Merger Proposal from City Capital Associates Ltd

Memo

To: The Board of Directors- Interco

From: Group 1

Date: 12-Mar-11

Re: x

This memo is in reference to the merger proposal from City Capital Associates Ltd. Partnership to Interco. This memo also analyses the analysis conducted by Wasserstein, Perella & Co.

Our main focus was to analyze the financial performance of Interco and to evaluate the offer made by City Capital i.e. $ 70 per share to Interco.

Interco comes across as a financially fairly conservative having a relatively low debt level. Overall the financial performance of Interco for fiscal year 1988 was positive, with sales and net income increasing 13.4% of and 15.4% respectively. These results were primarily due to the contributions of the furniture/ home furnishings and footwear groups, as well as a decrease of about 4.7% in Interco's effective tax rate. Despite the overall positive performance of the company, the apparel manufacturing and the general retail divisions remained troublesome.

The company is a target of hostile takeover due to the fact that City capital has already accumulated 8.7% of Interco's common stock.

erence to the merger proposal from City Capital Associates Ltd. Partnership to Interco. This memo also analyses the analysis conducted by Wasserstein, Perella & Co.

Our main focus was to analyze the financial performance of Interco and to evaluate the offer made by City Capital i.e. $ 70 per share to Interco.

Interco comes across as a financially fairly conservative having a relatively low debt level. Overall the financial performance of Interco for fiscal year 1988 was positive, with sales and net income increasing 13.4% of and 15.4% respectively. These results were primarily due to the contributions of the furniture/ home furnishings and footwear groups, as well as a decrease of about 4.7% in Interco's effective tax rate. Despite the overall positive performance of the company, the apparel manufacturing and the general retail divisions remained troublesome.

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