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
February 17, 2000
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(Date of earliest event reported)
CHAMPION INTERNATIONAL CORPORATION
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(Exact name of Registrant as specified in its charter)
NEW YORK 1-3053 13-1427390
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(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
One Champion Plaza, Stamford, Connecticut 06921
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(Address of principal executive offices, including zip code)
(203) 358-7000
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On February 17, 2000, Champion International Corporation and
UPM-Kymmene Corporation issued a joint press release, a copy of which is
attached hereto and incorporated herein by reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits
99.1 Joint Press Release, dated February 17, 2000,
announcing the execution of the Agreement and Plan of
Merger, dated as of February 17, 2000, among Champion
International Corporation, UPM-Kymmene Corporation and
Blue Acquisition, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: February 18, 2000
CHAMPION INTERNATIONAL CORPORATION
By: /s/ Lawrence A. Fox
_____________________________________
Name: Lawrence A. Fox
Title:Vice President and
Secretary
EXHIBIT INDEX
Exhibit No. Description
99.1 Joint Press Release, dated February 17, 2000,
announcing the execution of the Agreement and Plan of
Merger, dated as of February 17, 2000, among Champion
International Corporation, UPM-Kymmene Corporation and
Blue Acquisition, Inc.
Exhibit 99.1
UPM-KYMMENE AND CHAMPION INTERNATIONAL AGREE TO
EUR 20 BILLION ($20 BILLION) MERGER CREATING A
PREMIER GLOBAL FOREST PRODUCTS COMPANY
CHAMPION SHAREHOLDERS TO RECEIVE 1.99 UPM-KYMMENE SHARES FOR EACH
CHAMPION SHARE
Helsinki, Finland and Stamford, Connecticut, (February 17, 2000) -
UPM-Kymmene Corporation (Helsinki Stock Exchange: UPM1V; NYSE: UPM) and
Champion International Corporation (NYSE: CHA) today announced that their
boards of directors have approved a definitive merger agreement that would
create a premier global paper and forest products company. The combined
enterprise value is approximately EUR 20.5 billion ($20.2 billion) [EUR
15.5 billion ($15.3 billion) in equity; EUR 5.0 billion ($4.9 billion) in
net debt] and represents the industry's first substantial cross-Atlantic
merger.
Under the terms of the merger agreement, UPM-Kymmene will exchange
1.99 ordinary shares of UPM-Kymmene for each outstanding share of Champion
common stock. Champion's shareholders may elect to receive either
UPM-Kymmene ADRs or ordinary shares. The transaction values Champion's
total equity at approximately EUR 6.6 billion ($6.5 billion), based on
UPM-Kymmene's February 16 closing price of EUR 33.80 ($33.33). The exchange
ratio of 1.99 represents a premium to Champion shareholders of
approximately 30% over the average ratio of the two stocks during the past
month. The transaction will be accounted for as a pooling of interests and
is expected to be accretive to both companies' earnings per share in the
first full year after closing.
The combined company will be called Champion International and
will be symbolized by UPM-Kymmene's logo, the Griffin. The company
headquarters will be located in Helsinki, Finland.
The combined company will have a well-balanced business portfolio
with production plants in 17 countries and extensive sales and distribution
facilities on five continents to better serve both local and global
customers. In addition, the combined company will have the responsibility
for the sustainable management of 6.4 million hectares (15.8 million acres)
of forestlands worldwide. The combined company would have total revenues of
approximately EUR 13 billion ($14 billion) and a total papermaking capacity
of approximately 12.1 million metric tons per year, based on reported 1999
figures. UPM-Kymmene and Champion together have approximately 49,000
employees.
The companies anticipate that they will achieve approximately EUR
330 million ($325 million) in synergies per year by 2002 and onwards from a
combination of process optimization resulting in lower operating costs;
reductions in logistical and purchasing costs; implementation of
world-class marketing practices; internal pulp utilization; and sales and
administrative cost reductions.
UPM-Kymmene is one of the leading manufacturers of printing
papers, including magazine paper, newsprint, and fine paper, as well as
converting materials and wood products. UPM-Kymmene employs 31,000 people
around the globe. Champion's major businesses include coated papers;
uncoated freesheet papers; paper distribution; northern softwood and
hardwood pulps; forestlands; and wood products. Champion International
employs 18,000 people.
Juha Niemela, president and chief executive officer of UPM-
Kymmene Corporation, said, "We are delighted with today's announcement. We
are convinced that this decision will serve the needs of our customers,
shareholders and personnel in the best possible way. This merger solidifies
UPM-Kymmene's position in the top tier of global paper and forest products
companies. By combining two world-class organizations, we are creating an
outstanding platform to create shareholder value as we build and capitalize
upon Champion's and UPM-Kymmene's leadership positions in paper and forest
products worldwide. UPM-Kymmene is a leader in the forest industry in
Europe, and Champion has leadership positions in North America and Brazil.
We expect this geographic diversification to fortify our strong position in
the magazine and fine papers businesses and to moderate the traditional
cyclicality in our earnings base. Importantly, the combined company will
have all the necessary financial strength to pursue a whole range of growth
opportunities in our industry.
