4.4% 1.4%-4.6% 2.4%-3.6% 1.6%-4.7%
WACC 9.5%-10.5% 9.5%-10.5% 9.5%-10.5% 9.5%-10.5%
Pending acquisitions(2)
- Equity purchase price $70.3 $70.3 $70.3 $70.3
- Sales contribution 232.0 232.0 232.0 232.0
- ----------------------------------------------------------------------------------------------------------
Other acquisitions(3)
- Equity purchase price $174.0 Excluded Excluded Excluded
- Sales contribution 597.0
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Capex as % revenues does not include acquisition capex
(2) Cumulative equity purchase price and first full year sales
contribution of Chemco, Taylor, Pacific and Southland
acquisitions
JPMorgan (3) Other acquisitions occur in 1998-2000, cumulative equity
purchase price and first full year sales contribution;
these acquisitions have been excluded in the revised
management case, the upside case and the base case
5
<PAGE>
DISCOUNTED CASH FLOW ANALYSIS: IMPLIED MULTIPLES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Revised
Management case management case Upside case Base case
------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Firm value $590.0 - 755.0 $550.0 - $670.0 $530.0 - $650.0 $495.0 - $600.0
Equity value 578.2 - 743.2 538.2 - 658.2 518.2 - 638.2 483.2 - 588.2
Equity value per share $21.70 - $27.85 $20.20 - $24.70 $19.40 - $23.90 $18.10 - $22.00
- -------------------------------------------------------------------------------------------------
REVENUES
- LTM 0.5x - 0.6x 0.4x - 0.5x 0.4x - 0.5x 0.4x - 0.5x
- 1997E 0.4 - 0.6 0.4 - 0.5 0.4 - 0.5 0.4 - 0.4
- 1998F 0.4 - 0.5 0.4 - 0.4 0.4 - 0.4 0.3 - 0.4
EBITDA
- LTM 8.5 - 11.2 8.0 - 9.4 7.7 - 9.4 7.2 - 8.7
- 1997E 7.6 - 10.0 7.1 - 8.3 6.8 - 8.4 6.4 - 7.7
- 1998F 5.9 - 7.8 6.0 - 7.0 5.9 - 7.2 6.0 - 7.2
- -------------------------------------------------------------------------------------------------
EBIT
- LTM 9.7 - 12.8 9.1 - 10.7 8.7 - 10.7 8.2 - 9.9
- 1997E 8.8 - 11.6 8.2 - 9.7 7.9 - 9.7 7.4 - 9.0
- 1998F 6.8 - 8.9 6.8 - 8.0 6.7 - 8.2 6.9 - 8.4
- -------------------------------------------------------------------------------------------------
Net income
- LTM 18.3 - 24.1 17.0 - 20.1 16.3 - 20.1 15.2 - 18.6
_ 1997E 17.3 - 22.7 16.0 - 18.9 15.4 - 19.0 14.4 - 17.5
- 1998F 12.9 - 16.9 12.3 - 14.6 12.2 - 15.0 12.7 - 15.4
</TABLE>
Note: The above valuation assumes net debt of $39.5 million (includes
option proceeds of $5.5 million) and shares outstanding,
JPMorgan including options of 26.68 million
Equity values Incorporate the sale of the Utility division, an
impact of $1.04 per share, based on after-tax cash proceeds of
$27.7 million
6
<PAGE>
Discounted cash flow: implications
======================================================================
Management case
Terminal value as a % of firm value
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 80.1% 82.5% 84.3%
9.75% 80.1% 82.5% 84.3%
10.00% 80.1% 82.4% 84.3%
10.25% 80.1% 82.4% 84.3%
10.50% 80.1% 82.4% 84.3%
Implied terminal value growth rate
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 1.2% 2.5% 3.4%
9.75% 1.4% 2.7% 3.7%
10.00% 1.7% 3.0% 3.9%
10.25% 1.9% 3.2% 4.2%
10.50% 2.2% 3.5% 4.4%
Implied ROI
