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Accretive combination pre-synergies
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Transaction improves leverage ratio
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Significantly improves capital structure
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Extends reach into consumer categories; broadens portfolio of
leading brands
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Creates platform for growth in emerging markets
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Combination improves scale and strengthens position as an
industry leader in school and office products
LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Nov. 17, 2011--
ACCO Brands Corporation (NYSE: ABD), a world leader in branded office
products, and MeadWestvaco Corporation (NYSE: MWV), a world leader in
packaging, today announced the signing of a definitive agreement to
merge MeadWestvaco Corporation’s Consumer & Office Products business
into ACCO Brands in a transaction valued at approximately $860 million.
Upon completion of the transaction, MeadWestvaco shareholders will own
50.5% of the combined company.
MeadWestvaco’s Consumer & Office Products business is a leading
manufacturer and marketer of school supplies, office products, and
planning and organizing tools – including the Mead®, Five
Star®, Trapper Keeper®, AT-A-GLANCE®, Cambridge®, Day Runner®, Hilroy,
Tilibra and Grafons brands in the United States, Canada and Brazil. With
the addition of this business, ACCO Brands increases its scale and
strengthens its position as an industry leader in school and office
products.
“This is a transforming event for ACCO Brands,” said Robert J. Keller,
chairman and chief executive officer of ACCO Brands Corporation. “The
merger supports our brand leadership strategy and will greatly expand
our presence in important consumer channels and faster-growing
geographies. We believe that the merger will provide investors with a
compelling financial benefit and further enhance ACCO Brands’ ability to
deliver shareholder value for years to come. We expect this combination
to be immediately accretive and to significantly strengthen our balance
sheet.
“ACCO Brands is positioned as a worldwide leader in the office products
industry, and the addition of MWV’s profitable Consumer & Office
Products business – and its outstanding employees – should enable
significant growth for the new company around the world,” Keller
concluded.
The combination, when completed, will increase ACCO Brands’ annual
revenues by more than 50% and is expected to:
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Immediately be accretive to ACCO Brands’ earnings per share; for the
adjusted combined trailing twelve month period ended September 30,
2011, the combination is accretive by 70%, excluding synergies and
transaction-related costs;
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Yield $20 million of annualized cost synergies by 2014;
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Enhance ACCO Brands’ gross profit and operating income margins; for
the adjusted combined trailing twelve month period ended September 30,
2011 gross profit and operating income margins were higher by 110
basis points and 260 basis points, respectively;
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Improve ACCO Brands’ leverage profile; net leverage for adjusted
combined trailing twelve month period was 3.6x versus 3.9x for ACCO
Brands standalone;
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Enable ACCO Brands to re-capitalize its balance sheet and reduce its
interest rate significantly;
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Significantly enhance cash flow generation;
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Increase scale in the mass merchandise channel providing greater
consumer access and cost leverage;
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Bring greater consumer insight and category management capabilities to
the combined entity;
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Provide a $200 million sales leadership position in Brazil, and double
ACCO Brands’ size in Canada; and
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Add important new brands and products in key categories to ACCO
Brands’ existing portfolio of #1 and #2 brands.
ACCO Brands is one of the world’s largest office supply manufacturers.
More than 80% of sales come from brands holding leading market positions
in their categories. The company has strong and longstanding customer
partnerships and an experienced management team with a demonstrated
track record. Over the past three years, the company has made
significant operational improvements and has reported consistent gains
in earnings per share.
MeadWestvaco’s Consumer & Office Products business is a leading
manufacturer and marketer of school supplies, office products, and
planning and organizing tools. It maintains a leadership position within
its key market segments, and its brands – including Mead®, Five Star®,
Trapper Keeper®, AT-A-GLANCE®, Cambridge® and Day Runner® in the U.S.,
Hilroy in Canada and Tilibra and Grafons in Brazil – have strong and
time-tested brand equity. MWV’s Consumer & Office Products business
invests heavily in category management, consumer-focused marketing,
forecasting and supply-chain analytics, all of which contribute to its
superior products, positive customer relationships and strong financial
performance.
ACCO Brands Corporation’s financial advisor in the transaction is
Barclays Capital Inc., with William Blair & Company, L.L.C. providing a
fairness opinion. Its legal advisor is Skadden, Arps, Slate, Meagher &
Flom LLP.
