Filed by The Mead Corporation
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under
the Securities and Exchange Act of 1934
Subject Company: The Mead Corporation
Commission File No. 1-2267
The following press release was issued jointly by The Mead Corporation and
Westvaco Corporation on Wednesday, August 29, 2001:
MEAD AND WESTVACO AGREE TO COMBINE IN $10 BILLION MERGER
CREATES SIGNIFICANTLY STRONGER GLOBAL ORGANIZATION
WITH ENHANCED GROWTH AND COST SAVINGS OPPORTUNITIES
Dayton, OH and Stamford, CT - August 29, 2001 - The Mead Corporation (NYSE:MEA)
and Westvaco Corporation (NYSE:W) announced today that they have agreed to a
merger of equals creating a global company with leading positions in packaging,
coated and specialty papers, consumer and office products, and specialty
chemicals. The enterprise value of the combined organization is in excess of
$10 billion.
The new company, which will be called MeadWestvaco Corporation, will have
$8 billion in annual revenues, profitable growth platforms in the company's four
core businesses, and a strong balance sheet with substantial financial capacity.
In addition to significantly enhanced growth opportunities, the companies
together expect to achieve annual operating synergies of more than $325 million,
in full effect by the end of the second year. The transaction is expected to be
accretive to both companies.
Under the terms of the transaction, Mead shareholders will receive one share of
MeadWestvaco stock for each share of Mead stock, and Westvaco shareholders will
receive 0.97 shares of MeadWestvaco stock for each share of Westvaco stock. Mead
shareholders will also receive a special payment of $1.20 per share at closing.
The merger is structured as a stock-for-stock tax-free exchange, and will be
accounted for as a purchase transaction under the recent guidelines for business
combinations. The transaction has been approved by both Boards of Directors.
Jerry Tatar, Mead's Chairman, President and CEO, will serve as Chairman of the
combined company, and John A. Luke, Jr., Chairman and CEO of Westvaco, will
serve as Chief Executive Officer and President of MeadWestvaco. The Board of
Directors of MeadWestvaco will consist of equal representation from Mead and
Westvaco. The combined company will employ more than 32,000 people on six
continents and will be headquartered in Stamford, CT. The coated papers and
consumer and office products businesses, as well as significant corporate staff,
will be located in Dayton, OH.
Commenting on the merger, Jerry Tatar and John Luke, Jr. said, "This is a
strategically and financially compelling merger of equals that creates a
stronger company, well-positioned to compete in a global industry. In joining
these two organizations, we enhance our ability to deliver shareholder value,
offer customers a broader array of high-quality, value-added products, and
provide employees an opportunity to participate in an even more dynamic
enterprise. We look forward to working together to realize the full potential of
the new company."
Tatar and Luke added, "We are creating an exciting new business platform by
capitalizing on the strategic alignment and market leadership of both companies.
In packaging and coated papers, the two largest business segments, we will bring
together high quality manufacturing facilities with complementary product lines.
This will position MeadWestvaco exceptionally well to meet the needs of our
customers in a growing global marketplace. In addition, with a disciplined
approach to capital and a strategic focus on generating superior financial
returns, the new company will have the financial strength to pursue growth in
targeted markets and return capital to shareholders."
The combined company's expected $325 million in cost synergies will be
achieved principally in coated papers, packaging, purchasing and logistics,
corporate overhead and information technology. MeadWestvaco will conduct a
comprehensive review of its business lines with the objective of ensuring
that all businesses and assets meet rigorous parameters for strategic fit,
growth and returns. The company expects to take appropriate actions within
12 months.
The new company's annual common stock dividend is expected to be $0.92 per
share, providing a 24 cents per share annual dividend increase to Mead
shareholders and a consistent dividend to Westvaco shareholders, on an exchange
ratio-adjusted basis.
The companies expect to close the transaction, subject to customary shareholder
and regulatory approvals, in the fourth quarter of 2001.
Goldman, Sachs & Co. acted as financial adviser to Mead. Skadden, Arps, Slate,
Meagher & Flom LLP provided legal counsel to Mead. Greenhill & Co. and Morgan
Stanley acted as financial advisers to Westvaco. Wachtell, Lipton, Rosen & Katz
provided legal counsel to Westvaco.
A conference call discussing the transaction will be held on Wednesday,
August 29 at 9:30 a.m. EDT. The toll-free dial-in number is 888-348-6433 and
the number for participants located outside the U.S. is 212-896-6069. The
U.S. replay number is 800-633-8284 (858-812-6440 for international
participants) and for all participants wishing to listen to the replay the
access code is 19614599. The call will be available from 12:00 p.m. EDT on
August 29, 2001 to 12p.m. EDT on September 29, 2001.
A slide presentation and live audio webcast of the call will also be available
and archived on both company's Web sites at www.mead.com or www.westvaco.com.
Westvaco Corporation (www.westvaco.com), headquartered in Stamford, CT, is a
leading producer of paperboard and value-added packaging for media,
pharmaceutical and consumer markets, and is a major producer of coated papers
and specialty chemicals. The company operates in 21 countries, serves customers
in more than 70 countries, and employs approximately 17,000 people worldwide.