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 14.9% 29.1% 39.1%
9.75% 18.1% 31.3% 42.5%
10.00% 20.3% 34.6% 44.8%
10.25% 23.6% 36.9% 48.2%
10.50% 25.8% 40.2% 50.5%
Revised management case
Terminal value as a % of firm value
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 65.2% 68.6% 71.4%
9.75% 65.1% 68 5% 71.3%
10.00% 64.9% 68.4% 71.2%
10.25% 64.8% 68.2% 71.1%
10.50% 64.7% 68.1% 71.0%
Implied terminal value growth rate
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 1.4% 2.6% 3.6%
9.75% 1.6% 2.9% 3.8%
10.00% 1.9% 3.1% 4.1%
10.25% 2.1% 3.4% 4.3%
10.50% 2.4% 3.6% 4.6%
Implied ROI
------------------------------------
EBITDA 6.00x 7.00x 8.00x
------------------------------------
WACC
9.50% 15.7% 27.7% 37.0%
9.75% 17.7% 29.8% 40.1%
10.00% 20.7% 32.8% 42.2%
10.25% 22.7% 34.9% 45.3%
10.50% 25.7% 38.0% 47.4%
7
<PAGE>
Discounted cash flow: implications (cont'd)
================================================================================
Upside case
Terminal value as a % of firm value
- -----------------------------------
EBITDA 6.00x 7.00x 8.00x
- -----------------------------------
WACC
9.50% 65.0% 68.4% 71.3%
9.75% 64.9% 68.3% 71.1%
10.00% 64.8% 68.2% 71.0%
10.25% 64.6% 68.1% 70.9%
10.50% 64.5% 68.0% 70.8%
Implied terminal value growth rate
- -----------------------------------
EBITDA 6.00x 7.00x 8.00x
- -----------------------------------
WACC
9.50% 1.4% 2.7% 3.6%
9.75% 1.7% 2.9% 3.9%
10.00% 1.9% 3.2% 4.1%
10.25% 2.2% 3.4% 4.4%
10.50% 2.4% 3.7% 4.6%
Implied ROI
- ------------------------------------
EBITDA 6.00x 7.00x 8.00x
- ------------------------------------
WACC
9.50% 12.1% 25.5% 35.0%
9.75% 14.1% 27.6% 38.2%
10.00% 17.2% 30.7% 40.3%
10.25% 19.3% 32.9% 43.6%
10.50% 22.4% 36.0% 45.7%
Base case
Terminal value as a % of firm value
- ------------------------------------
EBITDA 6.00x 7.00x 8.00x
- ------------------------------------
WACC
9.50% 64.7% 68.1% 71.0%
9.75% 64.6% 68.0% 70.9%
10.00% 64.5% 67.9% 70.7%
10.25% 64.3% 67.8% 70.6%
10.50% 64.2% 67.7% 70.5%
Implied terminal value growth rate
- -----------------------------------
EBITDA 6.00x 7.00x 8.00x
- -----------------------------------
WACC WACC
9.50% 1.6% 2.8% 3.7%
9.75% 1.8% 3.0% 4.0%
10.00% 2.1% 3.3% 4.2%
10.25% 2.3% 3.5% 4.5%
10.50% 2.6% 3.8% 4.7%
Implied ROI
- ---------------------------------
EBITDA 6.00x 7.00x 8.00x
- ---------------------------------
WACC
9.50% 15.4% 28.9% 40.4%
9.75% 17.6% 32.4% 42.8%
10.00% 21.0% 34.7% 46.3%
10.25% 23.3% 38.1% 48.6%
10.50% 26.7% 40.4% 52.2%
JP Morgan
8
<PAGE>
Valuation analysis: Comparable company analysis
- --------------------------------------------------------------------------------
. Issues with respect to comparability exist. There are no "pure" plays for
comparison to Rexel; however, there are several parameters of comparability
- Customer base
- Margins
- Revenue base
- Growth prospects
- Market capitalization
- Capital structure
. Selected companies include:
- Anixter International
- Hughes Supply
- W.W. Grainger
- Applied Industrial
Noland Co., Waxman Industries and Anicom were not included in the analysis
because Waxman and Noland have market capitalizations below $100 million and
