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 Act of 1934
Date of Report: April 24, 2000
WESTVACO CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-3013 13-1466285
(State or other) (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
299 PARK AVENUE, NEW YORK, NEW YORK 10171
(Zip Code)
Registrant's telephone number, including area code (212) 688-5000
ITEM 5. OTHER EVENTS
Westvaco issued a news release on April 24, 2000, announcing a
definitive agreement to acquire IMPAC Group, Inc., a leading
global supplier of high-value specialty packaging and printing
solutions for a wide variety of consumer product markets
including entertainment, cosmetics and health and beauty aids.
The purchase price for IMPAC, which has production facilities in
the United States and Europe, is approximately $500 million,
including the assumption of $294 million in net debt and
preferred stock. Westvaco intends to refinance substantially all
of IMPAC's debt and redeem all preferred stock as soon as
practicable after the acquisition closes, which is expected to
occur by mid-2000. A copy of the news release is filed as
Exhibit 99a.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99 News release issued by the Company on April 24, 2000
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.
WESTVACO CORPORATION
By _______________________
John W. Hetherington
Vice President and Secretary
Date: April 24, 2000
EXHIBIT INDEX
Page No.
Exhibit 99 News release issued by the Company on April 24, 2000 4-7
EXHIBIT 99
WESTVACO CORPORATION Public Affairs Department
Westvaco Building 212 688 5000
299 PARK AVENUE,
NEW YORK, NY 10171 10171
Media Contacts: William P. Fuller III
(212) 318-5250
Investor Relations Contact: Roger A. Holmes
(212) 318-5288
FOR IMMEDIATE RELEASE:
WESTVACO TO ACQUIRE IMPAC GROUP, INC.
Acquisition adds to growth momentum in global high-value packaging markets
NEW YORK, NY, April 24, 2000 - Westvaco Corporation (NYSE: W)
today announced a definitive agreement to acquire IMPAC Group,
Inc., a leading global supplier of high-value specialty packaging
and printing solutions for a wide variety of consumer product
markets including entertainment, cosmetics and health and beauty
aids.
"Acquiring IMPAC is another important step in support of our
strategy for global expansion in high-value consumer packaging
markets," said John A. Luke, Jr., Chairman and CEO. "This
acquisition will immediately expand our market reach since IMPAC
has very little overlap with our existing customer base and
geographic presence. Furthermore, IMPAC's leadership team has a
proven track record for identifying and exploiting market
opportunities. With IMPAC on board, we now have a far stronger
platform to provide packaging solutions to global consumer
product companies, and we can now expand our capability beyond
paper-based products."
The purchase price for IMPAC, which has production facilities in
the United States and Europe, is approximately $500 million,
including the assumption of $294 million in net debt and
preferred stock. Westvaco intends to refinance substantially all
of IMPAC's debt and redeem all preferred stock as soon as
practicable after the acquisition closes, which is expected to
occur by mid-2000. Westvaco expects the acquisition of IMPAC,
which has pro forma annual revenues of approximately $332 million
after adjustment for recent acquisitions, to be immediately
accretive to earnings. Adjusted for acquisitions, IMPAC achieved
pro forma compound annual growth in sales and earnings before
interest, taxes, depreciation and amortization of 22 percent and
34 percent, respectively during the 1995-1999 period.
Adding to Mr. Luke's comments, Richard H. Block, President and
CEO of IMPAC, said, "We share a common vision of the value
created for our customers by building a global packaging
capability to provide a unique blend of packaging solutions.
Combining IMPAC's product and customer scope with Westvaco's
strengths in quality, customer service and research and
development supports this vision." Upon completion of the
transaction, Mr. Block will become a senior officer of Westvaco
and report to Mr. Luke. Mr. Block will lead the company's
Consumer Packaging Group, including IMPAC.
IMPAC is a leading supplier to the North American and European
audio and multimedia entertainment markets and the North American
cosmetics and personal care markets. For the entertainment
markets, IMPAC produces printed paper inserts for CD and DVD
packaging as well as paperboard folding cartons and a wide
variety of specialty packaging for music, home movie and video
game products.
For cosmetics and personal care markets, IMPAC designs and
produces paperboard, plastic and windowed folding cartons, rigid
paperboard set-up boxes and litho-laminated fluted packaging.
