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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
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SHOREWOOD PACKAGING CORPORATION
(Name of Subject Company)
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CHESAPEAKE CORPORATION
SHEFFIELD, INC.
(Bidders)
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Common Stock, $0.01 Par Value Per Share
(Including Associated Rights)
(Title of Class of Securities)
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825229107
(CUSIP Number of Class of Securities)
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Thomas H. Johnson
President & Chief Executive Officer
Chesapeake Corporation
1021 East Cary Street
Richmond, Virginia 23218-2350
(804) 697-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
Copies to:
Gary E. Thompson, Esq.
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
(804) 788-8200
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December 9, 1999
(Date of Event Which Requires Filing of This Statement)
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This Amendment No. 1 to Schedule 14D-1 supplements and amends the Tender
Offer Statement on Schedule 14D-1, filed on December 3, 1999 (the "Schedule
14D-1"), by Sheffield, Inc., a Delaware corporation ("Purchaser"), and
Chesapeake Corporation ("Chesapeake"), a Virginia corporation and the direct
owner of all of the outstanding capital stock of Purchaser. The Schedule 14D-1
relates to the offer by Purchaser to purchase all outstanding shares of common
stock, $0.01 par value per share (the "Common Stock"), including the
associated rights to purchase preferred stock (the "Rights" and together with
the Common Stock, the "Shares"), of Shorewood Packaging Corporation, a
Delaware corporation (the "Company"), not directly or indirectly owned by
Chesapeake and its subsidiaries, for a purchase price of $17.25 per Share, net
to the seller in cash, without interest thereon, on the terms and subject to
the conditions set forth in the Offer to Purchase, dated December 3, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal and any
amendments or supplements thereto (which collectively constitute the "Offer").
Capitalized terms used and not otherwise defined herein have the meanings set
forth in the Schedule 14D-1.
Item 10. Additional Information
(f) Attached hereto as Exhibit (f)(1) is a slide presentation that may be
used by persons making oral solicitations of the Company's stockholders by or
on behalf of Purchaser and Chesapeake, directly or indirectly, in connection
with the Offer.
Item 11. Material to be Filed as Exhibits
(f)(1) Slide presentation, titled "defining the future," which may be used
by persons making oral solicitations of the Company's stockholders by or on
behalf of Purchaser and Chesapeake, directly or indirectly, in connection with
the Offer.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: December 9, 1999
CHESAPEAKE CORPORATION
/s/ J. P. Causey Jr.
By: _________________________________
J. P. Causey Jr.
Senior Vice President, Secretary
& General Counsel
SHEFFIELD, INC.
/s/ J. P. Causey Jr.
By: _________________________________
J. P. Causey Jr.
Vice President & Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<C> <S>
(f)(1) Slide presentation, titled "defining the future," which may be used by
persons making oral solicitations of the Company's stockholders by or
on behalf of Purchaser and Chesapeake, directly or indirectly, in
connection with the Offer.
</TABLE>
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[Chesapeake Corporation logo]
defining the future
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[Chesapeake Corporation logo]
This presentation includes forward-looking statements that are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Changes in the following important factors, among others, could cause
Chesapeake's actual results to differ materially from those expressed in the
forward-looking statements: competitive products and pricing; production costs
(particularly for raw materials such as corrugated box and display materials);
fluctuations in demand; governmental policies and regulations affecting the
environment; interest rates; currency translation movements; and other risks
that are detailed from time to time in reports filed by the Company with the
Securities and Exchange Commission.
All information in this presentation concerning Shorewood Packaging Corporation,
including financial information, has been taken from or based on publicly
available documents and records on file with the Securities and Exchange
Commission and other public sources, and is qualified in its entirety by
reference thereto. Chesapeake takes no responsibility for the accuracy or
completeness of the information contained in such documents and records, or for
any failure by Shorewood Packaging Corporation to disclose events which may have
occurred or may affect the significance or accuracy of any such information, but
which is unknown to Chesapeake.
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[Chesapeake Corporation logo]
Chesapeake Management
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. Tom Johnson, C.E.O.
. Bill Tolley, C.F.O.