The Mead Corporation, a forest products company with $4.4 billion in annual
sales, is one of the leading North American producers of coated paper, coated
paperboard and consumer and office products, a world leader in multiple
packaging and specialty paper, and a producer of high-quality corrugating
medium. In management of the company's more than two million acres of forests,
Mead is committed to practicing principled forest stewardship and using
resources in a responsible and sustainable manner. For additional information
about Mead, visit the company's web site at www.mead.com
Additional Information
The Mead Corporation ("Mead") and Westvaco Corporation ("Westvaco")
will be filing a joint proxy statement/prospectus and other relevant
documents concerning the proposed transaction with the SEC. INVESTORS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors will be able to
obtain the documents free of charge at the SEC's website (www.sec.gov). In
addition, documents filed with the SEC by Mead or Westvaco with respect to
the proposed transaction may be obtained free of charge by contacting The
Mead Corporation, Mead World Headquarters, Courthouse Plaza Northeast,
Dayton, Ohio 45463, Attention: Mark Pomerleau, Director of Investor Relations
(tel.: (937) 495-3456), or Westvaco Corporation, One High Ridge Park,
Stamford, Connecticut 06905, Attention: John W. Hetherington (tel.: (203)
461-7500). INVESTORS SHOULD READ THE JOINT PROXY STATEMENT/PROSPECTUS
CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION.
Mead and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Mead shareholders. The
directors and executive officers of Mead include: John G. Breen, Duane E.
Collins, William E. Hoglund, James G. Kaiser, Robert J. Kohlhepp, John A.
Krol, Susan J. Kropf, Raymond W. Lane, Sue K. McDonnell, Timothy R. McLevish,
Ian Millar, Heidi G. Miller, Lee J. Styslinger, Jr., Jerome F. Tatar and J.
Lawrence Wilson. Collectively, as of January 31, 2001, the directors and
executive officers of Mead beneficially owned less than 1% of the outstanding
shares of Mead's common stock (excluding shares subject to options).
Shareholders may obtain additional information regarding the interests of
such participants by reading the joint proxy statement/prospectus when it
becomes available.
Westvaco and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Westvaco stockholders. The
directors and executive officers of Westvaco include: Michael E. Campbell,
Dr. Thomas W. Cole, Jr., David F. D'Alessandro, David L. Hopkins, Jr.,
Richard B. Kelson, Douglas S. Luke, William R. Miller, Jane L. Warner,
Richard A. Zimmerman, Rudolph G. Johnstone, Jr., John A. Luke, Jr., Robert C.
McCormack, David E. McIntyre, Karen R. Osar and Wendell L. Willkie, II.
Collectively, as of November 30, 2000, the directors and executive officers
of Westvaco beneficially owned approximately 4.8% of the outstanding shares
of Westvaco's common stock. Stockholders may obtain additional information
regarding the interests of such participants by reading the joint proxy
statement/prospectus when it becomes available.
Certain statements in this document and elsewhere by management of
the company that are neither reported financial results nor other
historical information are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such information
includes, without limitation, the business outlook, assessment of market
conditions, anticipated financial and operating results, strategies, future
plans, contingencies and contemplated transactions of the company. Such
forward-looking statements are not guarantees of future performance and are
subject to known and unknown risks, uncertainties and other factors which
may cause or contribute to actual results of company operations, or the
performance or achievements of each company, or industry results, to differ
materially from those expressed, or implied by the forward-looking
statements. In addition to any such risks, uncertainties and other factors
discussed elsewhere herein, risks, uncertainties and other factors that
could cause or contribute to actual results differing materially from those
expressed or implied for the forward-looking statements include, but are
not limited to, events or circumstances which affect the ability of Mead
and Westvaco to integrate successfully and achieve the anticipated benefits
of the transaction; competitive pricing for each company's products;
changes in raw materials; energy and other costs; fluctuations in demand
and changes in production capacities; changes to economic growth in the
U.S. and international economies, especially in Asia and Brazil; government
policies and regulations, including, but not limited to those affecting the
environment and the tobacco industry; and currency movements. Mead and
Westvaco undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Investors are advised, however, to consult any further
disclosures made on related subjects in each company's reports filed with
the SEC.
