Hybrid tax-free transaction

• Combines a tax-free spin-off with a tax-free reorganization
• Named after Commissioner v Mary Archer W Morris Trust 697 F2d 794 (4^th Cir 1966)

• Held that the tax-free acquisition of a parent company didn't disqualify the immediately preceding
  tax-free spin-off of a subsidiary

• Commentary

• CFO article  2002

Tax-efficient means to sell a subsidiary

• No entity or shareholder level taxation
• Parent company can receive cash distributions from sub

• Subsidiary can borrow and dividend proceeds to parent
• Result is akin to a sale for cash without taxation

• Can only be used in limited circumstances

• Parent shareholders must get more than 50% of the stock of the merged company
• So that buyer must have a smaller market value than the subsidiary

Developments

• IRS regulations  4.18.05

• Latham & Watkins commentary 4.27.05

Disney subsidiary to combine with radio network

• Will create 3^rd largest US radio network

• CDL stock chart

• DIS shareholders will own 52% of combined company

• DIS to get $1.4B to $1.65B in cash
• Amount based on CDL share price

• May be structured as a split-off

• Would give DIS shareholders option to receive
  DIS shares or CDL shares

• CDL is a Forstmann Little portfolio company

• 67% owned

Announced 2.06.06

Advisors

Agreements

Sally Beauty to merge with Regis Corp

• Alberto-Culver to divest its beauty salon business
• Reverse Morris Trust transaction

Announced 1.10.06

Advisors

Agreements

Alltel divides its wireless and wireline businesses

• Reverse Morris Trust transaction
• Wireline business to be spun-off and merged with VALOR

• Alltel shareholders will get 1.05 share of VALOR
• Alltel shareholders will own 87% of VALOR

• Alltel becomes a pure play wireless business

• Alltel shareholders keep 1 share of Alltel

• AT stock chart  VCG stock chart

Announced 12.09.05

Agreements

Smucker acquires Procter & Gamble's
JIF peanut butter and Crisco businesses

• Reverse Morris Trust transaction
• Avoids taxes on both corporate and shareholder levels
• P&G shareholders own just over 50% of the combined entity
• IDD's 2001 "Overall Deal of the Year" and
  "M&A Deal of the Year"

Advisors

Announced 10.10.01

Completed 6.01.02

SEC_CODE_REF_0090001192884

Proxy solicitation

Agreements

Interim communications

Merger of certain HJ Heinz businesses
with Del Monte Foods

• Reverse Morris Trust transaction
• Avoids taxes on both corporate and shareholder levels
• Heinz shareholders own just over 50% of the combined entity
• Included Heinz's US Seafood, North American Pet Food and Pet Snacks, US Private Label Soup and US Infant Feeding businesses

Advisors

Announced 6.13.02

Proxy solicitation

Agreements

Interim communications

Spin-Offs