Anicom distributes higher technology multimedia wiring and technology products
JPMorgan
9
<PAGE>
SELECTED COMPARABLE TRADING COMPANIES
------------------------------------------------------------------
<TABLE>
<CAPTION>
Rexel(1) Anixter Hughes Supply W.W. Grainger Applied Industrial
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DESCRIPTION: 5th largest U.S. Wholesale distributor of Wholesale distributor of Wholesale distributor Wholesale distri-
wholesale distributor wiring and networking electrical, plumbing and of equipment, butor of bearings,
of electrical parts & products for voice data, other equipment to the components and mechanical and
supplies video & electrical apps. construction industry supplies electrical drive
systems, indus-
trial products,
and fluid and
specialty repair
products
BUSINESS 51% of sales to Sales to network Sales to contractors, Sales to commercial, Sales by segment;
SEGMENTS: construction market, computer users, and utilities, municipalities industrial, contractor bearings, 43%;
remainder in indus- electrical wiring systems and manufacturers and institutional drive systems,
trial, government, for industrial processes markets 30%; specialty/
municipal and (44% non-NA locations) other, 27%
utility markets
MARKET CAP: $497.1 $880.3 $471.2 $4,488.6 $732.0
NET DEBT: $50.7 $456.2 $256.8 $207.4 $40.5
FIRM VALUE: $547.8 $1,336.5 $728.0 $4,695.9 $772.4
PUBLIC FLOAT(2) 47.6% 75.1% 89.3% 79.6% 83.7%
EMPLOYEES: 3,100 5,100 4,400 14,600 4,100
LOCATIONS: 161 188 292 527 330
<CAPTION>
FINANCIAL SUMMARY: LTM 1997E LTM 1997E LTM 1997E LTM 1997E LTM 1997E
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- - Revenues(3) $1,270 $1,368 $2,637 $2,950 $1,588 $1,750 $3,843 $4,100 $1,150 $1,160
- - 5 year CAGR(4) 14.1% 7.9% 25.8% 11.2% 7.0%
- - EBITDA margin 5.4% 5.7% 4.1% 4.5% 5.2% 5.0% 11.6% 13.9% 5.7% 6.3%
- - EBIT margin 4.8% 4.9% 3.9% 3.5% 4.1% 4.1% 9.6% 9.3% 4.3% 5.0%
- - Net margin 2.5% 2.6% 1.5% 1.5% 2.2% 2.3% 5.8% 5.6% 2.2% 2.6%
- - EPS LTG estimate 16.0% 21.3% 12.5% 12.0% 20.0%
</TABLE>
(1) Market data based on pre-announcement closing price of $18.88 on
8/28/97
JPMorgan (2) Includes all shares not held by management or affiliates
(3) Comparable statistics margins are based on Valueline sales for
1997
(4) 5-year historical compound annual growth rate
10
<PAGE>
<TABLE>
<CAPTION>
COMPARABLE TRADING MULTIPLES ANALYSIS
------------------------------------------------------------------------------------------------------------------
$ millions
FIRM VALUE PRICE
------------------------------------------------------------------------ -------------------------
LTM 1997 1998 LTM 97 98 LTM 97 98 LTM 97 98
CLOSE GROUP COMPARABLES REV. REV. REV. EBITDA EBITDA EBITDA EBIT EBIT EBIT EARNINGS EARNINGS EARINGS LTG
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REXEL(1) 0.4X 0.4X 0.4X 7.9X 7.4X 6.6X 9.OX 8.4X 7.4X 15.7X 14.4X 12.5X 16.0%
Anixter International 0.5 0.5 0.4 10.0 9.9 8.3 12.9 12.7 10.7 22.5 20.2 16.0 21.3
Hughes Supply 0.4 0.4 0.4 8.1 7.9 7.4 10.1 9.5 8.8 12.4 11.4 10.3 12.5
W.W. Grainger 1.2 1.2 1.1 10.5 10.0 8.9 12.7 12.3 10.8 20.3 19.7 17.3 12.0