# # #
CONTACTS:
FOR MEAD: FOR WESTVACO:
INVESTORS INVESTORS
Mark Pomerleau Roger Holmes
937-495-3456 203-461-7537
MEDIA MEDIA
Doug Draper Robert Crockett
937-495-3319 203-461-7583
or or
Citigate Sard Verbinnen Abernathy MacGregor Group
Debbie Miller/Jim Barron Steve Frankel
212-687-8080 212-371-5999
AUGUST 28, 2001
[MEAD LOGO] [WESTVACO LOGO]
MEADWESTVACO FACT SHEET
-----------------------
MEADWESTVACO OVERVIEW
- ---------------------
Mead Corporation (NYSE:MEA) and Westvaco Corporation (NYSE:W) have agreed to a
merger of equals creating a global company with strong positions in packaging,
coated and specialty papers, consumer and office products, and specialty
chemicals. The new company, with $8 billion in annual revenues, will be a
significantly stronger global organization with enhanced growth and cost savings
opportunities. Following are some of the transaction highlights designed to
create shareholder value:
o A GLOBAL PRODUCER OF HIGH QUALITY, VALUE-ADDED PRODUCTS, WITH STRATEGIC
SCALE, A STRONG CUSTOMER FOCUS, AND GROWTH OPPORTUNITIES
o CREATES A STRONG COMPETITOR WITH POSITIONS AND FOCUSED PLATFORMS FOR GROWTH
IN KEY BUSINESS SEGMENTS
o CREATES OPPORTUNITY TO ACHIEVE $325+ MILLION OF ANNUAL COST SAVINGS AND
OPERATIONAL SYNERGIES
o PROVIDES FLEXIBILITY TO EVALUATE ASSETS THAT DO NOT MEET FINANCIAL OR
STRATEGIC CRITERIA
o STRENGTHENS FINANCIAL POSITION AND FINANCIAL RETURNS
o COMBINES INDUSTRY-LEADING, EXPERIENCED MANAGEMENT TEAMS
TRANSACTION SUMMARY
- -------------------
o TRANSACTION STRUCTURE: The merger is structured as a stock-for-stock
tax-free exchange and will be accounted for as purchase transaction under
the recent guidelines for business combinations
o EXCHANGE RATIOS: 1 MeadWestvaco share per Mead share / 0.97 MeadWestvaco
share per Westvaco share
o SPECIAL CASH PAYMENT: $1.20 per share for Mead shareholders paid as part of
merger consideration - taxable at capital gains rate
o MEADWESTVACO ANNUAL DIVIDEND: Expected to be $0.92 per share
o ANTICIPATED CLOSING: Fourth Quarter of 2001
MEADWESTVACO MAJOR BUSINESS SEGMENTS
- ------------------------------------
o PACKAGING: MeadWestvaco will be a unique global consumer packaging franchise
that focuses on providing high-value packaging to markets with dynamic
growth potential, including pharmaceuticals, cosmetics, media, food and
beverages, and personal care products. We will have capabilities in multiple
substrates and multiple printing techniques, which means we will be
"material neutral" when it comes to packaging design, allowing us to focus
on the best possible solution to our customers global packaging needs.
o COATED PAPERS: MeadWestvaco will be a strong global supplier of both free
sheet and groundwood grades, with a low-cost, well-invested manufacturing
base.
o CONSUMER AND OFFICE PRODUCTS: MeadWestvaco will be a leading manufacturer
and distributor of school supplies, commercial office products and time
management products, with nationally recognized brands, including
AT-A-GLANCE(R), Five Star(R), First Gear(R), Trapper Keeper(R),
Cambridge(R), Time Line(R) and YEAR-IN-A-BOX(R)
o SPECIALTY CHEMICALS: The business focuses on high-value, high-margin
businesses. For instance, we are the world leader in activated carbon used
for car and truck pollution control devices and we have a strong position in
asphalt emulsifiers, printing ink resins and dye dispersants.
ABOUT MEADWESTVACO
- ------------------
o MEADWESTVACO: Will be a global business with 100 operations and sales
locations in 34 countries on six continents with 7.7 million tons of paper
and paperboard capacity.
WHO WE ARE
- ----------
o MEAD: Forest products company with approximately $4.4 billion in annual
sales. One of the leading North American producers of coated paper, coated
paperboard and consumer and office products, world leader in multiple
packaging and specialty paper, and producer of high-quality corrugating
medium. Approximately 15,000 employees; offices and operations in 32
countries, including operational plants in Canada, France, Germany, Italy,
Japan, Mexico, the Netherlands, Spain, the UK, and the US.
o WESTVACO: Leading producer of paperboard and value-added packaging for
media, pharmaceutical and consumer markets, and major producer of coated
papers and specialty chemicals. Approximately $3.7 billion in annual sales.
Paper products include bleached paperboard, printing papers, folding
cartons, envelopes, corrugated packaging, saturating kraft, and flexible
packaging. Company operates in 21 countries, serves customers in more than
70 countries, employs approximately 17,000 people worldwide.
EMPLOYEES
- ---------
The combined company will employ more than 32,000 people on six continents.
MANAGEMENT / BOARD OF DIRECTORS
- -------------------------------
o JERRY TATAR, Chairman & CEO of Mead Corporation will serve as Chairman of
the combined company.
o JOHN A. LUKE, JR., Chairman & CEO of Westvaco Corporation will serve as
Chief Executive Officer and President of the combined company.
o The Board of Directors of MeadWestvaco will have equal representation from
both companies.
HEADQUARTERS
- ------------
The new company will be headquartered in Stamford, CT. The coated papers and
consumer and office products businesses, as well as significant corporate staff
departments will be located in Dayton, OH.
Additional Information: The Mead Corporation ("Mead") and Westvaco Corporation
("Westvaco") will be filing a joint proxy statement/prospectus and other
relevant documents concerning the proposed transaction with the SEC. INVESTORS
ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors will be able to
obtain the documents free of charge at the SEC's website (www.sec.gov). In
addition, documents filed with the SEC by Mead or Westvaco with respect to the
proposed transaction may be obtained free of charge by contacting The Mead
Corporation, Mead World Headquarters, Courthouse Plaza Northeast, Dayton, Ohio
45463, Attention: Mark Pomerleau, Director of Investor Relations (tel.: (937)
495-3456), or Westvaco Corporation, One High Ridge Park, Stamford, Connecticut
06905, Attention: John W. Hetherington (tel.: (203) 461-7500). INVESTORS SHOULD
READ THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT BECOMES AVAILABLE
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION. Mead and its directors and
executive officers may be deemed to be participants in the solicitation of
proxies from Mead shareholders. The directors and executive officers of Mead
include: John G. Breen, Duane E. Collins, William E. Hoglund, James G. Kaiser,
Robert J. Kohlhepp, John A. Krol, Susan J. Kropf, Raymond W. Lane, Sue K.
