Filed by Champion International Corporation
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant Rule 14a-12 of the
Securities Exchange Act of 1934
Commission File No: 1-3053
Subject Company: Champion International Corporation
On February 17, 2000, Champion International Corporation and UPM-Kymmene
Corporation issued the following press release:
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) u 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, EtelAEesplanadi 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.
# # #
CONTACTS FOR UPM-KYMMENE: CONTACTS FOR CHAMPION INTERNATIONAL:
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
* * * *
The following is a script used in connection with a teleconference with
investors and analysts on February 14, 2000:
UPM-KYMMENE GROUP / CHAMPION INTERNATIONAL
TELECONFERENCE SCRIPT
THURSDAY 17, 2000 - 3:30PM TO 4:30PM FT (8:30AM TO 9:30AM NYT)
OLAVI KAUPPILA, VP, INVESTOR RELATIONS, UPM-KYMMENE
Thank you, Operator. Before we begin this call we would like to remind
everyone that the teleconference 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. For further details, please see the companies' 10K, 10Q
and other filings with the SEC. With that out of the way, let me introduce
to you Mr. Juha Niemela, president and chief executive officer of UPM-
Kymmene. Juha
JUHA NIEMELAE:
Thank you, Olavi. Welcome to our conference call. We appreciate your
being with us today. With me in Helsinki is Richard Olson, chairman and
chief executive officer of Champion International, Jan-Henrik Kulp, Senior
Vice President and Chief Financial Officer and Mike Corey, Senior Vice
President and Kari Toikka, Senior VP, Investor Relations.
Today we announced that our two companies have entered into a definitive
merger agreement that would create a premier global paper and forest
products company.
Since we have on the telephone members from both the European and the
American financial communities, some of whom may know one company but not
the other, let me tell you something about why this is such a powerful
combination.
First of all, UPM-Kymmene is one of Europe's largest forest product and
paper companies. We manufacture printing papers, including magazine paper,
newsprint, and fine paper, as well as converting materials and wood
products. UPM-Kymmene has a strong market position in the North America in
magazine papers and is fully integrated in pulp and almost self sufficient
in energy. Champion International has leadership positions in North America
and Brazil. Its major businesses include coated and uncoated papers; paper
distribution; northern softwood and hardwood pulps; timberlands; and wood
products.
The combined company will be called Champion International and its logo
will be UPM-Kymmene's Griffin. The headquarters will be in Helsinki.
Together, we will have total revenues of euros between 13 and 14 billion
and will have around 49,000 employees. Total papermaking capacity is
approximately 12.1 million metric tons per year. UPM-Kymmene and Champion,
together, will have a global well-balanced complimentary business portfolio
and mass to compete in global business. Production plants in 17 countries
and extensive sales and distribution facilities on five continents serve
better both local and global customers. 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. In addition, the combined company will have the
responsibility for the sustainable management of over 6.4 million hectares
(15.8 million acres) of forestlands worldwide. All these factors together
make the new company poised for continued growth.
We are committed to providing a superior return. It will come from
accretion and UPM-Kymmene's higher dividends to our shareholders. Our two
world-class organizations will create an outstanding platform to do just
that. 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, we expect to realize substantial operational and marketing
benefits. Our combined company will be committed to continuous improvement
in all its operations in order to maximize efficiency and long-term
profitability.
Under the terms of our merger agreement, UPM-Kymmene will exchange 1.99
ordinary shares for each share of Champion common stock. The transaction
values Champion's total equity at approximately EUR 6.6 billion, or $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.
We anticipate that we will achieve approximately EUR 330, or $325 million,
in annual synergies by 2002 from a combination of process optimization
resulting in lower operating costs; reductions in logistical and purchasing
costs; implementation of world-class marketing practices; and internal pulp
utilization; and sales and administrative cost reductions.
The combined company will have a total market value of 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 debt] giving us all the necessary
financial strength to pursue a whole range of growth opportunities in our
industry.
The Board of Directors and Executive Management will be committed to the
highest international standards of excellence in business practises,
environmental issues and treatment of people.
I will serve as chief executive officer of our company and Richard Olson,
will be senior executive vice president. The other member of our management
team are outlined in our press release. Six directors from Champion will
be invited to join UPM-Kymmene's Board, including Mr. Olson and Mr.
Nichols, Champion's vice chairman and executive officer, and four
independent directors.
Now, I'd like to turn the call over to Richard Olson so that he can share
his thoughts on today's announcement.
RICHARD OLSON:
Thank you, Juha.
We at Champion share Juha's excitement about this combination. This merger
is simply the perfect fit for our Company. We immediately achieve a scale
and the market presence to succeed in a global economy. Our shareholders
will receive a premium for their shares and the opportunity to own stock in
a premier global company with substantial growth potential. Together, we
intend to be the supplier of choice for our customers by providing the
quality of products and services they value. We expect to set the standard
for excellence in this industry.
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. Both
companies share a history of commitment to employees, the communities in
which we operate, to sustainable forest management and to the environment.
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 this year.
In summary, this merger puts us in the top tier of global paper and forest
products companies and positions us for profitable growth in a
consolidating industry.
JUHA NIEMELAE:
Thanks, Dick. Now, Operator, we would be pleased to take some questions.
[Q&A SESSION]