Applied Industrial 0.7 0.7 0.6 11.9 7.9 6.8 15.3 9.4 7.9 27.0 16.3 13.7 18.3
Technologies
Median 0.6 0.6 0.5 10.3 8.9 7.9 12.8 10.9 9.7 21.4 18.0 14.8 15.4
MULTIPLE RANGE
Low 0.4 0.4 0.4 8.1 7.9 7.0 10.0 9.5 8.0 20.0 16.0 13.5
High 0.5 0.5 0.5 10.5 10.0 8.5 13.0 12.0 10.5 22.5 20.0 16.0
REXEL UPSIDE CASE $1,196.8 $1,295.6 $1,436.8 $ 67.0 $ 75.7 $ 90.5 $ 58.5 $ 64.8 $ 79.2 $ 30.4 $ 32.3 $ 42.5
FINANCIALS(2)
FIRM VALUE
Low 478.7 518.2 585.5 542.7 598.0 633.5 585.0 615.6 633.6 649.4 558.2 615.2
High 598.4 647.8 731.9 703.5 757.0 769.3 759.2 777.6 831.6 725.4 687.4 721.4
IMPLIED EQUITY
VALUE PER SHARE:(2)
Low $ 17.50 $ 19.98 $ 21.50 $19.90 $21.97 $23.30 $21.48 $22.63 $23.30 $23.90 $20.48 $22.61
High $ 21.99 $ 23.83 $ 26.99 $25.92 $27.93 $28.39 $28.01 $28.70 $30.73 $26.74 $25.32 $26.59
Firm value range $540.0-$700.0
Implied equity value per share $19.80-$25.80
</TABLE>
JP Morgan (1) Based on I/B/E/S and publicly available information as of October
9,1997
(2) Excludes Utility division for LTM and 1997 to calculate firm
value. A reduction of $72.8 in revenues, $2.1 in EBIT and
EBITDA, and $1.3 million in earnings. However, equity value
per share is adjusted to reflect the sale of the Utility
division, an impact of $1.04 per share
Note: (i) Assumes net debt of $39.5MM (includes option proceeds of
$5.5 million) as of August 31, 1997
(ii) Valuation is based on shares outstanding of 26.68
million, common shares outstanding of 26.03 million and
0.65 million options outstanding with an estimated
average exercise price of $8.56 per option
11
<PAGE>
SELECTED COMPARABLE TRANSACTION ANALYSIS
----------------------------------------------------------------
COMPARABLE TRANSACTION ANALYSIS
<TABLE>
<CAPTION>
FIRM VALUE(1)
--------------------------------------------
DATE ANNOUNCED ACQUIROR TARGET DESCRIPTION $ MILLIONS REVENUE EBITDA EBIT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3/97 Applied Industrial Technologies Invetech Company Industrial distributor $83.0 0.3 N/A N/A
of ball bearings and
other products
7/3/97 Raab Karcher AG (Veba AG) Wyle Electronics Wholesales high-tech 751.3 0.6 9.6 11.0
electronic products,
provides engineering
services
12/20/96 Arrow Electronics, Inc. Farnell Electronic Wholesales electronic 300.0 0.6 N/A N/A
Services components
11/27/96 Bell Industries, Inc. Milgray Electronics, Wholesales electronic 135.2 0.5 7.8 8.1
Inc. parts and equipment
9/10/96 W.W. Grainger, Inc. Acklands Ltd. - Wholesales industrial 289.3 0.9 N/A 12.8
Industrial supply supplies
2/28/96 Windmere Corp. Salton/Maxim Wholesales electrical 53.4 0.6 7.2 10.2
Housewares Inc. appliances
8/31/95 Bell Industries, Inc. Sterling Electronics Wholesales electronic 152.1 0.5 8.3 8.8
Corp. component, mfg. other
products
3/28/95 Consolidated Electrical Guillevin Interna- Wholesale distributor 107.8 0.3 7.5 9.6
Distributors Ltd. tional Inc. of electrical construction
materials
Median 0.6x 7.8x 9.9x
Firm value range $480 - $630
Implied equity value per share(2) $17.60 - $23.20
</TABLE>
JPMorgan (1) Based on LTM Financials
(2) Adjusted to reflect the sale of the Utility division, an
impact of $1.04 per share