McDonnell, Timothy R. McLevish, Ian Millar, Heidi G. Miller, Lee J. Styslinger,
Jr., Jerome F. Tatar and J. Lawrence Wilson. Collectively, as of January 31,
2001, the directors and executive officers of Mead beneficially owned less than
1% of the outstanding shares of Mead's common stock (excluding shares subject to
options). Shareholders may obtain additional information regarding the interests
of such participants by reading the joint proxy statement/prospectus when it
becomes available. Westvaco and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from Westvaco
stockholders. The directors and executive officers of Westvaco include: Michael
E. Campbell, Dr. Thomas W. Cole, Jr., David F. D'Alessandro, David L. Hopkins,
Jr., Richard B. Kelson, Douglas S. Luke, William R. Miller, Jane L. Warner,
Richard A. Zimmerman, Rudolph G. Johnstone, Jr., John A. Luke, Jr., Robert C.
McCormack, David E. McIntyre, Karen R. Osar and Wendell L. Willkie, II.
Collectively, as of November 30, 2000, the directors and executive officers of
Westvaco beneficially owned approximately 4.8% of the outstanding shares of
Westvaco's common stock. Stockholders may obtain additional information
regarding the interests of such participants by reading the joint proxy
statement/prospectus when it becomes available.
[EQUITY PRESENTATION]
[Mead LOGO] [Westvaco LOGO]
"A COMBINATION TO CREATE
SHAREHOLDER VALUE"
JERRY TATAR JOHN A. LUKE, JR.
CHAIRMAN & CEO CHAIRMAN & CEO
MEAD CORPORATION WESTVACO CORPORATION
- -------------------------------------------------------------------------------
SAFE HARBOR
- -------------------------------------------------------------------------------
This presentation contains certain "forward-looking statements" within the
meaning of federal securities laws about our financial condition, results of
operations and business.
You can find many of these statements by looking for words such as "believes",
"expects", "anticipates", "estimates", or similar expressions used in this
presentation.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results, performance or achievements to
be materially different from our assumptions about future results, performance
or achievements expressed or implied by us in those statements. You are
cautioned not to place undue reliance on such statements, which speak only as of
the date of this presentation.
The cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that we or persons acting on our behalf may issue. We undertake no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this presentation or to reflect the
occurrence of unanticipated events. Our SEC filings discuss these assumptions;
please consult them.
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
A GLOBAL PRODUCER OF HIGH QUALITY, VALUE-ADDED PRODUCTS,
WITH STRATEGIC SCALE, A STRONG CUSTOMER FOCUS, SIGNIFICANT
GROWTH OPPORTUNITIES AND THE ABILITY TO DELIVER ENHANCED
SHAREHOLDER VALUE
|X| Creates a stronger, lower cost, higher return company better
positioned for accelerated growth
|X| Creates opportunity to achieve $325+ million of annual cost
savings and operational synergies
|X| Provides flexibility to evaluate assets that do not meet
financial or strategic criteria
|X| Strengthens financial position and financial returns
|X| Combines experienced management teams
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
TRANSACTION SUMMARY
- -------------------------------------------------------------------------------
TRANSACTION STRUCTURE
|X| Merger of Mead and Westvaco to form MeadWestvaco Corporation
|X| Tax-free stock exchange
|X| New purchase accounting
EXCHANGE RATIOS
|X| 1 MeadWestvaco share per Mead share
|X| 0.97 MeadWestvaco share per Westvaco share
OWNERSHIP
|X| 50.2% Mead shareholders
|X| 49.8% Westvaco shareholders
SPECIAL CASH PAYMENT
|X| $1.20 per Mead share
DIVIDEND
|X| $0.92 per share annually
CORPORATE HEADQUARTERS
|X| Stamford, CT
SIGNIFICANT STAFF & OPERATIONS
|X| Dayton, OH
BOARD
|X| 50/50 Composition
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
| |X| Creates a stronger, lower cost, higher return company better
| positioned for accelerated growth
- -------------------------------------------------------------------------------
|X| Creates opportunity to achieve $325+ million of annual cost
savings and operational synergies
|X| Provides flexibility to evaluate assets that do not meet
financial or strategic criteria
|X| Strengthens financial position and financial returns
|X| Combines experienced management teams
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
MEADWESTVACO COMPANY PROFILE
- -------------------------------------------------------------------------------
-----------------
MEADWESTVACO
Sales 8.0bn
EBITDA 1.6bn
-----------------
|
|
--------------------------------------------------------------
| | | |
--------------- -------------- --------------- --------------
PACKAGING PAPER CONSUMER AND SPECIALTY
OFFICE PRODUCTS CHEMICALS
Sales $3.8bn Sales $3.1bn Sales $0.8bn Sales $0.3bn
EBITDA 855mm EBITDA 586mm EBITDA 109mm EBITDA 88mm
--------------- ------------- --------------- --------------
Note: Based on FY 2000 data; segment sales and EBITDA exclude intersegment
transactions and other corporate items.
