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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): May 4, 1997
FORT HOWARD CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-20473 39-1090992
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
1919 South Broadway, Green Bay, Wisconsin 54304
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (414) 435-8821
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Item 5. Other Events
On May 5, 1997, Fort Howard Corporation, a Delaware corporation ("Fort
Howard"), and James River Corporation of Virginia, a Virginia corporation
("James River"), issued a joint press release announcing that they had entered
into an Agreement and Plan of Merger, dated as of May 4, 1997, among Fort
Howard, James River and James River Delaware, Inc., a Delaware corporation and a
wholly owned subsidiary of James River ("Merger Sub"), pursuant to which (i)
Merger Sub will be merged with and into Fort Howard, with Fort Howard the
surviving corporation in the merger as a wholly owned subsidiary of James River
(the "Merger") and (ii) each share of Common Stock, par value $.01 per share, of
Fort Howard issued and outstanding immediately prior to the effective time of
the Merger (other than certain shares which will be cancelled) will be converted
into 1.375 shares of Common Stock, par value $.10 per share of James River,
including the corresponding percentage of a preferred share purchase right
issued pursuant to James River's Rights Agreement. Consummation of the Merger is
conditioned upon, among other things, the requisite approval of the shareholders
of each of Fort Howard and James River and customary regulatory approvals. Such
press release is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Item 7(c). Exhibits
99.1 Press release, dated May 5, 1997, announcing the signing of an
agreement to merge Fort Howard and James River.
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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 thereunto duly authorized.
FORT HOWARD CORPORATION
Registrant
By: /s/ James W. Nellen II
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James W. Nellen II
Vice President and Secretary
Date: May 5, 1997
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Index to Exhibits
Exhibit No. Description
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99.1 Press release, dated May 5, 1997,
announcing the signing of an
agreement to merge Fort Howard
and James River.
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JAMES RIVER, FORT HOWARD AGREE TO MERGE
Creating a Preeminent Consumer Products Company
NEW YORK -- May 5, 1997 -- James River Corporation (NYSE:JR) and Fort
Howard Corporation (NASDAQ:FORT) announced today that they have signed a
definitive merger agreement creating a preeminent worldwide consumer products
company with a strong competitive position and outstanding prospects for growth.
The new company, which will be named Fort James Corporation, will have annual
sales in excess of $7 billion.
Under the agreement, shareholders of Fort Howard will receive 1.375
shares of Fort James common stock for each share of Fort Howard common stock.
This represents a per share value of $42.45 and a total value of $5.8 billion,
including the assumed Fort Howard debt, based on the James River closing stock
price on May 2 of $30.875. Shareholders of James River will retain their current
number of shares. Excluding non-recurring items, the merger is expected to be
slightly accretive to pro forma 1997 earnings, without anticipated synergies,
and accretive to 1998 earnings by approximately 10 percent, including synergies.
The transaction is structured to qualify as a tax-free reorganization
and will be accounted for as a pooling of interests. The merger, which is
expected to be completed at the end of the summer, is conditioned on receiving
regulatory clearances in the United States and Europe and requires the approval
of the shareholders of both companies. Morgan Stanley and certain other
shareholders, representing approximately 20 percent of Fort Howard's fully
diluted shares, have agreed to vote in favor of the merger.
"This merger opens the way for two strong companies to emerge as a
powerful single force in the consumer goods industry," said Miles L. Marsh,
James River's chairman and chief executive officer. "Because Fort James will be
able to compete more effectively as a combined company than we could have
individually, this merger will be attractive to shareholders, customers and
employees."
Marsh added, "Fort James will benefit from the complementary strengths
of James River's strong brands and marketing skills and Fort Howard's
exceptional, low-cost manufacturing base and leadership in commercial products.
The broad North American focus of both companies, as well as their strong
pan-European presence, represents a gateway to tremendous global opportunities."
Michael T. Riordan, Fort Howard's chairman and chief executive officer,
noted "Our combined product lines, supported by strategically located assets and
world-class manufacturing capabilities, create a strong competitive position
that will fuel long-term growth. In addition, the significant operating cash
flow of the combined company, which totaled more than $1 billion on a pro forma
basis in 1996, will allow for an aggressive pace of debt reduction, while at the
same time support strong business growth. Both James River and Fort Howard have
made significant recent progress in reducing debt, and Fort James remains
committed to this important objective."
