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Little Switzerland, Inc.
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(Name of Registrant as Specified In Its Charter)
Little Switzerland, Inc.
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(LITTLE SWITZERLAND LETTERHEAD)
LITTLE SWITZERLAND AND
DESTINATION RETAIL HOLDINGS
ANNOUNCE MERGER AGREEMENT
February 10, 1998
Dear Stockholder:
On February 4, Little Switzerland announced that it had entered into a
definitive merger agreement with Destination Retail Holdings Corporation. In
order to keep you fully informed, the text of the press release announcing the
transaction follows:
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ST. THOMAS, U.S. VIRGIN ISLANDS AND FREEPORT, BAHAMAS, February 4, 1998
. . . Little Switzerland, Inc. (NASDAQ:LSVI) and Destination Retail Holdings
Corporation, a privately-held company, today announced that they had entered
into a definitive merger agreement providing for the acquisition by Destination
Retail of all the issued and outstanding shares of Little Switzerland's common
stock for $8.10 per share in cash.
The merger agreement, which was unanimously approved by the Board of
Directors of Little Switzerland, is subject to, among other things, approval by
Little Switzerland stockholders and obtaining all requisite governmental
approvals. It is expected that the transaction will close in May 1998.
Little Switzerland was advised by Wasserstein Perella & Co., Inc., which
has provided the Board of Directors of Little Switzerland with its opinion that
the consideration to be received by Little Switzerland's stockholders, other
than Destination Retail and its affiliates, is fair from a financial point of
view. Destination Retail was advised by The Private Merchant Banking Company.
Donaldson, Lufkin & Jenrette, Inc. and DLJ Bridge Finance, Inc. have provided
firm financing commitment letters to Destination Retail to provide the funds
necessary to consummate the merger.
C. William Carey, Chairman of Little Switzerland, said: "After conducting
an organized sale process led by Wasserstein Perella, the Board of Directors
believes that
<PAGE>
the consummation of this transaction is in the best interests of Little
Switzerland stockholders, and we are pleased that our efforts to enhance
stockholder value have been successful."
Destination Retail commented: "We are delighted to be acquiring Little
Switzerland, a world-respected luxury retailer. The Board deserves
congratulations for their successful efforts to grow Little Switzerland and
unlock its value for stockholders. We look forward to a prompt completion of the
merger, continued growth of the Company, and working with Little Switzerland's
employees and suppliers to continue to provide customers with the world's
premier luxury goods."
Little Switzerland's annual meeting of stockholders, scheduled for February
5, 1998, has been postponed pending approval of the merger agreement by Little
Switzerland's stockholders.
Little Switzerland is a leading specialty retailer of brand name watches,
jewelry, crystal, china, fragrances and accessories, operating 24 stores on ten
Caribbean islands, and three stores in Alaska cruise ship destinations. The
Company's primary market consists of vacationing tourists attracted by freeport
pricing, duty-free allowances and a wide variety of quality merchandise.
Destination Retail Holdings, a privately-owned company, operates a number
of retail organizations throughout major hospitality centers in the Caribbean,
the Bahamas and Alaska, including Colombian Emeralds International, Diamonds in
Paradise, Parfum de Paris, Oasis, Jeweler's Warehouse, and Island Galleria.
These organizations have successfully competed in the luxury duty-free markets
for more than 30 years.
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Over the last several months, your Board considered a number of
alternatives to enhance stockholder value, and we believe that the merger
agreement with Destination Retail achieves this objective and brings to a
successful close the sale process.
Since the merger agreement requires stockholder approval, we anticipate
that a Special Meeting of Stockholders will be held in May. You may expect to
receive proxy materials for your consideration well in advance of the Meeting.
On behalf of your Board of Directors, we sincerely appreciate your
continued support.
Sincerely,
/s/ C. William Carey /s/ John E. Toler, Jr.
C. William Carey John E. Toler, Jr.
Chairman of the Board President and Chief Executive Officer