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
WORLDWIDE OPERATIONS
- -------------------------------------------------------------------------------
[World Map Showing Locations of Westvaco Operations in the following locations:
CONSUMER PACKAGING PLANTS
Birmingham, United Kingdom
Caguas, Puerto Rico
Chatham, New Jersey
Cleveland, Tennessee
Corby, United Kingdom
Dublin, Ireland
Enschede, The Netherlands
Franklin Park, Illinois
Freden, Germany
Garner, North Carolina
Greenville, Mississippi
Grover, North Carolina
Haarlem, The Netherlands
Jacksonville, Illinois
Kearny, New Jersey
Littlehampton, United Kingdom
London, United Kingdom
Louisa, Virginia
Louisville, Kentucky
Mebane, North Carolina
Melrose Park, Illinois
Memphis, Tennessee
Newark, Delaware
Norwich, Connecticut
Richmond, Virginia
Salzburg, Austria
Slough, United Kingdom
Svitavy, Czech Republic
Swindon, United Kingdom
Uden, The Netherlands
Valinhos, Brazil
Warrington, Pennsylvania
Weesp, The Netherlands
CORRUGATED BOX PLANTS
Blumenau, Brazil
Manaus, Brazil
Pacajus, Brazil
Valinhos, Brazil
ENVELOPE PLANTS
Atlanta, Georgia
Dallas, Texas
Enfield, Connecticut
Indianapolis, Indiana
Kenosha, Wisconsin
Los Angeles California
Springfield, Massachusetts
Williamsburg, Pennsylvania
Worcester, Massachusetts
FLEXIBLE PACKAGING PLANT
Springfield, Massachusetts
FORESTRY CENTERS
Rupert, West Virginia
Summerville, South Carolina
Tres Barras, Brazil
Wickliffe, Kentucky
LUMBER PLANT
Summerville, South Carolina
PRG EXTRUSION AND CONVERTING PLANTS
Low Moor, Virginia
Silsbee, Texas
PRG PAPERBOARD MILLS
Covington, Virginia
Evadale, Texas
North Charleston, South Carolina
Tres Barras, Brazil
Valinhos, Brazil
PRINTING PAPER MILLS
Luke, Maryland
Tyrone, Pennsylvania
Wickliffe, Kentucky
RESEARCH FACILITIES
Covington, Virginia
Laurel, Maryland
North Charleston, South Carolina
Summerville, South Carolina
SPECIALTY CHEMICAL PLANTS
Covington, Virginia
DeRidder, Louisiana
North Charleston, South Carolina
Wickliffe, Kentucky
PRINCIPAL SALES OFFICES
Atlanta, Georgia
Belem, Brazil
Belo Horizonte, Brazil
Bethlehem, Pennsylvania*
Blumenau, Brazil
Brussels, Belgium
Caguas, Puerto Rico
Cape Town, South Africa
Charlotte, North Carolina*
Chicago, Illinois
Cincinnati, Ohio
Cleveland, Ohio*
Coral Gables, Florida
Covington, Virginia
Culaba, Brazil
Curitiba, Brazil
Dallas, Texas
Danville, Illinois*
Denver, Colorado*
Detroit, Michigan
East Rutherford, New Jersey
Fortaleza, Brazil
Garner, North Carolina
Hong Kong
Houston, Texas
Indianapolis, Indiana
Jundial, Brazil
Kearny, New Jersey
Kenosha, Wisconsin
Londrina, Brazil
Los Angeles, California*
London, United Kingdom
Manaus, Brazil
Mebane, North Carolina
Melrose Park, Illinois
Mexico City, Mexico
Montreal, Canada
Mumbai, India
Newark, Delaware
New York, New York
North Charleston, South Carolina
Pacajus, Brazil
Petrolina, Brazil
Pittsburgh, Pennsylvania
Portland, Oregon
Porto Alegre, Brazil
Recife, Brazil
Richmond, Virginia
Rio de Janeiro, Brazil
St. Louis, Missouri
San Francisco, California
Seoul, South Korea
Shanghai, China
Singapore
Springfield, Massachusetts
Svitavy, Czech Republic
Swindon, United Kingdom
Sydney, Australia
Taipei, Taiwan
Tampa, Florida*
Tokyo, Japan
Toronto, Canada
Uberlandia, Brazil
Vila Velha, Brazil
Washington, DC
Wilmington, Delaware
Worcester, Massachusetts
* Envelope Print Centers
World map also shows Mead Operations in the following locations:
PAPER
Chillicothe, Ohio
Fremont, Ohio
Escanaba, Michigan
Rumford, Maine
GILBERT PAPER
Menasha, Wisconsin
Appleton, Wisconsin
SPECIALTY PAPER
South Lee, Massachusetts
Potsdam, New York
County Devon, England
PACKAGING
Lanett, Alabama
Atlanta, Georgia
Buena Park, California
Chicago, Illinois
Ajax, Ontario, Canada
Chateauroux, France
Trento, Italy
Roosendaal, The Netherlands
Trier-Ehrang, Germany
Bristol, England
Shimada, Japan
Bilbao, Spain
CONTAINERBOARD
7 plants within the United States in midwest and southern regions
Stevenson, Alabama
COATED BOARD
Phenix City, Alabama
Venlo, The Netherlands
Cottonton, Alabama
Greenville, Georgia
CONSUMER AND OFFICE PRODUCTS
7 manufacturing and 8 distribution locations throughout the
United States, one manufacturing and distribution location in Toronto,
Ontario, Canada, one manufacturing location in Nuevo Laredo, Mexico, and
one distribution location in Mexico City, Mexico]
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
[HIGH QUALITY, MULTINATIONAL CUSTOMERS]
- -------------------------------------------------------------------------------
[An assortment of Mead and Westvaco products as used by various Mead and
Westvaco customers are pictured.]