2
IMPAC provides packaging solutions to its customers by combining
a unique blend of services, materials, complex structures and
high-quality printed graphics. These qualities have led to
leadership positions with customers such as Avon, EMI, Universal,
BMG, Procter & Gamble, Colgate-Palmolive and Revlon. IMPAC's
relationship with these and other customers has been further
strengthened from success in developing and launching proprietary
packaging products. Examples include the Digipak CD package that
has been licensed globally and Klearfold folding printable rigid
plastic packaging.
After a strategic review conducted in 1999, Westvaco announced
its intent to build scale and focus in global, high-value
packaging markets and created the Packaging Resources Group to
pursue this objective. In December, Westvaco acquired Temple-
Inland, Inc.'s bleached paperboard mill in Evadale, TX, and in
January, the company acquired Mebane Packaging Group, Inc, a
leading U.S. supplier of packaging for pharmaceutical, health
care and personal care products.
Westvaco's folding carton operations include eight Consumer
Packaging plants in the United States, Brazil, China and the
Czech Republic and seven Mebane plants in the eastern United
States and Puerto Rico. These plants produce packaging for
confectionery, electronic, food, health care, personal care,
pharmaceutical and tobacco products. IMPAC operates eight
production facilities and one fulfillment center in the United
States and a total of 12 manufacturing facilities in Austria,
Ireland, The Netherlands and the United Kingdom.
IMPAC, headquartered in Melrose Park, IL, is owned by its
employees and Heritage Partners, a private equity group in
Boston, MA. The company employs about 2,100 people and was
created through the merger of Klearfold, Inc., and AGI, Inc.
Subsequently, IMPAC acquired Tinsley Robor, plc, a leading
supplier to the European entertainment industry. In addition to
Tinsley Robor, IMPAC has completed four acquisitions over the
last two years, including two other businesses in Europe where
the company now derives about 43 percent of its total revenue.
After adjustment for recent acquisitions and certain nonrecurring
charges, IMPAC's 1999 pro forma EBITDA totaled approximately $60
million.
Westvaco Corporation (www.westvaco.com), headquartered in New
York, NY, is a major producer of paper, packaging and specialty
chemicals. The company has operations in the United States,
Brazil, China and the Czech Republic and serves customers in more
than 70 countries. J. P. Morgan & Co. Incorporated is acting as
financial advisor to Westvaco on its acquisition of IMPAC.
Certain statements in this document and elsewhere by management
of the company that are neither reported financial results nor
other historical information are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform
Act of 1995. Such information includes, without limitation, the
business outlook, assessment of market conditions, anticipated
financial and operating results, strategies, future plans,
contingencies and contemplated transactions of the company. Such
forward-looking statements are not guarantees of future
performance and are subject to known and unknown risks,
uncertainties and other factors which may cause or contribute to
actual results of company operations, or the performance or
achievements of the company, or industry results, to differ
materially from those expressed, or implied by the forward-
looking statements. In addition to any such risks, uncertainties
and other factors discussed elsewhere herein, risks,
uncertainties and other factors that could cause or contribute to
actual results differing materially from those expressed in or
implied by the forward-looking statements include, but are not
limited to, competitive pricing for the company?s products;
changes in raw materials, energy and other costs; technological
developments; fluctuations in demand and changes in production
capacities; changes in economic growth in the U.S. and
international economies, especially in Asia and Brazil;
government policies and regulations, including but not limited to
those affecting the environment and the tobacco industry; and
currency movements.
WESTVACO IMPAC GROUP
IMPAC Fact Sheet
Overview:
IMPAC Group, Inc. is a leading international designer,
manufacturer and supplier of high-end specialty packaging for
various consumer products including entertainment, cosmetics and
personal care. IMPAC provides innovative specialty packaging and
printing solutions, using a broad range of paper, paperboard,
transparent rigid plastic, and litho-laminated fluted board for
customers that seek to differentiate their products in the
consumer marketplace. The Company has grown both organically and
through acquisitions, resulting in five-year compound growth
rates in sales and EBITDA of 22% and 34%, respectively. In 1999,
IMPAC generated pro-forma EBITDA of $60.2 million on sales of
$332 million.