Financial Benefit for ACCO Brands Corporation Shareholders
This transaction delivers significant opportunity for investors to
participate in a larger, more profitable business that is a leader in
the industry. Assuming MeadWestvaco’s Consumer & Office Products
business had been owned by ACCO Brands Corporation for the trailing
twelve-month period ending September 30, 2011, the company would have
combined sales of over $2 billion and adjusted supplemental EBITDA of
approximately $320 million, with the potential of an additional $20
million from cost synergies. Pre-synergies, the combination is expected
to be significantly accretive to adjusted earnings per share (EPS),
excluding merger and transaction-related costs. The transaction is
expected to significantly increase cash flow and accelerate the
de-leveraging of ACCO Brands’ balance sheet. Adjusted pro forma net
leverage for the trailing twelve month period was 3.6x and is projected
to drop below 3x by the end of fiscal 2013. (Note: These figures are
unaudited.)
Transaction Details
The separation of the Consumer & Office Products business from
MeadWestvaco Corporation is structured as a “Reverse Morris Trust”
transaction. Under the terms of the merger agreement, MeadWestvaco will
establish a separate entity to hold the Consumer & Office Products
business, the shares of which will be distributed to MeadWestvaco
shareholders in a tax-free transaction in return for a $460 million
dividend to MeadWestvaco from the new entity holding MeadWestvaco’s
Consumer & Office Products business. Immediately after the spin-off and
distribution, the newly formed company will merge with a subsidiary of
ACCO Brands. This “Reverse Morris Trust” transaction has been approved
by the boards of both companies.
The entity that will hold MeadWestvaco’s Consumer & Office Products
business has commitments for financing that will enable it to pay the
dividend to MeadWestvaco. ACCO Brands has commitments for financing that
will enable it to refinance its existing secured debt.
Leadership, Approvals and Timing
The combined business will be managed by ACCO Brands’ senior executive
team and board of directors, which will include two directors designated
by MeadWestvaco Corporation. ACCO Brands’ headquarters will remain in
Lincolnshire, Illinois.
The transaction is subject to approval by ACCO Brands shareholders and
the satisfaction of customary closing conditions and regulatory
approvals, including a ruling from the U.S. Internal Revenue Service on
the tax-free nature of the transaction. The transaction is expected to
be completed in the first half of 2012.
Webcast
At 9:30 a.m. Eastern Time today, ACCO Brands Corporation will host a
conference call to discuss the strategic benefits of the transaction.
The call will be broadcast live via webcast. The webcast can be accessed
through the Investor Relations section of www.accobrands.com.
The webcast will be in listen-only mode and will be available for replay
for one month following the event.
At 10:30 a.m. Eastern Time today, MeadWestvaco Corporation will host a
conference call to discuss the transaction and the company’s strategic
focus on packaging. Investors may participate in the live conference
call by dialing 1 (800) 288-9626 (toll-free domestic) or 1 (612)
332-0418 (international); passcode: MeadWestvaco. Please call to
register at least 10 minutes before the conference call begins. The live
conference call and presentation slides may be accessed on MeadWestvaco
Corporation's website at www.mmv.com.
After connecting to the home page, go to the Investors
page and look for the link to the webcast. Please go to the website at
least 15 minutes prior to the call to register, download and install any
necessary audio software. A replay of the call will be available for one
month via the telephone starting at 12:00 p.m. EDT on November 17th, and
can be accessed at 1 (800) 475-6701 (toll-free domestic) or 1 (320)
365-3844 (international); access code: 225669.
Non-GAAP Financial Measures
“Adjusted” results exclude all unusual tax items. Adjusted supplemental
EBITDA from continuing operations excludes other non-operating items,
including other income/expense and stock-based compensation expense.
Adjusted results and supplemental EBITDA from continuing operations are
non-GAAP measures. There could be limitations associated with the use of
non-GAAP financial measures as compared to the use of the most directly
comparable GAAP financial measure. Management uses the adjusted measures
to determine the returns generated by its operating segments and to
evaluate and identify cost-reduction initiatives. Management believes
these measures provide investors with helpful supplemental information
regarding the underlying performance of the company from year to year.
These measures may be inconsistent with measures presented by other
companies.
About ACCO Brands Corporation
ACCO Brands Corporation is a world leader in branded office products.
Its industry-leading brands include Day-Timer®, Swingline®, Kensington®,
Quartet®, GBC®, Rexel, NOBO, Derwent, Marbig and Wilson Jones®, among
others. Under the GBC brand, the company is also a leader in the
professional print finishing market.