Note: All deals were completed on a friendly basis except for
Wyle Electronics (pending/friendly) and Sterling
Electronics Corp. (withdrawn/unsolicited)
Source: Securities Data Company
12
<PAGE>
AGENDA
------------------------------------------
. Valuation summary
. Valuation of Rexel
- Discounted cash flow analysis
- Comparable trading analysis
- Comparable transaction analysis
------------------------------------------
. Stock price performance of Rexel
------------------------------------------
. Review of selected minority transactions
JPMorgan
13
<PAGE>
REXEL PRICE PERFORMANCE OVER THE PAST YEAR AND POST ANNOUNCEMENT
- --------------------------------------------------------------------------------
PAST YEAR PERFORMANCE POST-ANNOUNCEMENT(1)
[Chart Appears Here] [Chart Appears Here]
1 Transaction announced August 29, 1997
Note: as of October 8, 1997
JPMorgan
14
<PAGE>
REXEL TRADING VOLUME AT VARIOUS PRICES PRE- AND POST-ANNOUNCEMENT
- --------------------------------------------------------------------------------
LAST 12 MONTHS PRE-ANNOUNCEMENT POST-ANNOUNCEMENT
0-13 0.0% 20.50-20.75 0.0%
13-14 5.4% 20.75-21.00 11.7%
14-15 20.7% 21.00-21.25 85.6%
15-16 10.5% 21.25-21.50 0.8%
16-17 10.6% 21.50-21.75 1.8%
17-18 21.0% 21.75-22.00 0.9%
18-19 27.1%
19-20 2.6%
20-21 2.1%
Total shares traded: 10.62 Total shares traded: 2.07
Percent of float: 82.3% Percent of float: 16.1%
Note: (i) Total float is 12.9 million shares (49.4% of total shares
outstanding)
(ii) As of October 8, 1997
Source: Tradeline
JPMorgan
15
<PAGE>
AGENDA
------------------------------------------
. Valuation summary
. Valuation of Rexel
- Discounted cash flow analysis
- Comparable trading analysis
- Comparable transaction analysis
. Stock price performance of Rexel
------------------------------------------
. Review of selected minority transactions
------------------------------------------
JPMorgan
16
<PAGE>
J.P. Morgan has reviewed minority interest transactions
================================================================================
<TABLE>
<CAPTION>
% of Deal
Date Date shares value Final bid Initial bid
announced effective Acquiror name Target name acquired ($MMM) premium(1) premium(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jun-97 08/19 Rhone-Poulenc S.A. Rhone-Poulenc Rorer 31.9% $4,250.0 22.8% 16.5%
Jun-97 Pending Waste Management Wheelabrator Technologies 33.0 780.0 N/A 16.5
May-97 Pending Enron Corp Enron Global Power & Pipelines 48.0 403.9 N/A 7.6
May-97 Pending St. Joe Paper Co Florida East Coast Inds Inc 46.0 428.4 N/A 16.6
Dec-96 07/97 Allmerica Financial Corp Allmerica Property & Casualty 40.5 798.6 13.8 0.0
Aug-95 01/96 Berkshire Hathaway Inc GEICO Corp (Berkshire Hathaway) 49.0 2,347.0 23.1 N/A
Ju1-95 12/95 COBE Laboratories
(Gambro AB) REN Corp-USA (COBE Labs Inc) 47.0 177.7 20.3 N/A
Apr-95 10/95 McCaw Cellular Commun
(AT&T) LIN Bdcstg (McCaw Cellular) 48.0 3,323.4 19.7 N/A
Nov-92 05/93 Rust International Inc Brand Cos Inc 44.0 185.0 13.6 N/A
Aug-92 12/92 Leucadia National Corp PHLCORP Inc 36.9 139.9 15.2 N/A
May-91 12/91 Tele-Communications Inc United Artists Entertainment 46.0 1,189.0 22.2 N/A
Feb-91 07/91 BHP Hldgs (USA) Inc