Products:
Through IMPAC's unique design capabilities and specialized
manufacturing and printing techniques, the Company
provides its customers with one of the most extensive product
lines in the consumer packaging industry. Many of
IMPAC's products and designs are proprietary and include the
following:
Entertainment Sector: Printed paper inserts for standard
CDs, paperboard-based CD packaging, specialty packaging for home
videos and DVDs, video game packaging, and CD-ROM packaging
Cosmetics and Personal Care Sectors: Paperboard and plastic
folding cartons, windowed boxes made of paperboard and
transparent rigid plastic for miscellaneous skin care products,
set-up boxes and litho-laminated fluted packaging
Examples of products include: CD Inserts -- N'Sync's No Strings
Attached; Santana's Supernatural. Packaging -- Sony Playstation's
WWF Smackdown, Avon's Skin So Soft; Revlon's ColorStay;
Chesebrough Pond's Skin Cream, Titanic video special edition collector's
set, Ralph Lauren Safari and Polo Sport.
Industry Overview:
The consumer packaging industry has witnessed specialty
packaging evolve into a significant marketing and merchandising
tool. Changes in the retail environment are driving these
trends. These changes include increased purchasing from "self-
select" channels and product proliferation requiring
differentiation at the point of sale. Manufacturers of consumer
products continue to pursue means of product promotion and
therefore consider value-added packaging as a key feature of
their promotion strategy.
IMPAC Group, Inc.
Strong Market Positions
#1 in the $300 million European audio market
#2 in the $300 million North American audio market
#1 in the $250 million European multimedia market
#3 in the $500 million North American cosmetics and
personal care market
Customers:
IMPAC has a loyal and diversified blue chip customer base and
through its integrated international design, sales and production
capabilities, the Company has become an integral component of
many of its customers' product development teams. Some of
IMPAC's customers are:
Entertainment: Universal Music Group; BMG Entertainment;
EMI Group plc; Sony Music Entertainment; Time Warner and 20th
Century Fox
Cosmetics/Personal Products: Avon Products; Estee Lauder;
Procter &Gamble; Clairol; Colgate-Palmolive; Mary Kay,
Chesebrough-Pond's and Revlon
Other Customers: Apple Computer, IBM and Sara Lee
IMPAC Fact Sheet
April 24, 2000
Page 2
Manufacturing Facilities:
IMPAC operates eight production facilities and one
fulfillment center in the United States and twelve manufacturing
facilities in Austria, Ireland, The Netherlands and the United
Kingdom. With its state-of-the-art facilities strategically
located throughout the U.S. and Europe, IMPAC can complement its
international sales team with production capabilities tailored to
meet the needs of global customers.
With over $100 million in pro forma capital expenditures
over the past four years, IMPAC has developed modern facilities
that enable the Company to lower turnaround time while reducing
staffing requirements and maintaining "just-in-time"
manufacturing capabilities.
Financial Summary:
1995* 1996* 1997* 1998** 1999***
Net Sales $148.7 $147.1 $160.8 $271.0 $332.2
growth 21.4 % (1.1 %) 9.3 % 68.5 % 22.6 %
EBITDA 19.9 22.2 24.5 39.9 60.2
margin 13.4 % 15.1 % 15.2 % 14.7 % 18.1 %
* 1995-1997 pro-forma for AGI / Klearfold combination
** 1998 pro forma for full year of the AGI/Klearfold combination
and the Tinsley Robor acquisition
*** 1999 pro-forma for recent acquisitions and the exclusion of
certain nonrecurring charges
Transaction Summary:
Purchase price: approximately $500 million
Assumption of net debt: $271 million (will be substantially
refinanced after closing)
Assumption of preferred stock: $23 million (will be redeemed
after closing)
Anticipated closing: mid-2000
Employees: 2,100
Management:
IMPAC has assembled an experienced, highly regarded management
team with an average of over 25 years of experience in the
packaging industry. Because the Company has been built through a
series of combinations, senior management brings a unique blend
of industry expertise from a variety of different perspectives.
Richard H. Block has served as the President and CEO of AGI
since October 1987 and the CEO of IMPAC since March 1998. He
began his career at AGI in 1970 as Vice President of Sales; he
was subsequently promoted to Executive Vice President. Prior to
1970, he served as a Sales Manager for Westvaco Corporation.
Lee Newbon was appointed COO of IMPAC and CEO of IMPAC Group
Europe in November 1998 and has been a Director of IMPAC since
March 1999. Prior to joining IMPAC, Mr. Newbon spent over twenty
years with Tinsley Robor, plc, the last four of which he served
as CEO. IMPAC acquired Tinsley Robor in 1998. Mr. Newbon has
worked extensively in the printing and music industries.
Headquarters:
1950 N. Ruby St.
Melrose Park, IL 60160
