[Letterhead of Lehman Brothers Inc.]
June 30, 2000
Board of Directors
Dexter Corporation
1 Elm Street
Windsor Locks, CT 06096
Members of the Board:
We understand that ISP Acquisition Corp. (the "Purchaser"), a
wholly-owned subsidiary of International Specialty Products Inc. ("ISP" and
together with the Purchaser, the "Bidders") has commenced a tender offer
for all of the outstanding shares of common stock, par value $1.00 per
share (the "Company Shares"), of Dexter Corporation ("Dexter" or the
"Company") not owned by ISP for $45.00 per share in cash (the "ISP Offer").
We also understand that ISP owns approximately 9.98% of the outstanding
shares of common stock of the Company and is part of a "group" (as defined
under the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder) that owns approximately 22.9% of the outstanding
shares of common stock of Life Technologies Inc. ("Life Technologies"), a
company which is approximately 75% owned by Dexter.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the adequacy, from a financial point of
view, to the holders of the Company Shares (other than ISP and its
affiliates) of the consideration offered to such shareholders in the ISP
Offer.
In arriving at our opinion, we reviewed and analyzed: (1) the terms
and conditions of the ISP Offer, (2) publicly available information
concerning the Company, the Bidders and Life Technologies that we believed
to be relevant to our analysis, (3) financial and operating information
with respect to the business, operations and prospects of the Company and
Life Technologies furnished to us by the Company, including, without
limitation, certain projections of future financial performance of the
Company and Life Technologies prepared by management of the Company and
Life Technologies, respectively, (4) a trading history of the Company
Shares and a comparison of that trading history with those of other
companies that we deemed relevant, (5) a comparison of the historical
financial results and present financial condition of the Company with those
of other companies that we deemed relevant, (6) a comparison of the
historical financial results and present financial condition of Life
Technologies with those of other companies that we deemed relevant, (7) a
comparison of the financial terms of the ISP Offer with the financial terms
of certain other recent transactions that we deemed relevant, (8) the terms
and conditions of the recently announced sale of the Company's Electronic
Materials, Adhesives and Polymer Systems businesses, (9) the terms and
conditions of the recently announced sale of the the Company's Nonwoven
Materials business, and (10) indications of interest received by the
Company with respect to the other businesses of Dexter. In addition, we
have had discussions with the management of the Company and Life
Technologies concerning the businesses, operations, assets, financial
conditions and prospects of the Company and Life Technologies and have
undertaken such other studies, analyses and investigations as we deemed
appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of
the Company that they are not aware of any facts or circumstances that
would make such information inaccurate or misleading. With respect to the
financial projections of the Company and Life Technologies, upon advice of
the Company we have assumed that such projections have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the managements of the Company and Life Technologies as to the
future financial performance of the Company and Life Technologies and that
the Company and Life Technologies will perform substantially in accordance
with such projections. In arriving at our opinion, we have not conducted a
physical inspection of the properties and facilities of the Company or Life
Technologies and have not made or obtained any evaluations or appraisals of
the assets or liabilities of the Company or Life Technologies. Our opinion
necessarily is based upon market, economic and other conditions as they
exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion as
of the date hereof that, from a financial point of view, the consideration
which has been offered pursuant to the ISP Offer is inadequate to the
holders of the Company Shares (other than ISP and its affiliates).
We have acted as financial advisor to the Company in connection
with the ISP Offer and will receive a fee for our services. In addition,
the Company has agreed to indemnify us for certain liabilities that may
arise out of the rendering of this opinion. We also have performed and
continue to perform various investment banking services for the Company
(including the sale of its Electronic Materials, Adhesives and Specialty
Polymer Systems businesses to Loctite Corporation and the sale of its
Nonwoven Materials business to Ahlstrom Paper Group Oy). In the ordinary
course of our business, we may actively trade in the debt and equity
securities of the Company, Life Technologies, and ISP for our own account
and for the accounts of our customers and, accordingly, may at any time
hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors
of the Company and is rendered to the Board of Directors in connection with
its consideration of the ISP Offer. This opinion is not intended to be and
does not constitute a recommendation to any shareholder of the Company as
to whether to accept the consideration offered to the shareholders in the
ISP Offer.
Very truly yours,
LEHMAN BROTHERS