(Broken Hill) Hamilton Oil Corp 48.3 524.3 21.2 N/A
Jan-91 07/91 Murphy Oil Corp Ocean Drilling & Exploration 39.0 391.8 24.1 N/A
Jul-90 10/90 Renault Vehicles
Industrials Mack Trucks Inc 40.0 103.7 19.0 N/A
Median 19.4% l6.5%
</TABLE>
1 Premium based on bid price relative to share price one week before the
acquisition announcement
Note: Selected deals have the following characteristics: (i) deal value above
$100MM; (ii) acquiror owned 50%-67% of the target before the transaction;
(iii) target is a U.S. public company; (iv) all transactions were friendly
except for Murphy Oil Corp.'s acquisition of Ocean Drilling & Exploration
Source: Securities Data Company
JPMorgan
17
<PAGE>
RHONE-POULENC S.A. - RHONE-POULENC RORER ("RPR")
- --------------------------------------------------------------------------------
INITIAL OFFER:
June 26, 1997; acquisition of the remaining 31.9% RPR: ONE-YEAR STOCK PRICE
stake in RPR for $92 a share, 100% cash. [CHART APPEARS HERE]
Rhone-Poulenc S.A. was constrained from taking
formal action until after 7/31/97, under the
terms of the acquisition agreement negotiated with
RPR in 1990.
Total equity value of approximately $4.03 billion
INITIAL PREMIUMS:
1 week - 16.5%; 1 month - 20.3%; 30 day average - 18.8%
REACTION:
RPR stock closed on the day of the announcement at
$91.00 per share
After the announcement S&P placed both Rhone-Poulenc S.A.
and RPR on Credit Watch with negative implications
RPR's board formed an Independent Special Committee
to review a potential formal proposal (7/2/97)
RPR announced retention of legal advisors and an
investment bank to evaluate proposal (7/31/97)
FINAL OFFER:
Rhone-Poulenc S.A. increased offer to $97 cash tender
offer (8/19/97)
Total equity value of approximately $4.25 billion
Independent Special Committee unanimously endorses
$97 cash tender offer (8/19/97)
RPR Board of Directors approves $97 offer and signs
definitive agreement. The agreement stipulates that
any shares not acquired in the offer will be acquired
in a second step merger at the same price. The offer
will commence within 5 business days (8/19/97)
FINAL PREMIUMS:
1 week - 22.8%; 1 month - 26.8%; 30 day average - 25.2%
Note: RPR closing price of $96.06 on August 21, 1997
JPMorgan
18
<PAGE>
WASTE MANAGEMENT - WHEELABRATOR TECHNOLOGIES ("WTI")
- --------------------------------------------------------------------------------
INITIAL OFFER:
June 20, 1997; acquisition of the remaining 33% WTI: ONE-YEAR STOCK PRICE
stake in WTI for $15 a share, 100% cash [CHART APPEARS HERE]
Total equity value of approximately $780 million
IMPLIED PREMIUMS:
1 week - 16.5%; 1 month - 17.7%; 30 day average -
16.3%
REACTION:
WTI stock closed at $15.75 on the day of the
announcement (has not traded below $15 since
announcement)
WTI appointed a Special Committee of independent
directors to evaluate the offer
After the announcement both S&P (6/30/97) and
Moody's (6/23/97) downgraded Waste Management's
rating, citing increased risk and leverage
from the pending WTI acquisition
WTI shareholders sued to block the acquisition,
indicating the offer was not adequate (7/1/97)
Analysts are quoted indicating that they would
