EXHIBIT 99.1
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CONTACTS:
FOR PILLOWTEX CORPORATION FOR FIELDCREST CANNON, INC.
Investor Contact: T. R. Staab
Mark Kirkpatrick Vice President and
Treasurer Chief Financial Officer
(214) 333-3225 Ext. 618 (704) 939-4600
Media Contact: R. E. Reece
Joele Frank / Dan Katcher Vice President Human Resources
Abernathy/MacGregor Group (704) 939-2290
(212) 371-5999
PILLOWTEX TO ACQUIRE FIELDCREST CANNON IN
TRANSACTION
VALUED IN EXCESS OF $700 MILLION
COMBINATION CREATES ONE OF INDUSTRY'S LARGEST HOME TEXTILE MANUFACTURERS
Dallas, Texas, and Kannapolis, North Carolina, September 11, 1997 -- Pillowtex
Corporation (NYSE: PTX) and Fieldcrest Cannon, Inc. (NYSE: FLD) announced today
that they have entered into a merger agreement under which Pillowtex will
acquire Fieldcrest Cannon for a combination of cash and Pillowtex stock. The
total transaction value is in excess of $700 million, including the refinancing
of approximately $200 million of Fieldcrest Cannon debt. This combination
creates one of the industry's largest home textile manufacturers with annual
sales in excess of $1.5 billion and a portfolio of many of the best recognized
brands in the industry.
Under the agreement, each common share of Fieldcrest Cannon would be exchanged
for $27.00 in cash and $7.00 in Pillowtex common stock and each preferred share
of Fieldcrest Cannon would be exchanged for $46.15 in cash and $11.97 in
Pillowtex common stock, for a total equity value of about $400 million. This
represents a premium of 55% over the $21.89 average closing price of Fieldcrest
Cannon common stock for the 90-trading days through September 9, 1997. The
acquisition will be accounted for as a purchase and is anticipated to be
accretive to Pillowtex's earnings per share in 1998.
Charles M. Hansen, Jr., Chairman and Chief Executive Officer of Pillowtex, said,
"The combination of Pillowtex and Fieldcrest Cannon creates a true one-stop shop
for
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home textiles that will bring together Fieldcrest Cannon's pre-eminent bed and
bath product lines with Pillowtex's premiere 'top-of-the-bed' products. United,
we will be able to use our extensive distribution networks to offer retailers a
broad array of products available at all price points. By combining Fieldcrest
Cannon's industry- leading brands such as Royal Velvet(R), Cannon(R), Touch of
Class(R), and Charisma(R) with Pillowtex's Ralph Lauren, Disney and Martha
Stewart products, we will strengthen our ability to cross merchandise all bed
and bath product offerings. We believe the market opportunities of this
combination are significant, as are the benefits to shareholders of both
companies."
Jeffrey D. Cordes, President and Chief Operating Officer of Pillowtex, said,
"Pillowtex has consistently delivered results to its shareholders. The
combination with Fieldcrest Cannon produces the opportunity for significant
market, operating and financial synergies which should result in enhanced cash
flows and net income. This will allow us to service our debt while continuing to
make capital investments designed to improve our operating efficiencies and add
to our profitability. Moreover, the additional shares issued in connection with
the transaction will increase our market capitalization and improve liquidity
for our shareholders. The combination is expected to result in substantial
annual cost savings which would be realized from the elimination of duplicate
corporate and administrative programs, greater efficiencies in operations and
business processes, and lower material costs through combined purchasing
programs.
"Pillowtex and Fieldcrest Cannon have established practices of reinvestment in
plant and equipment to modernize their operations," Mr. Cordes commented.
"Fieldcrest Cannon has several outstanding facilities including a brand-new,
state-of-the-art towel production facility which will complement Pillowtex's
modern pillow operations and newly upgraded blanket weaving facilities. We plan
on continuing Fieldcrest Cannon's capital investment plan which we believe
should significantly increase profitability in our industry-leading position."