. Joel Mostrom, Investor Relations
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[Chesapeake Corporation logo]
Agenda
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. Overview of Chesapeake
. Transformation
. Strategic Direction
. Offer for Shorewood
. Discussion
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[Chesapeake Corporation logo]
TRANSFORMATION
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[Chesapeake Corporation logo]
Focused Strategy
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. Targeted markets
. Defensible market positions
. Global arena
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Broaden Product Capability and Geographic Coverage in Target Markets
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[Chesapeake Corporation logo]
Near-Term Actions
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. Portfolio Transformation
- Timber sale
- Tissue monetization
- Field acquisition
- CPI acquisition
- Color-Box JV pending
. Operational Excellence
- CD&P margin improvement
- Field integration
- HBU land monetization
. Financial Re-engineering
- Debt reduction
- Share re-purchase
. Acquisitions & Alliances
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[Chesapeake Corporation logo]
Strategic Transformation
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. Sold Kraft Paper Mill
- 2Q97
. Sold Timberlands -------- Generated $1.3 billion of cash
- 3Q 1999 |
. Tissue Partnership |
- 4Q99 |
|
. Reduced Debt
. Share Repurchase Program
. Strategic Growth Inititatives
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[Chesapeake Corporation logo]
Chesapeake Sales: '96 - '99
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[Pie Charts showing sales breakdown (%) as indicated in the following table]
1996: $1.1B 1999 Pro Forma: $1.0B
Description % Description %
- ----------- --- ----------- ---
Tissue 40% European Packaging 45%
Kraft Paper 30% Worldwide Displays &
U.S. Packaging 28% Merchandising 29%
Land Development 2% U.S. Packaging 24%
Land 2%
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[Chesapeake Corporation logo]
Current Sectors Served
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[Pie Chart showing sectors served (%) as indicated in the following table]
1999 Pro Forma: $1.0 Billion
Description %
- ----------- --
Pharma-Personal Care 22%
Cosmetics-Luxury-Spirits 21%
Food-Bev. 12%
Tobacco 12%
Candy 10%
Recreation 6%
Other 5%
Home-Garden 5%
Technology-Multimedia 4%
Paper-Packaging 2%
Clothing 1%
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[Chesapeake Corporation logo]
CSK Strengths
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. Multiple market leadership positions
. Customer-first philosophy
. One-stop shopping capability
. Award winning innovation and know-how
. In-depth understanding of retail environment
. Leadership
. Reputation
. Financial flexibility
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[Chesapeake Corporation logo]
Growth Criteria
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. Competitive Advantage
. Accretive on Day 1
. Return in excess of cost of capital
. Target Markets
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[Chesapeake Corporation logo]
Primary Target Markets
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Source: Company studies
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[Chesapeake Corporation logo]
Pharmaceutical Packaging Market
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. Global demand growing
- Population growth
- Aging of population
- New technology
- New regulations
. Globalizing producers
. Rationalization of suppliers
. Product packaging evolution
- Folding cartons dominate secondary packaging
- Blister packs
- Package, label, leaflet combinations
. Cross-selling opportunities
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Global capability + one-stop shopping = competitive advantage
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[Chesapeake Corporation logo]
Technology Packaging Market
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. High growth rates
. Brand awareness & retail presence more important
. Need for innovative product protection
. Demand for global sourcing and one-stop shopping
. Global suppliers must have Flexo, litho, and folding carton capability
. Major locations--USA, Ireland, U.K., China, Singapore
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Global capability + one-stop shopping = competitive advantage
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[Chesapeake Corporation logo]
1999 Growth Initiatives
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. Field Group (March `99)
- Leading European folding carton company with sector focus in
pharmaceuticals, tobacco, confectionery
- $415 million enterprise value
. Berry's Limited (May `99)
- Irish leaflet and label producer
- Part of pharmaceutical expansion into Ireland
. Mateo Cartonajes (July `99)
- Leading Spanish printing company's packaging operations
- Tobacco and pharmaceuticals
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[Chesapeake Corporation logo]
1999 Growth Initiatives (con't...)
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. Consumer Promotions International (Oct. `99)
- US, UK and France
- Permanent Displays and Merchandising Systems
. Color Box JV (Pending)
- Joint venture expected to create the largest litho laminated company in
North America
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[Chesapeake Corporation logo]
Field Group
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[photograph of various pharmaceutical packaging]
. Leading specialty packaging supplier with sales of $400 million
. Reputation for quality and innovation
. Platform for European growth
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[Chesapeake Corporation logo]
Field Group
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. Well positioned - #1 specialty packaging in the UK, #1 in pharmaceutical
packaging in Europe
. Solid platform for growth across Europe
. Strong, stable management team
. Solution-based, end-user focused approach
. Top-line growth and cost synergies
. Reasonably priced -- 6.5X EBITDA
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[Chesapeake Corporation logo]
Field Group
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Major Customers
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Pharmacia/Upjohn
Astra-Zeneca
American Home Products