Fort James will be able to offer a broad range of tissue and tabletop
products. Its retail products, to be distributed in grocery and drug stores,
mass merchandisers, and warehouse clubs, include such well-known North American
brands as QUILTED NORTHERN, SOFT 'N GENTLE, BRAWNY, MARDI GRAS, VANITY FAIR,
GREEN FOREST and DIXIE. In addition, Fort James will have a strong presence in
the European market with brands such as LOTUS, NOUVELLE, COLHOGAR and TENDERLY.
The company will also be a leading supplier of store brands. Away-from-home
products will be sold primarily through paper, foodservice and janitorial
distributors to serve the lodging, industrial, health care, restaurant,
foodservice, leisure, transportation and office building sectors, as well as
schools, governments and retail establishments.
The merger is expected to generate cost savings estimated to total at
least $150 million in 1998, increasing to more than $200 million per year over
time. Fort James intends to reduce expenses and increase efficiency by combining
complementary technologies, optimizing product manufacturing and logistics
across the combined systems, increasing purchasing efficiencies, eliminating
redundant overhead costs, consolidating work forces where duplication exists and
increasing product quality and productivity. To cover the cost of implementing
these plans, Fort James expects to take a reorganization charge in the quarter
in which the merger is completed. The amount of the charge has not been
determined.
At the same time, Fort James will continue the cost reduction program
begun by James River in 1995, which is expected to deliver enhanced savings as
this program matures. A portion of the expected
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incremental savings will be reinvested in Fort James' brands in order to grow
market share and accelerate top-line growth.
Under the terms of the merger agreement, which has been unanimously
approved by the boards of directors of both companies, Marsh will serve as
chairman and chief executive officer of Fort James and Riordan will be president
and chief operating officer. The board of directors of Fort James will be
comprised of 15 directors, 11 from James River and four from Fort Howard. Fort
James' senior management team will also include key James River and Fort Howard
executives. A new executive headquarters for Fort James' senior management will
be established in the Chicago area.
"From the beginning, we have looked at this as a merger of equals,"
said Marsh, "with both companies contributing important product strengths,
strategic assets and management talent."
"There has been a very high level of mutual respect in all of our
discussions," added Riordan, "and I believe we will be able to move very quickly
to capitalize on synergies and aggressively pursue growth opportunities."
As a result of the merger, Fort James will have a total market
capitalization of $11 billion, including debt of $4.4 billion. Fort James will
have approximately 218 million outstanding fully diluted common shares.
Fort Howard currently pays no dividend. James River pays a current
quarterly cash dividend of $.15 per share, which will be the initial dividend
rate of Fort James.
James River Corporation, with 1996 consolidated sales of $5.7 billion,
is a leading marketer and manufacturer of paper-based consumer products,
packaging, and business, printing and converting papers. The company has a total
of approximately 60 manufacturing facilities located in the United States,
Canada and ten European countries. The second largest worldwide producer of
tissue products, James River markets such widely recognized brands as QUILTED
NORTHERN bathroom tissue, BRAWNY paper towels, VANITY FAIR napkins, and DIXIE
cups and plates in North America, and LOTUS bathroom tissue, towels, and facial
tissue in Europe.
Fort Howard, with 1996 consolidated sales of $1.6 billion, is a leading
producer of tissue products for away-from-home customers in the United States,
and a leading supplier of value brands and private label products for retail
tissue customers. With three manufacturing facilities in the United States, one
operation in the United Kingdom and a joint venture in China, Fort Howard's
products include bath and facial tissue, towels, napkins, wipers and specialty
nonwoven products. Familiar brand names include MARDI GRAS, SOFT 'N GENTLE, and
GREEN FOREST.
Forward-looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties regarding this transaction. Such risks and
uncertainties include, but are not limited to, the satisfaction of the
conditions to close the transaction; determinations by regulatory and
governmental authorities; the ability to successfully integrate the James River
and Fort Howard businesses; the ability to achieve synergistic and other cost
reductions and efficiencies; general business and economic conditions;
competitive pricing pressures for the company's products; changes in raw
material, energy and other costs; and opportunities that may be presented to and
pursued by the company. Any of these risks or uncertainties may cause actual
results or future circumstances to differ materially from the forward-looking
statements contained in this news release.
# # #
Today's news release, along with past releases from James River, is
available by fax, at no charge, by calling (800) 758-5804, ext. 457350. You may
access James River's corporate-wide site at Internet address
http://www.jamesrivercorp.com, and Fort Howard's corporate-wide site at Internet
address http:// www.forthoward.com.