"Pillowtex is no stranger to the Carolinas where we operate seven facilities and
have almost 2,000 employees. Pillowtex has historically had among the highest
rates of sales per employee in the industry. Fieldcrest Cannon employees have a
solid reputation in our industry and we welcome them to the Pillowtex family,"
said Mr. Hansen. "This combination will allow us to review both companies'
operations and institute the best practices of each company across the combined
entity. All union contracts will be honored. Fieldcrest Cannon will become a
subsidiary of Pillowtex. Pillowtex's headquarters will remain in Dallas with a
significant operating presence in Kannapolis."
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James M. Fitzgibbons, Chairman and Chief Executive Officer of Fieldcrest Cannon,
said, "The efforts of our management and employees to enhance the performance of
Fieldcrest Cannon has created exceptional value for our shareholders. By joining
with Pillowtex, our shareholders will receive a premium price for their shares
and will also be able to participate in the upside potential of a newly created
industry leader. The breadth and quality of our combined product lines, backed
by the expertise of both companies' talented managers will serve our customers,
employees and shareholders well."
Pillowtex intends to finance the acquisition, in part, with borrowings under a
new senior bank facility to be provided by NationsBank of Texas N.A., the
incurrence of additional debt, as well as a $65 million convertible preferred
stock investment provided by certain affiliates of Apollo Management L.P.
Leon D. Black, founding partner of Apollo Management L.P., stated, "The
Pillowtex/Fieldcrest Cannon transaction creates a unique franchise in home
textiles. The merger combines the best management teams in the industry with the
best brand names in the home fashion textile market. We are very pleased with
our investment in Pillowtex."
Under the agreement, for each Fieldcrest Cannon common share, the number of
Pillowtex common shares will not be more than 0.333 or less than 0.269 and, for
each Fieldcrest Cannon preferred share, the number of Pillowtex common shares
will not be more than 0.569 or less than 0.460, unless the average closing price
of Pillowtex common stock is less than $21.00, in which case Pillowtex may elect
to increase the amount of cash and/or Pillowtex common shares, such that the
value of the consideration to be paid for each Fieldcrest Cannon common share is
$34.00 and the value of the consideration to be paid for each Fieldcrest Cannon
preferred share is $58.12. If an election is not made, Fieldcrest Cannon may
terminate the agreement. The actual number of Pillowtex common shares to be paid
as merger consideration will be determined by the average closing price of
Pillowtex common stock for the 20 consecutive trading days immediately preceding
the 5th day prior to the close of the merger.
The merger is conditioned upon, among other things, the approval of each
company's shareholders and customary regulatory clearances, and is expected to
be completed by the end of 1997.
Bear, Stearns & Co. Inc. acted as financial advisor and provided a fairness
opinion to Pillowtex. Credit Suisse First Boston Corporation acted as financial
advisor and provided a fairness opinion to Fieldcrest Cannon.
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Pillowtex Corporation, with annual sales in excess of $500 million, markets and
manufactures top-of-the-bed home textile furnishings. The Company operates a
network of manufacturing, purchasing and distribution facilities in the U.S. and
Canada, with approximately 4,000 employees.
Fieldcrest Cannon, Inc., with annual sales in excess of $1 billion, is
headquartered in Kannapolis, North Carolina, markets and manufacturers bath and
bedding home textile products. Fieldcrest Cannon operates a network of
manufacturing, purchasing and distribution facilities, with approximately 11,000
employees.
Apollo is a private investment partnership which has invested in excess of $7
billion since 1990 in a variety of real estate and corporate transactions.
# # #
Information contained in this release with respect to the expected financial
impact of the proposed merger is forward-looking. These statements represent the
companies' reasonable judgment with respect to future events and are subject to
risks and uncertainties that could cause actual results to differ materially.
Such factors include, but are not limited to, material adverse changes in
economic and competitive conditions in the markets served by the companies,
material adverse changes in the business and financial condition of either or
both companies and their respective customers, uncertainties concerning
technological changes and future product performance, and substantial delay in
the expected closing of the merger.
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