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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 1995
THE WEST COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
Pennsylvania 0-5884 23-1210010
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
P.O. Box 645, 101 Gordon Drive, Lionville, Pennsylvania 19341-0645
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including, area code: 610-594-2900
Not Applicable
(Former name or former address, if changed from last report)
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Item 2. Acquisition or Disposition Of Assets.
On March 24, 1995, The West Company, Incorporated, a Pennsylvania
corporation (the "Company"), Paco Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of the Company ("Purchaser") and Paco
Pharmaceutical Services, Inc., a Delaware corporation (" Paco"), executed
an Agreement and Plan of Merger (the "Merger Agreement").
Pursuant to the Merger Agreement, on April 26, 1995, Purchaser
purchased 3,951,595 shares of common stock, par value $.01 per share (the
"Shares"), of Paco, at $12.25 per Share, pursuant to a tender offer
commenced on March 30, 1995 (the "Offer"). As a result of consummation of
the Offer, Purchaser acquired majority control of Paco as the first step in
the acquisition of the entire equity interest in Paco.
On April 27, 1995, Paco's stockholders voted to approve and adopt the
Merger Agreement and on April 27, 1995 (the " Effective Time"), Purchaser
was merged with and into Paco (the "Merger"), with Paco continuing as the
surviving corporation. As a result of the Merger, on April 27, 1995 Paco
became a wholly-owned subsidiary of the Company. On April 27, 1995, the
Company issued a press release relating to consummation of the Merger, a
copy of which is attached hereto as Exhibit 99.2 and incorporated by
reference herein.
In the Merger, each then outstanding share (other than Shares held by
the Company, Purchaser or any other subsidiary of the Company, Shares held
in the treasury of Paco or those shares with respect to which dissenters'
rights have been exercised pursuant to the Delaware General Corporation
Law), constituting an aggregate of 4,372,000. Shares on a fully-diluted
basis, was converted into the right to receive $12.25 net in cash, for an
aggregate amount of approximately $53.6 million (the "Merger
Consideration").
The total amount of funds required by Purchaser to acquire all
outstanding Shares pursuant to the Offer and the Merger, consummate the
transactions contemplated by the Merger Agreement and to pay related fees
and expenses is estimated to be approximately $55 million. The Company has
provided these funds to Purchaser by contributing equity and advancing
funds.
The, Company obtained such funds (i) from its general corporate funds,
(ii) from general corporate funds of wholly-owned subsidiaries and (iii) by
borrowing under two separate revolving credit agreements, (each a
" Credit Agreement" and collectively, the Credit Agreements", with
CoreStates Bank, N.A. ("CoreStates"). The first Credit Agreement, dated
October 21, 1994 between the Company and CoreStates provides for
revolving credit advances up to $30 million. Each advance made under
the Credit Agreement bears interest at the applicable LIBOR rate,
as adjusted; plus the applicable premium thereon calculated with
reference to certain leverage ratios. The Credit Agreement provides
for maturity of all loans made thereunder no later than
October 20, 1995, but
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is renewable at CoreStates' option, for an additional period of 364
days. The second Credit Agreement between a wholly-owned subsidiary
and CoreStates , dated November 18, 1994, provides for revolving
credit advances up to DM35 million. Each advance under the Credit
Agreement bears interest at the applicable LIBOR rate plus .40% per
annum, unless the fixed rate offered is accepted. The Credit Agreement
provides for maturity of all loans made thereunder no later than November
17, 1995, but is renewable for two additonal one year periods, at the
subsidiary 's option. Drawdowns were made by the subsidiary to repay an
intercompany loan from the Company. Additionally, the Credit agreements
contain customary affirmative and negative covenants. The consummation
of the transactions contemplated by the Offer does not constitute a
violation under the Credit Agreements.
The Company intends to refinance on a more permanent basis, all or
part of the funds to be used in connection with the Offer and to be
borrowed under the Credit Agreements. The Company, however, has not
currently concluded a plan or entered into arrangements to complete this
refinancing.