Forward-Looking Statements
This press release contains certain statements which may constitute
"forward-looking statements” as that term is defined in the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks and
uncertainties, are made as of the date hereof and the company assumes no
obligation to update them. ACCO Brands Corporation's ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Because actual results may differ from those predicted by
such forward-looking statements, you should not place undue reliance on
them when deciding to buy, sell or hold the company’s securities. Among
the factors that could cause our plans, actions and results to differ
materially from current expectations are: fluctuations in the cost and
availability of raw materials; competition within the markets in which
the company operates; the effects of both general and extraordinary
economic, political and social conditions, including continued
volatility and disruption in the capital and credit markets; the effect
of consolidation in the office products industry; the liquidity and
solvency of our major customers; our continued ability to access the
capital and credit markets; the dependence of the company on certain
suppliers of manufactured products; the risk that targeted cost savings
and synergies from previous business combinations may not be fully
realized or take longer to realize than expected; future goodwill and/or
impairment charges; foreign exchange rate fluctuations; the development,
introduction and acceptance of new products; the degree to which higher
raw material costs, and freight and distribution costs, can be passed on
to customers through selling price increases and the effect on sales
volumes as a result thereof; increases in health care, pension and other
employee welfare costs; as well as other risks and uncertainties
detailed in the company’s Annual Report on Form 10-K for the year ended
December 31, 2010, under Item 1A, “Risk Factors,” and in the company’s
other SEC filings. Forward-looking statements relating to the proposed
merger involving ACCO Brands, MWV’s Consumer & Office Products business
and MeadWestvaco Corporation include, but are not limited to: statements
about the benefits of the proposed merger, including future financial
and operating results; ACCO Brands’ plans, objectives, expectations and
intentions; the expected timing of completion of the merger; and other
statements relating to the merger that are not historical facts. With
respect to the proposed merger, important factors could cause actual
results to differ materially from those indicated by such
forward-looking statements, including, but not limited to: risks and
uncertainties relating to the ability to obtain the requisite ACCO
Brands Corporation shareholder approval; the risk that ACCO Brands or
MeadWestvaco Corporation may be unable to obtain governmental and
regulatory approvals required for the merger; the risk that a condition
to closing of the merger may not be satisfied; the length of time
necessary to consummate the merger; the risk that the cost savings and
any other synergies from the transaction may not be fully realized or
may take longer to realize than expected and the impact of additional
indebtedness. These risks, as well as other risks associated with the
merger, will be more fully discussed in the proxy statement/prospectus
that will be included in the registration statement on Form S-4 that
will be filed by ACCO Brands with the SEC in connection with the merger.
Additional Information
In connection with the proposed transaction, ACCO Brands Corporation
will file a registration statement on Form S-4 with the SEC. This
registration statement will include a proxy statement of ACCO Brands
Corporation that also constitutes a prospectus of ACCO Brands, and will
be sent to the shareholders of ACCO Brands. Shareholders are urged to
read the proxy statement/prospectus and any other relevant documents
when they become available, because they will contain important
information about ACCO Brands and the proposed transaction. The proxy
statement/prospectus and other documents relating to the proposed
transaction (when they are available) can be obtained free of charge
from the SEC’s website at www.sec.gov.
The proxy statement/prospectus and other documents (when they are
available) can also be obtained free of charge from ACCO Brands upon
written request to ACCO Brands Corporation, Investor Relations, 300
Tower Parkway, Lincolnshire, Illinois 60069, or by calling (847)
484-3020.
This communication is not a solicitation of a proxy from any security
holder of ACCO Brands Corporation. However, ACCO Brands and certain of
its directors and executive officers may be deemed to be participants in
the solicitation of proxies from shareholders in connection with the
proposed transaction under the rules of the SEC. Information about the
directors and executive officers of ACCO Brands Corporation may be found
in its 2010 Annual Report on Form 10-K filed with the SEC on February
24, 2011, and its definitive proxy statement relating to its 2011 Annual
Meeting of Shareholders filed with the SEC on April 4, 2011.
Source: ACCO Brands Corporation
For further information (ACCO Brands):
Media Relations:
Rich
Nelson, (847) 484-3030
or
Investor Relations:
Jennifer
Rice, (847) 484-3020
or
For further information
(MeadWestvaco):
Media Relations:
Tucker McNeil, (804)
444-6397
or
Investor Relations:
Jason Thompson, (804)
444-2556
