- 60 -
Mr. Matthews then ascertained the appropriate discounts.
Considering both potential swing vote characteristics and the risks
associated with decedent's 23.55-percent block of voting shares,
he determined that a 15-percent discount should be applied for
minority interest and lack of marketability. However, because the
right of first refusal materially adversely affected the value of
decedent's class A voting shares, Mr. Matthews determined that an
additional discount of 35 to 40 percent was appropriate. Applying
these discounts cumulatively Mr. Matthews arrived at a combined
range of 45 to 49 percent for the class A voting shares.
With regard to the class B nonvoting stock, Mr. Matthews
determined a 35-percent discount for lack of marketability. In
reaching this conclusion, he considered J.R. Simplot Co.'s size,
the industries in which it participated, and the fact that the
shares were not publicly traded. (Mr. Matthews observed that to
the extent J.R. Simplot Co.'s valuation is based on the market
prices of shares of publicly traded comparable companies, the
discount for minority interest would be implicitly subsumed in the
valuation because publicly traded shares are minority interests.)
The following chart summarizes Mr. Matthews' analysis and
determinations (using a 6-percent voting rights premium of the
equity value of J.R. Simplot Co.):
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