Item 7. Financial Statements and Exhibits. Page
----
The following financial statements and exhibits are filed herewith
unless otherwise indicated:
(a) Financial Statements of Businesses Acquired
Consolidated balance sheets of PACO and subsidiaries as of March
31, 1994 and 1993 and related consolidated statements of
operations, changes in stockholders' equity (deficit) and cash
flows for the years ended March 31, 1994, 1993 and
1992 (incorporated by reference to PACO's Annual Report on Form
10-K for the fiscal year ended March 31, 1994).
Consolidated balance sheet of PACO and subsidiaries as of
December 31, 1994 and related consolidated statements of
income and cash flows for the nine months ended December
31, 1994 (incorporated by reference to PACO's Quarterly
Report on Form 10-Q for the quarterly period ended December 31,
1994).
(b) Pro Forma Financial Information
Pro forma condensed consolidated balance sheet at 4
December 31, 1994.
Pro forma condensed consolidated statement of income, 7
for the year ended December 31, 1994.
(c) Exhibits:
99.1 Agreement and Plan of Merger, dated March 24, 1995, among the
Company, Purchaser and Paco (incorporated by reference to
Exhibit (c)(1) of the Company's Tender Offer Statement on
Schedule 14D-1 filed with the Securities and Exchange Commission
on March 30, 1995 (the "Schedule 14D-1")).
99.2 Text of Press Release, dated April 27, 1995, issued 9
by the Company.
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99.3 Credit Agreement dated October 21, 1994 by and between the
Company and CoreStates, as amended (incorporated by reference to
Exhibit (b)(1) of the Schedule 14D-1).
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The West Company, Inc. and subsidiaries
Pro Forma Financial Information
(U.S. dollars in thousands, except share and per share data)
The following proforma condensed consolidated balance sheet of The
West Company, Inc. and subsidiaries consolidates on a purchase basis
the net assets of Paco Pharmaceutical Services, Inc. and subsidiaries as
if 100% of Paco had been acquired on December 31, 1994. The actual
purchase occurred on April 26, 1995 , when The West Company, Inc.
purchased 3,951,595 shares of the common stock of Paco Pharmaceutical
Services for cash equal to $12.25 per share. On April 27, 1995, Paco's
stockholders voted to approve and adopt the Merger Agreement and as a
result the Company acquired the remaining shares and Paco became a
wholly owned subsidiary of the West Company, Inc. on that date.
The following financial information should be read in conjunction with
the Company's Annual Report on Form 10-K for the year
ended December 31 , 1994 and Paco's Annual Report on Form 1O-K for
the year ended March 31, 1994 and Paco's Quarterly report on Form
1O-Q for the period ended December 31, 1994 incorporated herein by
reference. The proforma balance sheet reflects the acquisition of
100% of Paco's outstanding common stock after giving effect to the
exercise of all options to purchase Paco common stock , related
expenses, and certain purchase accounting adjustments as
described in notes hereto:
Condensed Consolidated Balance Sheet:
As of December 31, 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Adjustments Pro
West Paco E. Reference Forma
Assets: 2,500} A.
Cash and equivalents 27,200 2,500 (21,000)} F. 11,200
Marketable securities 0 5,200 5,200
Accounts receivable 57,800 8,500 66,300
Inventories 38,100 5,200 43,300
Other current assets 13,600 1,800 15,400
------- ------ -------- -------
Total current assets 136,700 23,200 (18,500) 141,400
------- ------ -------- -------
Net property, plant & equipment 192,200 29,700 221,900
Investments 21,900 0 21,900
Intangible assets, including goodwill 33,900 6,000 (6,000)} D. 49,700
14,300 } F.
1,500 } G.
Other assets and deferred charges 12,700 100 12,800
------- ------ -------- -------
Total assets 397,400 59,000 (8,700) 447,700
------- ------ -------- -------
------- ------ -------- -------
Liabilities and Equity:
Notes payable 2,700 2,700
Long-term debt, current maturities 19,200 19,200
Accounts payable 19,300 3,200 22,500
Other current liabilities 45,100 2,100 1,500 G. 48,700
------- ------ -------- -------
Total current liabilities 86,300 5,300 1,500 93,100
------- ------ -------- -------
32,600} F.
