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May 30, 2000
[LAZARD LOGO]
The Board of Managing Directors
and the Board of Supervisory Directors
Baan Company N.V.
Baron van Nagellstraat 89
3770 AC Barneveld
The Netherlands
Dear Members of the Board:
We understand that Baan Company N.V. (the "Company"), Invensys plc
("Parent"), B Acquisition B.V., i.o., a wholly-owned subsidiary of Parent (the
"Purchaser"), and B Offer Sub B.V., i.o., a wholly-owned subsidiary of the
Purchaser ("Offer Sub"), propose to enter into an Offer Agreement (the "Offer
Agreement") pursuant to which Offer Sub will commence an offer (the "Offer") to
purchase all the outstanding common shares, par value NLG 0.06 per share (the
"Common Shares"), of the Company at a price of 2.85 Euros per share, net to the
seller in cash (with a U.S. dollar equivalent option) (the "Consideration").
You have requested our opinion as to the fairness, from a financial point
of view, of the Consideration to be received by the holders of the Common Shares
in the Offer. In connection with this opinion, we have:
(i) reviewed the financial terms and conditions of the draft Offer
Agreement dated May 27, 2000 (which did not contain disclosure
schedules);
(ii) analyzed certain historical business and financial information
relating to the Company;
(iii) reviewed financial forecasts and other data provided to us by the
Company relating to its businesses for 2000, which did not contain
projected statements of cash flows (we have been informed by
representatives of the Company that no projected statements of cash
flows for 2000 exist and no projections for any year after 2000
exist);
(iv) held discussions with members of senior management of the Company
with respect to the businesses and prospects of the Company and its
strategic objectives;
(v) reviewed public information with respect to certain other companies
in lines of business we believe to be generally comparable to those
of the Company;
(vi) reviewed the financial terms of certain business combinations
involving companies in lines of business we believe to be generally
comparable to those of the Company;
(vii) reviewed the historical stock prices and trading volumes of the
Common Shares; and
(viii) conducted such other financial studies, analyses and investigations
as we deemed appropriate.
We have relied upon the accuracy and completeness of the foregoing
information and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of Parent or the Company or concerning the
solvency of, or issues relating to solvency concerning, Parent or the Company.
With respect to financial forecasts, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the management of the Company as to the future financial
performance of the Company. We assume no responsibility for and express no view
as to such forecasts or the assumptions on which they are based. We note that
management has not provided us with an estimate of synergies expected to result
from the transaction contemplated by the Offer Agreement.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we did not
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address the relative merits of the Offer, any alternative potential transaction
or the Company's underlying decision to enter into the Offer Agreement.
In rendering our opinion, we have assumed that the Offer will be
consummated on the terms described in the Offer Agreement, without any waiver of
any material terms or conditions. We have also assumed that the definitive Offer
Agreement will not differ in any material respect from the draft thereof
referred to in paragraph (i) above.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Offer and will receive a fee for our services, a substantial
portion of which is contingent upon the consummation of the Offer. We have in
the past provided investment banking services to the Company for which we
received usual and customary compensation. In addition, the Company has agreed
to indemnify us for certain liabilities that may arise out of the rendering of
this opinion. We are also currently advising Parent on a divestiture for which
we expect to be paid reasonable and customary fees. Lazard Freres & Co. LLC is
not regulated by any authority or body in the Netherlands, and is rendering this
opinion in accordance with customary practice in the United States. With your
consent, we have assumed that law, custom and practice in the Netherlands
relating to opinions such as the one being delivered hereby are not materially
different from those of the United States.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the Offer to be commenced
by Offer Sub pursuant to the Offer Agreement. This opinion is not intended to
and does not constitute a recommendation to any holder of the Common Shares as
to whether such holder should tender such holder's Common Shares in the Offer.
This opinion does not address any transaction involving the Common Shares,
whether or not contemplated by the Offer Agreement, other than the Offer. It is
understood that this letter may not be disclosed or otherwise referred to
without our prior written consent, except as may otherwise be required by law or
by a court of competent jurisdiction. This opinion is given pursuant to the
engagement letter dated January 31, 2000 and is governed by New York law. It may
only be relied on with the express condition that it is governed by New York
law.
Based on and subject to the foregoing, we are of the opinion that the
Consideration to be received by the holders of the Common Shares pursuant to the
Offer is fair to the holders of the Common Shares from a financial point of
view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ LUIS E. RINALDINI
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Luis E. Rinaldini
Managing Director
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