Schering-Plough
Smith Kline Beecham
Johnson & Johnson
BAT
Diagio
Cadbury
Mars
Nestle's
Sanofi
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[Chesapeake Corporation logo]
Field Group Revenues and EBITDA Margin
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($ Millions)
[Bar Chart showing Field Group Revenues as indicated in the following table]
<TABLE>
<CAPTION>
Description 1996 1997 1998 1999F
- ----------- ---- ---- ---- -----
<S> <C> <C> <C> <C>
Field Group Revenues 332 374 402 387
Revenue Growth +10% +13% +7% -3%
EBITDA Margin 16% 15% 16% 16%
</TABLE>
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[Chesapeake Corporation logo]
Summary
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. Leadership positions in growing businesses with sustainable competitive
advantages
. Revenue growth from customer market sectors and expanding geography
. Relentless pursuit of cost reduction
. Healthy cash flow generation
. Management focused on building shareholder value
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[Chesapeake Corporation logo]
Offer For
Shorewood Packaging
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[Chesapeake Corporation logo]
Shorewood Packaging Corporation
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. North America's largest non-integrated folding carton company
. Business focus on the tobacco, drinks, personal care and entertainment
markets
. Reputation for high quality and product innovation
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[Chesapeake Corporation logo]
Shorewood Packaging
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52-Week High-Low $20-5/8 - $11-3/4
Stock Price $16-7/8
Diluted Shares Outstanding 28.1
Market Value $475 million
Market Capitalization $745 million
Diluted EPS / P/E
1999E* $1.27 / 13.3
2000E* $1.45 / 11.6
*Source: First Call (Calendar year estimate)
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[Chesapeake Corporation logo]
Shorewood Sales
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[Pie Charts showing sales by End Use and Geography]
<TABLE>
<CAPTION>
By End Use By Geography
Description % Description % $
- ----------- -- ----------- -- -
<S> <C> <C> <C> <C>
Music & Home Entertainment 33% United States 67% $439mm
Tobacco 34% Canada 32% $179mm
Consumer Products & Other 19% China 1% 2mm
Cosmetics & Toiletries 14%
Total: $620mm
</TABLE>
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[Chesapeake Corporation logo]
Shorewood's Principal Plant Locations
[map of United States and Canada showing 15 locations; map of China
showing one location]
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3,800 employees: 2,600 in the U.S., 1,100 in Canada and 100 in China
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(a) Map does not show 11 sales offices in North America, 2 in Canada and 1 in
China
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[Chesapeake Corporation logo]
Shorewood Packaging Profitability
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[Bar chart showing Shorewood Packaging Profitability ($Millions) and EBITDA
Margin for the Years 1996 - 1999 as described in the following table]
<TABLE>
<CAPTION>
Year 1997 1998 1999 1999PF
- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C>
EBITDA ($Million) $ 66 $ 68 $ 85 $92
EBITDA Margin 16% 16% 15% 15%
</TABLE>
Source: Company reports and CSK estimates
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[Chesapeake Corporation logo]
Chesapeake Sector Revenues
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[Pie Charts showing sectors served (%) as indicated in the following tables]
<TABLE>
<CAPTION>
Chesapeake Chesapeake + Shorewood
Description % Description %
- ----------- --- ----------- ---
<S> <C> <C> <C>
Pharma-Personal Care 22% Tobacco 20%
Cosmetics-Luxury-Spirits 21% Pharma-Personal Care 19%
Food-Bev. 12% Cosmetics-Luxury-Spirits 18%
Tobacco 12% Technology-Multimedia 16%
Candy 10% Food-Bev. 7%
Recreation 6% Other 7%
Other 5% Candy 5%
Home-Garden 5% Recreation 3%
Technology-Multimedia 4% Home-Garden 3%
Paper-Packaging 2% Paper-Packaging 1%
Clothing 1% Clothing 1%
$1.0 Billion $1.6 Billion
</TABLE>
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[Chesapeake Corporation logo]
CSK's Offer For Shorewood Valuation Multiples
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<TABLE>
<CAPTION>
Average
Offer Acquisition
Transaction Value/LTM Multiple Multiple
- --------------------- -------- --------
<S> <C> <C>
Revenues 1.2 .9
EBITDA 8.0 6.7
EBIT 12.0 9.9
</TABLE>
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[Chesapeake Corporation logo]
Revenue Enhancement/Cost Reduction Opportunities
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. Cost Reductions
- Purchasing
. Paper
. Other materials
- S, G, & A
. Corporate HQ
. Selling $20M by Year 2
. Cross Marketing Opportunities
- Pharmaceutical
- Luxury packaging
- Tobacco
- Multi-media
. Technical Exchange
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[Chesapeake Corporation logo]
Shorewood Acquisition Impact to EPS
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($ in millions, except per share data)
<TABLE>
<CAPTION>
Description Year 1 Year 2
- ----------- ------ ------
<S> <C> <C>
EBIT Before Synergies 80 86
Goodwill Amortization (11) (11)
Synergies 10 20
Incremental EBIT 79 95
Incremental Financing Costs 61 59
Profit Before Tax 18 36
Taxes 11 18
Net Income 7 18
Shares Outstanding 17.2 17.2
EPS Accretion/Dilution .41 1.05
</TABLE>
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[Chesapeake Corporation logo]
Capital Structure Flexibility
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<TABLE>
<CAPTION>
Y/E Y/E
99 99 After
Forecast SWD
Purchase
<S> <C> <C>
Net Debt (30) 743
Deferred Taxes 237 237
Shareholder's Equity 584 584
--- -----
Total Capital 791 1,564
Net Debt/Capital - 48%
</TABLE>
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[Chesapeake Corporation logo]
Summary
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. Highly focused pure-play specialty packaging and merchandising services
company
. Leadership positions in good businesses with sustainable competitive
advantages
. Revenue growth from high-growth markets and expanding geography
. Healthy cash flow generation
. Management focused on improving shareholder value
. Shorewood acquisition makes strategic and financial sense
34
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[Chesapeake Corporation logo]
defining the future
35