Long- term debt 35,900 3,100 1,200} B. 72,800
Deferred income taxes 24,400 6,500 (900) B.C. 30,000
Other noncurrent liabilities 21,600 0 1,000 C. 22,600
Minority interests 1,900 0 1,900
Shareholders' Equity:
Common stock 4,200 100 (100) F. 4,200
2,500} A.
Capital in excess of par value 23,200 57,600 (60,100)} F. 23,200
Cumulative translation adjustments 17,100 0 0 17,100
Retained earnings 189,800 (13,600) (700)} B. 189,800
(600)} C.
(6,000)} D.
20,900 F.
------- ------- --------- --------
234,300 44,100 (44,100) 234,300
Treasury Stock 7,000 0 0 7,000
------- ------- --------- --------
Total shareholders' equity 227,300 44,100 (44,100) 227,300
------- ------- --------- --------
Total liabilities & equity 397,400 59,000 (8,700) 447,700
------- ------- --------- --------
------- ------- --------- --------
</TABLE>
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Notes:
Adjustments to Paco:
A) Record exercise of options to acquire 371,000 of Paco common shares by
Paco's employees and directors for an aggregate exercise price of $2,500.
This increases the Paco common shares outstanding to 4,372,000.
B) Restate Paco's long- term debt ( convertible subordinated debentures) to
fair market value, based on current interest rate of 6 1/2% . This
results in an estimated value equal to the subordinated debentures'
par value of $4,300. Deferred taxes applicable to the difference in basis
are recorded.
C) Accrue liability for the excess of the projected benefit obligation over
the net assets of Paco's noncontributory pension plan covering all nonunion
employees. This amounts to $1,000 based on the latest information
available. Deferred taxes applicable to the difference in basis are
recorded.
D) Eliminate goodwill previously recorded by Paco.
E) Except as noted above all assets and liabilites are included at
Paco's historical value in the accompanying proforma balance sheet. The
Company is undertaking studies, including appraisals as
appropriate, to establish the fair market value of the individual assets
and liabilities of Paco . Final results of these studies, not expected to
be available for several months, will be used to establish the opening
balance sheet carrying values for Paco's net assets.
Record Acquisition:
F) Record the Company's purchase of all Paco common shares outstanding at
$12.25 per share, for a total consideration of $53,600. Such amount
was financed using available cash of approximately $21,000 and
available long-term credit facilities of $32,600.
G) Record liability for fees and expenses related to the acquisition and
merger totalling approximately $1,500.
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The West Company, Inc. and subsidiaries
Pro Forma Financial Information
(U.S. dollars in thousands, except share and per share data)
The following proforma condensed consolidated income statement for the
year ended December 31, 1994 presents the results of operations of The
West Company, Inc. and subsidiaries after giving effect to the
acquisition of 100% of Paco Pharmaceutical Services, Inc. and
subsidiaries as if such acquisition had occurred on January 1, 1994.
The adjustments required are described in the notes following the
proforma statement. The financial information should be read in
conjunction with Company's Annual Report on Form 1O-K for the year ended
December 31, 1994 and Paco's Annual Report on Form 10-K for the year
ended March 31, 1994 and Paco's Quarterly report on Form 10-Q for the
period ended December 31, 1994 incorporated herein by reference.
