Filed by UPM-Kymmene Corporation
Pursuant to Rule 425 under the Securities
Act of 1933 and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Champion International Corporation
Commission File No.: 001-03053
[Slide Presentation given by UPM-Kymmene Corporation
beginning on February 18, 2000]
[Slide 1]
These materials contain 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 UPM-Kymmene's and Champion
International's 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 these
materials. 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 these materials.
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 Commission's 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.
READ THE PROSPECTUS/ OFFER TO EXCHANGE CAREFULLY BEFORE MAKING A DECISION
CONCERNING THE TRANSACTION.
[Slide 2]
[Logo of UPM-Kymmene Corporation]
[Logo of post-merger Champion International Corporation]
[Logo of Champion International Corporation]
[Slide 3]
[Logo of Champion International Corporation]
[Logo of UPM-Kymmene Corporation]
[Table stating the following information:
Champion International Corporation UPM-Kymmene Corporation
(USD) EUR)
Turnover 1999 USD 5268 million 8261 million
Personnel 18,000 31,000
Earnings 322 million 1398 million
Paper Production Capacity 3.5 mill. tonnes 8.6 mill. tonnes
Pulp 3.1 mill. tonnes 2.9 mill. tonnes
Plywood 1.2 mill. m3 0.8 mill. m3
Sawn Timber 3.9 mill. m3 2.0 mill. m3
Forests under management 4 mill. hectares 1.3 mill. hectares]
hectares
Production in USA, Canada, Brazil Europe, USA, China
[Slide 4]
[Miniaturized logo of Champion International Corporation]
SALES BY BUSINESS 1999
[Pie chart showing Champion's percentage sales and amount in Euros by business
in 1999:
Business Percentage of Sales
Forest 7%
Chemical Pulp 8%
Wood Products 17%
Converting 6%
Fine 31%
Magazine Paper 16%
Other 15%]
[Slide 5]
[Logo of post-merger Champion International Corporation
[Slide 6]
[Logo of post-merger Champion International Corporation]
[Table stating the following information:
Worldwide ranking
Total Worldwide Sales EUR 13.5 bill. 2
Market Capitalization EUR 13.4 bill. 2]
[Slide 7]
The merging companies have an excellent strategic fit for each other
o parallel strategic intent
o complementary product lines
o complementary geographical presence
[Slide 8]
PRODUCTION PLANTS IN EUROPE
[Map showing plant locations in Europe.]
[Slide 9]
PRODUCTION PLANTS OUTSIDE EUROPE
[Map showing plant locations outside of Europe.]
[Slide 10]
The merging companies have excellent fit for each other
o parallel strategic intent
o complementary product lines and geographic presence
[Slide 11]
Pooling of interests
o no goodwill
o strong balance sheet preserved
o limitations for asset sales in the near future (excluding listed
shares)
o treasury shares to be re-issued (7,5 million shares)
o share buy-backs not possible in the near future
[Slide 12]
Deal structure:
Deal structure:
Exchange ratio:
Champion shareholders will receive 1.99
UPM-Kymmene shares for 1 Champion share
Ownership structure:
UPM-Kymmene shareholders 58%
Champion shareholders 42%
[Slide 13]
Premium over Champion's shareprice
1 day 19%
1 week 24%
1 month 29%
3 months 26%
6 months 23%]
[Slide 14]
SHARE PRICE RATIO CHAMPION/ UPM
[Graph presenting the share price ratio of Champion International Corporation
and UPM-Kymmene Corporation as follows:
May 1996 2,62
1997 2,18
1998 2,21
1999 1,45
2000 1,54]
[Slide 15]
ACCRETION ANALYSIS
Market Estimates for EPS (I.B.E.S.) in 2001
[Table reflecting the following information:
UPM-Kymmene 3.41
Champion 7.07
Champion
with synergy benefits
of USD 150 million 3.75
Accretion .24
10% 7.1%
The merger will be earnings accretive one year from the closing of the deal.]