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
GLOBAL PACKAGING PLATFORM
- -------------------------------------------------------------------------------
$3.8 BILLION GLOBALLY INTEGRATED HIGH-VALUE PACKAGING BUSINESS
|X| Focus on high-margin, fast-growth markets
-- Food & beverage multi-packs -- Media & entertainment
-- Pharmaceutical -- Cosmetics
-- Healthcare -- Personal Care
|X| Enhanced growth and cross-selling opportunities
|X| Innovation with multiple substrates and process capabilities
-- 1.7MM tpy bleached board
-- 1.0MM tpy CNK
-- Value-added saturating kraft and unbleached paperboard
-- Containerboard business in the U.S. and Brazil
|X| Growth through package design capabilities and strategic acquisitions
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
COATED PAPER - A NEW LEADER
- -------------------------------------------------------------------------------
SIGNIFICANTLY ENHANCED EFFICIENCY,
QUALITY AND FINANCIAL RETURNS
|X| Opportunity for significant cost reduction and machine
rationalization
|X| Strong customer relationships through direct and merchant sales
channels
|X| North America's second-largest coated producer - 2.2 million tpy
|X| Broad product line
-- Full line of coated papers
-- Strong positions in carbonless and specialty papers
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
FIRST NAME IN CONSUMER & OFFICE PRODUCTS
- -------------------------------------------------------------------------------
A LEADING MANUFACTURER AND MARKETER OF BRANDED
SCHOOL SUPPLIES, COMMERCIAL OFFICE PRODUCTS, AND TIME
MANAGEMENT PRODUCTS IN NORTH AMERICA
|X| Strong growth driven by innovative product development
|X| Stable cash flow with attractive returns
|X| Superior marketing and distribution through multiple channels
|X| Nationally recognized brands
-- Mead(R) -- First Gear(R)
-- AT-A-GLANCE(R) -- Time Line(R)
-- Cambridge(R) -- Trapper Keeper(R)
-- Five Star(R) -- Columbian(R)
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
SPECIALTY CHEMICALS
- -------------------------------------------------------------------------------
HIGH-VALUE SPECIALTY CHEMICALS FOR GROWING GLOBAL
MARKETS
|X| High returns and strong stable cash flow
|X| Leading positions in multiple segments
-- Activated carbons for vehicle emissions control
-- Printing ink resins
-- Asphalt emulsifiers for high-growth
"cold paving" technology
-- Dye dispersants
|X| Strong growth driven by innovative product development
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
FOREST RESOURCES
- -------------------------------------------------------------------------------
STRONG, SECURE, HIGH QUALITY FIBER SUPPLY
|X| 3.5 million acres of sustainably managed forestlands
|X| Enhanced wood basket efficiencies
|X| Increased monetization opportunities
|X| Strong and innovative research capability driving
productivity and new commercial ventures
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
|X| Creates a stronger, lower cost, higher return company better
positioned for accelerated growth
- -------------------------------------------------------------------------------
| |X| Creates opportunity to achieve $325+ million of annual cost
| savings and operational synergies
- -------------------------------------------------------------------------------
|X| Provides flexibility to evaluate assets that do not meet
financial or strategic criteria
|X| Strengthens financial position and financial returns
|X| Combines experienced management teams
[MEADWESTVACO LOGO] 13
- -------------------------------------------------------------------------------
COMPELLING COST SAVINGS AND SYNERGIES
- -------------------------------------------------------------------------------
OPERATING SYNERGIES
|X| $325+ mm annual pre-tax operating synergies
|X| MeadWestvaco pro-forma EPS impact of $1.01(1)
TIMING
|X| 30% in year 1
|X| 75% in year 2
|X| Fully realized by end of year 2
CAPEX/WORKING CAPITAL
|X| Increased efficiency in combined capital spending
|X| Reduced working capital needs
REVENUE
|X| Significant cross-selling opportunities
(broader range of products and customers)
NOTE: (1) ASSUMING FULL $325 MM OF SYNERGIES AND A 38% MARGINAL TAX RATE.