not be surprised by an increase of at least 10%
to the original offer of $15 per share (7/3/97)
FINAL OFFER:
Pending
JPMorgan Note: August 21, 1997 closing price of WTI was $15.63 per share
19
<PAGE>
ALLMERICA FINANCIAL - ALLMERICA PROPERTY & CASUALTY ("APY")
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INITIAL OFFER:
Dec. 17, 1996; acquisition of remaining 40.5% stake APY: ONE-YEAR STOCK PRICE
in APY for approximately $29 per share(1) comprised [CHART APPEARS HERE]
of either; (i) $16.59 in cash and 0.385 shares of
Allmerica Financial common stock or; (ii) 100% cash
or 100% stock
Total equity value of 701.8 million
INIITAL PREMIUMS:
1 week - 0.0%; 1 month - (1.3%); 30 day average - (0.0%)
REACTION:
APY stock closed on the day of the announcement at
$30.13 per share
APY appointed a special committee of independent
directors to evaluate the proposal
FINAL OFFER:
Definitive agreement reached Feb. 19, 1997 for
approximately $33 per share (13.8% premium to the
initial offer) comprised of either; i) $17.60
cash and 0.40 shares of Allmerica Financial, with
a collar of $32-$34 per share or ii) $33 in cash
or 0.857 shares of Allmerica Financial common for
each share of Allmerica Property
Total closing equity value of approximately $851.0
million
The increased purchase price was negotiated after
dissident shareholders appealed the offer in Delaware
court
Transaction was completed July 17, 1997
FINAL PREMIUMS:
1 week - 13.8%; 1 month - 15.3%; 30 day average -
14.3%
(1) Based on the 30-day average closing price for Allmerica Financial common
stock
Note: On July 17, 1997, Allmerica Property Stock closed at $35.125 per share
which is comprised of $17.60 cash per share plus 0.40 multiplied by
Allmerica Financial closing price of $43.813 per share
JPMorgan
20
<PAGE>
ENRON CORP. - ENRON GLOBAL POWER & PIPELINES ("EPP")
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INITIAL OFFER:
May 14, 1997; acquisition of remaining 48.0% stake EPP: ONE-YEAR STOCK PRICE
in EPP for $32 per share, 100% cash [CHART APPEARS HERE]
Total equity vale of $403.9 million
IMPLIED PREMIUMS:
1 week - 7.6%; 1 month - 14.3%, 30 day average -
10.1%
REACTION:
EPP stock closed at $32.38 on the day of the
announcement
EPP appointed an oversight committee to review
the offer, which was expected to take several
weeks
Analyst Carl Kirst of Jeffries & Co. indicated he
anticipated a revised offer of $33-$34 per share
FINAL OFFER:
Pending
Note: August 21, 1997 closing price of EPP was $34.44
JPMorgan
21
<PAGE>
ST. JOE PAPER - FLORIDA EAST COAST ("FLA")
- --------------------------------------------------------------------------------
INITIAL OFFER:
May 5, 1997; acquisition of remaining 46.0% FLA: ONE-YEAR STOCK PRICE
stake in FLA for $102 per share, 100% cash [CHART APPEARS HERE]
Total equity value of $428.4 million
IMPLIED PREMIUMS:
1 week - 16.6%; 1 month - 9.7%; 30 day average
- - 11.1%
REACTION:
FLA stock closed at $107.88 on the day of the
announcement, up $19.13, reflecting that market's
view that the stock was undervalued
FINAL OFFER:
Pending
Note: August 21, 1997 closing price of FLA was $111.75
JPMorgan
22