[Slide 16]
SYNERGIES
[Table reflecting the following information:
Years from merger
1 2 3
Cumulative Synergies USD
A. Cost Savings 100 175 175
o purchasing
o manufacturing
o SGA
B. Revenue related synergies 50 100 150
o best practice in marketing
o additional volumes
Total 150 275 325]
[Slide 17]
Shares listed in Helsinki and New York (NYSE)
Champion shareholders will have the option of getting ADS's listed on the
New York Stock Exchange or shares listed on the Helsinki Stock Exchange.
[Slide 18]
It is proposed to the shareholders' meeting to have six additional members
on the Board:
From the present Champion Board
o Chairman and CEO Richard E. Olson
o Vice Chairman Kenwood D. Nichols
o and four others
[Slide 19]
THE MANAGEMENT TEAM
Chief Executive Officer Juha Niemala
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
Senior Vice President Kari Toikka
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
Group Senior Vice President Kari Makkonen
[Slide 20]
II Company presentation
[Slide 21]
Strategy
o take advantage of global growth opportunities
o focus on core businesses
o intensive co-operation with global and local customers
o emphasis on profitability
o responsible corporate citizen
o increase shareholder value as principal goal
[Slide 22]
Strengths
o Global presence
o Efficient production capacity
o Economies of scale
o High level of vertical integration
o Access to high quality human resources
[Slide 23]
Financial Objectives
ROE Riskfree Rate + 5%
ROCE Internally for its businesses, pre-tax return 15%
Gearing ratio below 100%
[Slide 24]
Dividend Policy
Annual dividend anticipated to average 1/3 of the annual profit
[Slide 25]
ENTERPRISE VALUE OF SELECTED PAPER COMPANIES
[Bar graph representing the following information :
Market Value (USD) Net Debt (USD)
International 17676 11837
Aqua 13164,3 5247
Weyerhaeuse 12099,4 4211
StoraEnso 10595,2 5585
Georgia-Paci 9504,9 5546
Smurfit-Stone 3686,7 5965
SCA 5846,8 2823,1
Williamette 4155,6 1706,1
Jefferson Sm 2851,2 2139,3
Mead 3419,3 1498,6]
[Slide 26]
WORLD'S LARGEST FOREST PRODUCT COMPANIES BY NET SALES
Consolidated Sales (billions USD), 1998
International Paper 19.541
CHAMPION 14.959 (UPM-Kymmene, 9306 + Champion, 5653))
Weyerhauser 13.62 (Weyerhauser, 10800 + McMillan Bloedel, 2819)
Georgia-Pacific 13.376
Stora Enso 9.366
Source: PPI Top 150, Pulp & Paper International, September 1999.]
[Slide 27]
WORLD'S LARGEST PAPER AND PAPER BOARD PRODUCERS 1999
[Bar graph representing the following information :
Paper Paperboard
International Paper (1) 7,1 6,6
StoraEnso 9,3 3,57
CHAMPION 11,698 0,372
Abitibi-Consolidated (2) 7,2 --
Smurfit-Stone-Consolidated 0,1 7,1
Georgia-Pacific (3) 3,2 3,6
Oji Paper 5 1,7
Nippon Group (4) 4,9 1,7
Weyerhaeuser (5) 1,9 3,8
Metsa-Seria, Myllykoski 4,4 1,25
(1) Incl. 1/2 of Carter-holt Harvey (50%); (2) incl. Donohue and 1/3 of PAPCO
and Boise Cascade marketing agreement; (3) incl. Georgia-Pacific Tissue; (4)
incl. 1.2 of NORPAC, joint venture (50%); (5) incl. MacBlo and 1/2 of NORPAC,
joint venture (50%).]
