===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: March 2, 1999
UNISOURCE WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
-----------------------
Delaware 1-14482 13-5369500
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File no.) Identification No.)
1100 Cassatt Road
Berwyn, Pennsylvania 19312
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 296-4470
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
===============================================================================
<PAGE>
Item 5. Other Events.
The Boards of Directors of Unisource Worldwide, Inc. ("Unisource") and UGI
Corporation ("UGI") announced the signing of an Agreement and Plan of Merger
dated as of February 28, 1999. The transaction, which has been approved by the
Boards of Directors of both companies, calls for Unisource stockholders to
receive .566 shares of UGI common stock in a tax-free exchange for each share
of Unisource common stock. Consummation of the merger is subject to a number of
conditions, including approval by the stockholders of both companies and by
certain regulatory agencies.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(99) Press Release dated March 1, 1999
Page 2 of 8
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNISOURCE WORLDWIDE, INC.
By: /s/ Thomas A. Decker
---------------------------------
Name: Thomas A. Decker
Title: Senior Vice President,
General Counsel and Secretary
March 2, 1999
<PAGE>
Exhibit Index
Exhibit Number Description
- -------------- -----------
(99) Press Release dated March 1, 1999
Page 4 of 8
EXHIBIT 99
NEWS RELEASE
UGI CORPORATION AND UNISOURCE WORLDWIDE TO MERGE
Combination Results in $8.8 Billion Distribution Powerhouse
UGI to Divest UGI Utilities, Inc.
UGI to Initiate 6.6 Million Share Repurchase Program
Valley Forge and Berwyn, Pennsylvania (March 1, 1999) -- UGI Corporation
("UGI") (NYSE: UGI) and Unisource Worldwide, Inc. (NYSE: UWW) today announced
that their boards of directors have approved a definitive merger agreement for
a stock-for-stock transaction with a transaction value of approximately $1.5
billion. The transaction combines two national distributors, creating one,
multi-product distribution company with fiscal 1998 combined sales of
approximately $8.8 billion. Through its majority-owned subsidiary, AmeriGas
Partners, L.P. ("AmeriGas") (NYSE: APU), UGI is the nation's largest retail
propane marketer, serving over 950,000 customers from more than 600 locations
in 46 states. Unisource Worldwide is the largest marketer and distributor of
printing and imaging paper and supply systems in North America, serving more
than 100,000 customers from more than 350 locations throughout the U.S. and
Canada.
Under the agreement, UGI will exchange 0.566 common shares of UGI stock
for each Unisource Worldwide share. Based upon the closing stock prices of UGI
and Unisource Worldwide on Friday, February 26, 1999, this represents a price
of $11.50 per Unisource Worldwide share, or a premium of approximately 65%. UGI
will issue approximately $815 million in stock to Unisource Worldwide
stockholders to complete the transaction. On a pro forma basis, based on
current shares outstanding, Unisource Worldwide stockholders would own
approximately 55% of the combined company. The combination will be accounted
for as a purchase and is anticipated to be accretive to UGI's earnings within
the first year after closing.
The combined company will operate in four core distribution businesses:
o Propane
o Printing and Imaging Paper
o Packaging
o Maintenance Supplies
Lon R. Greenberg, chairman, president and chief executive officer of UGI, said,
"Our combined network will establish a strong platform from which we can
broaden the number and type of products we distribute." As described in greater
detail below, following completion of the
Page 5 of 8
<PAGE>
merger, UGI plans to divest UGI Utilities, Inc., its utility subsidiary;
reduce its dividend; retire debt; and reinvest excess cash into growing the
newly-combined company's core distribution businesses. The combined company
will continue to own UGI Enterprises, Inc.
Mr. Greenberg, continued, "This is truly a winning combination for
shareholders, customers and employees. We are particularly excited about
today's announcement because UGI and Unisource Worldwide together will create a
nationwide distribution powerhouse. By combining both companies' best practices
in distribution, customer service and information systems with an expanded
national presence and increased critical mass, we will be able to deliver
greater operational efficiencies than either company could deliver on a
stand-alone basis. Regardless of the product, it is primarily through efficient
logistics and procurement practices and quality customer service by which
distributors are differentiated. We will leverage our operational expertise
with Unisource Worldwide's strength in distribution for the benefit of our
customers and suppliers. The combined company will have excellent earnings
potential, a strengthened balance sheet and the cash flow necessary to support
the growth opportunities of an expanded distribution business.
"UGI and Unisource Worldwide have been neighbors for years. We are a good
cultural fit, and we look forward to working together with Unisource's talented
people to make our combined business a success," Mr. Greenberg said. Ray B.
Mundt, chairman and chief executive officer of Unisource Worldwide, said, "Last
year, we defined our vision for the future of our company: to be the
distributor of choice for both customers and suppliers in the industries we
serve. To achieve that vision, we initiated an extensive restructuring plan
centered on improving customer service, decreasing costs, increasing financial
flexibility and growing profitable market segments. Both UGI and we believe
that the Unisource restructuring will be a key driver of the growth and
profitability of the combined company going forward. We are confident that the
financial strength and management expertise contributed by UGI will facilitate
completion of that plan.