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
TOP PRIORITY - REALIZE SYNERGIES
- -------------------------------------------------------------------------------
Initial Opportunities Identified
- --------------------------------
Paper $ 125 MM
Packaging 40
Purchasing & Logistics 70
Corporate Overhead / IT 90
--------------
Total $ 325+ MM
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
|X| Creates a stronger, lower cost, higher return company better
positioned for accelerated growth
|X| Creates opportunity to achieve $325+ million of annual cost
savings and operational synergies
- ---------------------------------------------------------------------------
| |X| Provides flexibility to evaluate assets that do not meet |
| financial or strategic criteria |
- ---------------------------------------------------------------------------
|X| Strengthens financial position and financial returns
|X| Combines experienced management teams
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
SHARPEN BUSINESS FOCUS
- -------------------------------------------------------------------------------
FOCUS ON BUSINESSES MEETING STRICT PARAMETERS FOR
STRATEGIC FIT, GROWTH AND FINANCIAL RETURNS
|X| Assets not meeting criteria will be restructured,
sold or closed
|X| Such assets may include:
-- Selected containerboard operations
-- Non-strategic woodlands
-- Selected paper operations
|X| Take appropriate actions within 12 months
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
|X| Creates a stronger, lower cost, higher return company better
positioned for accelerated growth
|X| Creates opportunity to achieve $325+ million of annual cost
savings and operational synergies
|X| Provides flexibility to evaluate assets that do not meet
financial or strategic criteria
- ------------------------------------------------------------------------
| |X| Strengthens financial position and financial returns |
- ------------------------------------------------------------------------
|X| Combines experienced management teams
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
COMMITMENT TO DELIVER SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
|X| Enhanced returns on capital and increased free cash flow
|X| Increase the return of capital to shareholders
-- Dividends
-- Share repurchases
|X| Reduce pro forma capital expenditures
-- Prudently assess growth capital
|X| Maintain strong investment-grade credit ratings
|X| Initial annual dividend of $0.92 per share
-- Increase of $0.24 for Mead shareholders
-- Maintains Westvaco on exchange ratio adjusted basis
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
PRO FORMA INCOME STATEMENT
- -------------------------------------------------------------------------------
2000(1)
-----------------------------------
W/OUT SYNERGIES W/SYNERGIES(2)
- -------------------------------------------------------------------------------
Sales $8,031 MM
EBITDA 1,613 1,938
EBIT 962
Net Income 407
EPS $2.04 $3.05
(1) Based on fiscal year end data
(2) Assumes $325 million of synergies and a 38% marginal tax rate
[MEADWESTVACO LOGO]
- ------------------------------------------------------------------------------
PRO FORMA BALANCE SHEET
- ------------------------------------------------------------------------------
MOST RECENT PERIOD(1)
-----------------------------------
W/OUT SYNERGIES WITH SYNERGIES
- ------------------------------------------------------------------------------
Total Assets(2) $13,101 MM
Total Debt 4,533
Shareholders' Equity(3) 5,285
Debt / Total Capitalization 40%
Debt / EBITDA(4) 3.2x 2.6x
(1) As of the most recent published 10Q
(2) Adjusted for new goodwill
(3) Assumes $1.20 special dividend to Mead shareholders
(4) Assumes $325 million of synergies.
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
|X| Creates a stronger, lower cost, higher return company better
positioned for accelerated growth
|X| Creates opportunity to achieve $325+ million of annual cost
savings and operational synergies
|X| Provides flexibility to evaluate assets that do not meet
financial or strategic criteria
|X| Strengthens financial position and financial returns
- ---------------------------------------------------------------------------
| |X| Combines experienced management teams |
- ---------------------------------------------------------------------------
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
EXPERIENCED LEADERSHIP TEAM
- -------------------------------------------------------------------------------
NAME RESPONSIBILITY
- ----------------------- ---------------------------------------------
Jerry Tatar Chairman
John Luke President & CEO
Jim Buzzard Integration
Karen Osar Chief Financial Officer
Ray Lane Primary Packaging
Richard Block Consumer Packaging
Rita Foley Consumer Packaging
Ian Millar Coated Papers
Tim McLevish Strategic Planning, Specialty Paper,
Consumer & Office Prods, and Forest Resources
Sam Torrence Specialty Chemicals
Wendell Willkie General Counsel
Mark Watkins Technology
Jim McGrane Information Resources
Linda Schreiner Human Resources
[MEADWESTVACO LOGO]
- -------------------------------------------------------------------------------
MEADWESTVACO:
A COMBINATION TO CREATE SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
--------------------------- | \
| Improved returns, lower | | \
| cost, higher growth | | \
| | | \
--------------------------- | \
--------------------------- | \
| $325+ MM annual | | \
| cost savings | | \
--------------------------- | \
--------------------------- | \ INCREASED
| | | \ SHAREHOLDER
| Evaluate non-core assets| | / VALUE
| | | /
--------------------------- | /
--------------------------- | /
| Increased financial | | /
| strength | | /
--------------------------- | /
--------------------------- | /
| Experienced | | /
| management team | | /
--------------------------- | /
[MEADWESTVACO LOGO]
The Mead Corporation ("Mead") and Westvaco Corporation ("Westvaco") will be
filing a joint proxy statement/prospectus and other relevant documents
concerning the proposed transaction with the SEC. INVESTORS ARE URGED TO READ
THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ON THE PROPOSED TRANSACTION. Investors will be able to obtain the
documents free of charge at the SEC's website (www.sec.gov). In addition,
documents filed with the SEC by Mead or Westvaco with respect to the proposed
transaction may be obtained free of charge by contacting The Mead Corporation,
Mead World Headquarters, Courthouse Plaza Northeast, Dayton, Ohio 45463,
Attention: Mark Pomerleau, Director of Investor Relations (tel.: (937)
495-3456), or Westvaco Corporation, One High Ridge Park, Stamford, Connecticut
06905, Attention: John W. Hetherington (tel.: (203) 461-7500). INVESTORS SHOULD
READ THE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN IT BECOMES AVAILABLE
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION. Mead and its directors and
executive officers may be deemed to be participants in the solicitation of
proxies from Mead shareholders. The directors and executive officers of Mead
include: John G. Breen, Duane E. Collins, William E. Hoglund, James G. Kaiser,
Robert J. Kohlhepp, John A. Krol, Susan J. Kropf, Raymond W. Lane, Sue K.