Condensed Consolidated Statement of Income
For the year ended December 31, 1994
<TABLE>
<CAPTION>
Adjustment Pro
West Paco A)4. Reference Forma
<S> <C> <C> <C> <C> <C>
Net sales 365,100 64,800 429,900
Cost of goods sold 249,000 56,200 305,200
------- ------ ------ -------
Gross profit 116,100 8,600 124,700
(1,600)} A
Selling, general and administrative expenses 69,000 5,400 400 } C. 73,200
Other expense, net 1,700 100 1,800
------- ------ ------ -------
Operating profit 45,400 3,100 1,200 49,700
Interest expense 3,300 200 2,700 B. 6,200
------- ------ ------ -------
Income before income taxes and minority interests 42,100 2,900 (1,500) 43,500
Provision for income taxes 13,400 600 (500) D. 13,500
Minority interests 1,900 0 0 1,900
------- ------ ------ -------
Income from consolidated operations 26,800 2,300 (1,000) 28,100
Equity in net income of affiliated companies 500 0 500
------- ------ ------ -------
Net income 27,300 2,300 (1,000) 28,600
------- ------ ------ -------
------- ------ ------ -------
Net income per share: 1.70 1.78
Average shares outstanding (thousands) 16,054 16,054
</TABLE>
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Notes:
A.) Record reduction of Paco selling, general and administrative expense
to reflect:
1. Elimination of administrative expenses related to Paco's
public reporting obligations estimated at $800 per annum
2. Synergies of the sales and marketing organizations with an
estimated annual saving of $600.
3. Elimination of amortization of Paco goodwill of $200
4. Additional synergies are expected to be identified, but no
estimate is available.
B.) Record additional interest expense at the rate of LIBOR plus 40 basis
points on net cash requirements as follows:
Cash required for the following:
1. Cost of acquiring Paco outstanding common stock at $12.25 per
share, net of proceeds from the option exercise proceeds,
totalling $51,100.
2. Fees and expenses related to the acquisition totalling
$1,500.
3. Interest expense on additional borrowings.
Less average cash savings on the following:
1. Selling, general and administrative expense savings estimated at
$1,400 per annum
2. Paco common dividends of $.1O per share per quarter.
C.) Record annual amortization of goodwill related to the Paco acquisition
based on an estimated 40 year life.
D.) Record income taxes at average domestic tax rate in 1994 of 37.8% on
all deductible expenses.
<PAGE> Signatures
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 hereunto duly authorized.
THE WEST COMPANY, INCORPORATED
By:
------------------------------------
Raymond J. Land
Senior Vice President
Finance and Administration
Date: May 11, 1995
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EXHIBIT INDEX
Exhibit
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99.1 Agreement and Plan of Merger, dated March 24, 1995, among the Company,
Purchaser and Paco. (incorporated by reference to Exhibit (c)(1)
of the Schedule 14D-1).
99.2 Text of Press Release, dated April 27, 1995, issued by the Company.
99.3 Credit Agreement dated October 21, 1994 by and between the Company
and CoreStates, as amended (incorporated by reference to Exhibit
(b)(1) of the Schedule 14D-1).
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THE WEST COMPANY NEWS RELEASE
NYSE SYMBOL: WEST
CORPORATE OFFICES
101 Gordon Drive
P. O. Box 645
Lionville, PA 19341-0645
610-594-2900
FAX.- 610-594-3000
FOR RELEASE: Immediate CONTACT: Stephen M. Heumann
Vice President and
Treasurer
(610) 594-3346
THE WEST COMPANY, INCORPORATED
COMPLETES PACO SHORT FORM MERGER
LIONVILLE, PA, April 27, 1995 - The West Company, Incorporated (NYSE: WEST)
announced today that it completed its acquisition of Paco Pharmaceutical
Services, Inc. via a short-form merger. The merger follows the completion
of West's $12.25 per share cash tender offer for Paco common stock. West
purchased in the offer 3,951,595 shares of Paco, approximately 99% of the
shares outstanding. As a result of the merger, each remaining share of
Paco common stock (other than any dissenting shares) has been converted
into the right to receive $12.25 cash per share, and Paco has become a
wholly-owned subsidiary of West.
The West Company is a premier supplier of products that satisfy the unique
filling, sealing, dispensing and delivery needs of the health care and
consumer products industries. Over 85 percent of West's revenue
is generated by the health care markets. Products include stoppers,
closures, containers, medical device components and assemblies
made from elastomers, metal, plastic and glass. West also
manufactures related packaging machinery.
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