"We admire the work that UGI has done to establish AmeriGas as the
nation's leading distributor of propane," Mr. Mundt continued. "Unisource
Worldwide is the nation's premier distributor of paper products and supply
systems, with one of the most comprehensive distribution networks in the
country. The merger should be transparent to customers and suppliers with the
important exception that they will now benefit from their association with a
larger, stronger company, with expanded resources and a solid balance sheet,"
concluded Mr. Mundt.
Following the merger, Mr. Greenberg will be chairman, president and chief
executive officer of the combined company, which has not yet been named. Mr.
Mundt will retire as CEO of Unisource Worldwide effective upon completion of
the merger and has agreed to serve on the board of directors of the combined
company until the next annual meeting. The board will have ten directors: five
who will be designated by UGI; four who will be designated by Unisource
Worldwide, including Mr. Mundt; and one director who currently serves on the
boards of both companies.
Page 6 of 8
<PAGE>
Approvals and Timing
The merger is conditioned, among other things, upon the approvals of the
stockholders of UGI and Unisource Worldwide, and clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the Canadian
Competition Act. The companies anticipate that the transaction will be
completed by the end of June 1999.
Sale of Utility
In addition to its merger with Unisource Worldwide, UGI announced today
its intention to divest its utility subsidiary, UGI Utilities, Inc. The
proposed sale would mark the exit of UGI from the regulated utility industry.
Mr. Greenberg said, "We have one of the best performing gas utilities in the
country and an electric utility that has successfully repositioned itself for a
deregulated marketplace. However, we believe that our shareholders would be
better served by redeploying the cash proceeds from the sale of the utility
into this opportunity to grow our core distribution businesses, where we expect
to achieve higher returns."
Share Repurchase
UGI also announced today that its board of directors has authorized the
repurchase of up to 6.6 million shares, or 20%, of the Company's common stock.
Under the terms of the open-market share repurchase program, UGI will purchase
shares from time to time in amounts determined by the Company's management,
depending on market conditions and other factors. Such repurchases will be
funded from existing cash balances and a newly committed credit facility with
Merrill Lynch Capital Corporation.
Dividend Policy
UGI's board has announced its intention to reduce the Company's annual
dividend to $0.75 from $1.46, a decrease of 49%. The new dividend would be
effective upon the close of the merger. The Company emphasized that the new
annual dividend rate will allow it to retain additional cash to fuel future
growth in its core businesses and reflects a yield consistent with a growth
company.
"The announced dividend rate represents an increase of approximately 112%
for current Unisource Worldwide shareholders while still providing an
attractive yield for UGI shareholders," Mr. Greenberg noted.
Merrill Lynch & Co. acted as financial advisor and provided a fairness
opinion to UGI Corporation. Donaldson, Lufkin & Jenrette acted as financial
advisor and provided a fairness opinion to Unisource Worldwide, Inc.
Unisource Worldwide, Inc., headquartered in Berwyn, Pennsylvania, is the
largest distributor of printing and imaging products, packaging systems and
sanitary maintenance
Page 7 of 8
<PAGE>
supplies in North America. Fiscal 1998 revenues were $7.4 billion.Headquartered
in Valley Forge, Pennsylvania, UGI Corporation is a holding company with three
subsidiaries: AmeriGas, Inc., through its majority owned subsidiary, AmeriGas
Partners, L.P., is the nation's largest marketer of propane; UGI Utilities,
Inc. is a natural gas and electric utility serving eastern Pennsylvania; and
UGI Enterprises, Inc. is a supplier of energy services.
Comprehensive information about UGI Corporation and Unisource Worldwide,
Inc. is available on the World Wide Web at http://www.ugicorp.com and
http://www.unisourcelink.com.
This press release contains certain forward-looking statements which
management believes to be reasonable as of today's date only. Actual results
may differ significantly because of risks and uncertainties which are difficult
to predict and many of which are beyond management's control. You should read
UGI Corporation's annual report on Form 10-K and its quarterly report on Form
10-Q for the quarter ended December 31, 1998 for a fuller list of factors that
could affect UGI's results, but among them are adverse weather conditions and
price volatility and availability of all energy products, including natural
gas, propane and fuel oil. You should read Unisource Worldwide, Inc.'s annual
report on Form 10-K and its quarterly report on Form 10-Q for the quarter ended
December 31, 1998 for a fuller list of factors that could affect Unisource
Worldwide's results, but among them are the implementation of Unisource
Worldwide's restructuring plan, the divestiture of its Mexican operations and
modifications of its information technology and systems, including its
remediation of such systems for Year 2000 Compliance. UGI Corporation and
Unisource Worldwide, Inc. undertake no obligation to release revisions to these
forward-looking statements to reflect events or circumstances occurring after
today.
# # #
Contact Information:
For UGI Corporation: For Unisource Worldwide, Inc.:
Investors: Investors:
Name: Robert W. Krick Name: JoAnn P. Huston
Phone: (610) 337-1000, ext. 3141 Phone: (610) 722-3513
Media: Media:
Name: Sabrina A. Walheim Name: Martha A. Buckley
Abernathy MacGregor Frank Phone: (610) 722-3511
Phone: (212) 371-5999
Page 8 of 8