"We are committed to providing a superior return to our
shareholders. Our complementary product lines will provide enhanced profit
opportunities through, among other things, access to both short and long
fiber, improved pulp balance and low cost pulp supply. In addition,
Champion and UPM-Kymmene together should be able to realize substantial
operational and marketing benefits, which we expect to further enhance
profitability. Furthermore, the combined company will be committed to
continuous improvement in all its operations in order to maximize
efficiency and long-term profitability," Mr. Niemela added.
Richard E. Olson, chairman and chief executive officer of Champion
International, said, "We are very excited about this combination. With this
merger, we immediately achieve the scale and market presence required to
succeed in a global economy. This merger is the perfect fit for our
Company. Our shareholders will receive a premium for their shares and the
opportunity to own stock in a premier global company with substantial
growth potential. Our employees will benefit from being part of an
organization with leadership positions around the globe. The combined
talents of UPM-Kymmene and Champion employees will make us not just bigger,
but better. We both share a history of commitment to our employees, to the
communities in which we operate, to sustainable forest management and to
the environment.
Mr. Niemela added, "We intend to be the supplier of choice for our
customers by providing the quality of products and services that they
value, and we expect to set the standard for excellence in this industry."
BOARD OF DIRECTORS
Six members of Champion's board of directors, including Mr.
Richard E. Olson, chairman and chief executive officer, and Mr. Kenwood C.
Nichols, vice chairman and executive officer, will be invited to join the
board of directors of UPM-Kymmene, which presently has ten members.
MANAGEMENT TEAM
Mr. Juha Niemela, president and chief executive officer of
UPM-Kymmene, will be the chief executive officer of the combined company.
In addition to Mr. Niemela, the members of the management team will
include: senior executive vice president Martin Granholm, senior executive
vice president Richard E. Olson, executive vice president Kenwood C.
Nichols, senior vice president Michael P. Corey, senior vice president
Jan-Henrik Kulp, senior vice president Heikki Sara and senior vice
president Kari Toikka. The management team also includes the following
divisional presidents: group senior vice president Pentti Arvela, group
senior vice president Ismo Lepola, group senior vice president Matti J.
Lindahl, group senior vice president Pentti Kallio and group senior vice
president Kari Makkonen.
TIMING AND APPROVALS
The merger is conditioned upon, among other things, the approvals
of the shareholders of both companies and regulatory approvals in various
jurisdictions. The companies anticipate that the merger can be completed
during the first half of the year 2000.
Chase Securities Inc. acted as financial advisor and White & Case
LLP acted as legal counsel to UPM-Kymmene. Goldman Sachs & Co. acted as
financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP acted as
legal counsel to Champion.
ABOUT UPM-KYMMENE
UPM-Kymmene Group, which is based in Helsinki, Finland, is one of
the world's largest forest product companies and paper producers with
annual sales in 1999 of EUR 8.3 billion ($8.8 billion). The company's
product range covers printing papers, converting materials and wood
products. The company has production plants in 15 countries and an
extensive sales network.
ABOUT CHAMPION INTERNATIONAL
Champion International Corporation is an integrated forest
products company with significant operations in the United States, Canada
and Brazil. The company had sales in 1999 of $5.3 billion (EUR 5.0
billion). Champion is a major producer and distributor of coated and
uncoated papers. The company's other products include market pulp, lumber
and plywood, and selected paper for packaging. Champion has the
responsibility for the sustainable management of approximately eleven
million acres of forestlands supporting its manufacturing facilities.
This press release contains certain statements that are neither
reported financial results nor other historical information. These
statements are forward-looking statements within the meaning of the
safe-harbor provisions of the U.S. federal securities laws. These
forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed in the
forward- looking statements. Many of these risks and uncertainties relate
to factors that are beyond the companies' ability to control or estimate
precisely, such as future market conditions, the behavior of other market
participants and the actions of governmental regulators. These and other
risk factors are detailed in the two companies' SEC reports. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this press release. The companies do not
undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the
date of this press release.
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the business combination transaction
referenced in the foregoing information, when it becomes available, because
it will contain important information. Such joint proxy
statement/prospectus will be filed with the Securities and Exchange
Commission by UPM-Kymmene and Champion International. Investors and
security holders may obtain a free copy of the joint proxy statement/
prospectus (when available) and other related documents filed by
UPM-Kymmene and Champion International at the Commissions website at
www.sec.gov. The joint proxy statement/prospectus and the other documents
may also be obtained from UPM-Kymmene by contacting UPM-Kymmene, Attn: Reko
Aalto-Setala, Etelaesplanadi 2, FIN-00101 Helsinki, Finland, and/or
Champion International by contacting Champion International, Attn: Tom
Hart, One Champion Plaza, Stamford, Connecticut 06921.
Champion International, its directors, executive officers and
certain other members of Champion International management and employees
may be soliciting proxies from Champion International shareholders in favor
of the merger. Information concerning the participants will be set forth in
the joint proxy statement/prospectus when it is filed with the Securities
and Exchange Commission.
# # #
INTERNATIONAL:
CONTACTS FOR UPM-KYMMENE: CONTACTS FOR CHAMPION
For Media: For Media:
Markku Franssila Gael Doar
+ 358-204-15-0021 1-203-358-7900
[email protected] [email protected]
For Investors: For Investors:
Olavi Kauppila Tom Hart
+ 358-204-15-0658 1-203-358-7291
[email protected] [email protected]
For U.S. investors: 1-877-487-2349
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