[Slide 28]
WORLD'S LARGEST PUBLICATIONS PAPER PRODUCERS 1999
[Bar graph representing the following information :
ctd sc news
Abitibi-Consolidated* -- 724 6330
CHAMPION 3399 1292 2015
StoraEnso 1615 1150 3175
Bowater 450 -- 2955
Norske -- 540 2250
Haindl** 810 560 1350
Fletcher Challenge -- 75 2350
MS Mylly 1280 777 --
Holmen -- 150 1210
Burgo*** 1215 -- --
* incl. Boise Cascade marketing agreement + 1/3 stake in PAPCO
** incl. Haindl's new PM in Augsburg on stream in June 2000
*** incl. Burgo's new PM at Verzuolo on stream in end 2001]
[Slide 29]
WORLD'S LARGEST FINE PAPER PRODUCERS 1999
[Bar graph reflecting the following information :
Uncoated Coated
(Capacity in `ooo tons)
International Paper 4010 680
CHAMPION 2472 1120
APP 2330 1250
Sappi 430 2815
StoraEnso 1340 1660
Georgia-Pacific 1955 55
MoDo+SCA 1240 500
Oji Paper 850 850
Metsa-Seria 525 1015]
[Slide 30]
LEADER POSITIONS IN OTHER CHOSEN PRODUCTS
[Table stating the following information:
Europe Global
Converting Materials
Label Papers and self-adhesive label 1 2
Siliconized papers 1 1-2
Industrial wrapping 1 --
Envelope papers 1 --
Wood Products
Plywood -- 4
Sawn Timber -- 5]
[Slide 31]
SALES BY BUSINESS
[Pie charts reflecting the following information:
Magazine 24.3%
Newsprint 7.6%
Converting 14.9%
Wood Products 15.8%
Chemical pulp 4.3%
Forest 3.9%
Energy 0.8%
Other 7.2%]
[Slide 32]
PAPER, BOARD & PULP PRODUCTION GEOGRAPHICALLY, % in 1999 (Proforma)
[Pie charts reflecting the following information:
Finland 43%
Other Europe 14%
North America 38%
Latin America 6%]
[Slide 33]
PERSONNEL 31.12.1999 (Proforma)
[Pie charts reflecting the following information:
Finland 43%
Other Europe 17%
North America 32%
Latin America 8%
Other 0%]
[Slide 34]
BALANCE SHEET (Proforma)
[Table reflecting the following information:
Million Euros
31.12.97 31.12.98 31.12.99
Assets
Non-Current assets 15 516 14 856 15 311
Stocks 1 458 1 486 1 427
Cash and Cash Equivalents 686 671 737
Other current assets 2 053 1 724 2 150
Total 19 713 18 737 19 625
Equity and liabilities
Shareholders' equity 7 468 7 675 8 382
Deferred tax liability 1 531 1 455 1 818
Provisions 171 179 199
Non-current liabilities 6 630 6 132 6 128
Current liabilities 3 913 3 296 3 098
Total 19 713 18 737 19 625
Excluding own shares
Rates of exchange 1,09686 1,16674 1,00460]
[Slide 35]
OPERATING PROFIT
[Bar graph representing the following information:
Capital Gains Write-Offs
1997 1130 -504
1998 1354 492
1999 1442 614]
[Slide 36]
[Miniaturized logo of post-merger Champion International Corporation-
The Premier Global Forest Products Company]
[Logo of UPM-Kymmene Corporation]
[Logo of post-merger Champion International Corporation]
[Logo of Champion International Corporation]
[Slide 37]
NET INTEREST-BEARING DEBT AND GEARING
[Bar graph reflecting the following information:
Debt Gearing
97 7221 96
98 6229 81
99 5278 63]
[Slide 38]
RETURN ON EQUITY
[Bar graph reflecting the following information:
97 7,5
98 9,7
99 9.7]
[Slide 39]
RETURN ON CAPITAL EMPLOYED
[Bar Graph reflecting the following information:
97 7,2
98 9,2
99 10,1]
[Slide 40]
EQUITY TO ASSETS RATIO
[Bar graph reflecting the following information:
97 37,9
98 41
99 42,8]
[Slide 41]
GROSS CAPITAL EXPENDITURE
[Bar graph reflecting the following information:
Depreciation % of turnover
97 1747 928 12,7
98 1076 917 8,1
99 927 921 6,9]
[Slide 42]
HOW TO DELIVER VALUE TO SHAREHOLDERS
o increased earnings and dividends
o improved growth opportunities
o strengthened position among the largest companies in the sector
[Slide 43]
TIME TABLE
Closing in May 2000
preceded by :
o shareholders' approval
o approval of requisite authorities