Exhibit A
[Donaldson, Lufkin and Jenrette Letterhead]
October 30, 2000
Board of Directors
French Fragrances, Inc.
14100 NW 60th Avenue
Miami Lakes, Florida 33014
Dear Sirs:
You have requested our opinion as to the fairness from a financial
point of view to French Fragrances, Inc. (the "Company") and its stockholders of
the consideration to be paid by the Company pursuant to the terms of the
Purchase Agreement, to be dated as of October 30, 2000 (the "Agreement"), by and
between Conopco, Inc. ("Conopco"), a New York corporation and a subsidiary of
Unilever, N.V., a Netherlands corporation ("Unilever"), and the Company pursuant
to which the Company will acquire certain assets and assume certain liabilities
of Conopco and its affiliates relating to the manufacturing, marketing and
distribution of fragrance, skin treatment, bath and body and cosmetic products,
including (i) the Elizabeth Arden brand of fragrances, skincare and cosmetics,
(ii) the Elizabeth Taylor fragrance brands and (iii) the White Shoulders
fragrance brand, as more fully set forth in the Agreement (together, the
"Business").
Pursuant to the Agreement, the Company will acquire the Arden business
from Conopco for cash consideration of $250,000,000, subject to certain
adjustments pursuant to the Agreement, which we understand will result in the
cash consideration being approximately $183,000,000 (the "Cash Consideration")
and the issuance of (i) Series D Convertible Preferred Stock, to be issued by
the Company, with an aggregate liquidation preference of $50,000,000 (the
"Convertible Preferred") and (ii) potentially, warrants or other securities
issued in accordance with the adjustment mechanisms described in Schedule 2.3 of
the Agreement (together with the Convertible Preferred, the "Stock
Consideration;" the Stock Consideration together with the Cash Consideration,
the "Consideration").
In arriving at our opinion, we have reviewed the draft dated October
30, 2000 of the Agreement. We have also reviewed the draft dated October 30,
2000 of the Articles of Amendment to the Amended and Restated Articles of the
Company. We also have reviewed financial and other information that was publicly
available or furnished to us by the Company, Conopco and Unilever including
information provided during discussions with Company, Conopco and Unilever
managements. Included in the information provided during discussions with the
respective managements were certain financial projections of the Arden business
for the period beginning the fourth quarter of fiscal year 2001 and ending the
fourth quarter of fiscal year 2010, prepared by the Company's management and
certain financial projections of the Company for the period beginning the fourth
quarter of fiscal year 2001 and ending the fourth quarter of fiscal year 2010
prepared by the management of the Company. We have assumed the availability to
the Company of certain deductions for federal tax purposes. In addition, we have
compared certain financial and securities data of the Company and certain
financial data of the Arden business with various other companies whose
securities are traded in public markets, reviewed prices paid in certain other
business combinations and conducted such other financial studies, analyses and
investigations as we deemed appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy
and completeness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company,
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Conopco and Unilever, or that was otherwise reviewed by us and have assumed that
the Company is not aware of any information prepared by it or its other advisors
that might be material to our opinion that has not been made available to us.
With respect to the financial projections supplied to us, we have relied on
representations that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments as to the future operating and
financial performance of the Company and the Arden business on both a growth and
non-growth basis. We have not assumed any responsibility for making any
independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by us.
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist, and on the information made available to us as
of, the date of this letter. It should be understood that, although subsequent
developments may affect the conclusion reached in this opinion, we do not have
any obligation to update, revise or reaffirm this opinion unless requested to do
so under our engagement letter. We are expressing no opinion herein as to the
fair market value of the Convertible Preferred. Our opinion does not address the
relative merits of the acquisition and the other business strategies being
considered by the Company's Board of Directors, nor does it address the Board's
decision to proceed with the acquisition. Our opinion does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matter relating to the proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of
its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes. DLJ has
performed investment banking and other services for the Company in the past and
has been compensated for such services. DLJ or certain of its affiliates have,
with Fleet National Bank and its affiliates, provided the Company with a $160.0
million bridge loan commitment and a $175.0 million Senior Secured Credit
Facility commitment to fund the consummation of the acquisition.
Based upon the foregoing and such other factors as we deem relevant, we
are of the opinion that the Consideration to be paid by the Company pursuant to
the Agreement is fair to the Company and its stockholders from a financial point
of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ George Petrides
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George Petrides
Managing Director
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