McDonnell, Timothy R. McLevish, Ian Millar, Heidi G. Miller, Lee J. Styslinger,
Jr., Jerome F. Tatar and J. Lawrence Wilson. Collectively, as of January 31,
2001, the directors and executive officers of Mead beneficially owned less than
1% of the outstanding shares of Mead's common stock (excluding shares subject to
options). Shareholders may obtain additional information regarding the interests
of such participants by reading the joint proxy statement/prospectus when it
becomes available. Westvaco and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from Westvaco
stockholders. The directors and executive officers of Westvaco include: Michael
E. Campbell, Dr. Thomas W. Cole, Jr., David F. D'Alessandro, David L. Hopkins,
Jr., Richard B. Kelson, Douglas S. Luke, William R. Miller, Jane L. Warner,
Richard A. Zimmerman, Rudolph G. Johnstone, Jr., John A. Luke, Jr., Robert C.
McCormack, David E. McIntyre, Karen R. Osar and Wendell L. Willkie, II.
Collectively, as of November 30, 2000, the directors and executive officers of
Westvaco beneficially owned approximately 4.8% of the outstanding shares of
Westvaco's common stock. Stockholders may obtain additional information
regarding the interests of such participants by reading the joint proxy
statement/prospectus when it becomes available.
[MEADWESTVACO LOGO] Source: Skadden, Arps
INVESTOR PRESENTATION SCRIPT
[Introduction from Mark Pomerleau]
COVER SLIDE [SPEAKER - JT]
- ---------------------------
Good morning. Thank you for joining us. John and I are very pleased to talk with
you today about the merger-of-equals of Mead and Westvaco to form MeadWestvaco.
The management teams of both companies are very excited about this transaction.
The merits of this transaction are very compelling for shareowners of both Mead
and Westvaco. In the next few minutes we hope to show you why.
This transaction creates a premier, global company with a value-added portfolio
of businesses, businesses with leading positions in packaging; coated and
specialty papers; consumer and office products; and specialty chemicals. The
merger establishes a new company with a strong financial position, an excellent
platform for accelerated growth and a commitment to aggressively pursue cost
savings and operating synergies. These advantages give this new company the
ability to create significant value for shareholders of Mead and Westvaco.
I'd like to now turn it over to John to say a few words.
[SPEAKER -JL]
Thank you Jerry. We at Westvaco are also very excited about this transaction and
look forward to describing its merits to you. As Jerry has said, and we will
discuss throughout this presentation, the combination of Mead and Westvaco has a
compelling strategic rationale and many significant benefits for shareholders,
customers, and employees. The combination positions MeadWestvaco's high-value
packaging and coated papers businesses to be among the leaders in their
industries and establishes excellent platforms for further growth and superior
financial returns.
MeadWestvaco will have market leadership, attractive global platforms, a
talented management team, a strong, multinational customer base, and low cost
production facilities. This foundation provides a sound platform from which to
grow and generate superior financial returns. Importantly, we expect to be able
to generate a significant amount of cost and operational synergies. Furthermore,
because the transaction is a stock-based merger-of-equals, our balance sheet
will remain very strong, giving us the ability to pursue these strategic growth
opportunities.
Now I'll turn it back to Jerry.
[SPEAKER - JT]
Working together to finalize the details of this transaction, we have also
learned that our values and ambitions are very similar. In recent weeks, our
people have been spending a lot of time together finalizing arrangements. During
that time, our teams have worked extraordinarily well together, adding to our
enthusiasm for the merits of this unique combination.
In our discussion today, we will focus on several topics. I will summarize the
terms of the merger and provide an overview of the strategic rationale for the
transaction. John will discuss the benefits and synergies derived from the
combined company in more detail. Karen Osar, MeadWestvaco's Chief Financial
Officer, will provide an overview of the financial policies and pro forma
financial profile of MeadWestvaco. We will then conclude with some summary
remarks and open the floor to your questions. But first let me begin with our
vision of MeadWestvaco.
For those of you following along with the slide presentation, you can now turn
to slide number 2.
SLIDE 2: A COMBINATION TO CREATE SHAREHOLDER VALUE
- ---------------------------------------------------
As John and I, and our respective management teams, first began to explore the
concept of a combination, we very quickly recognized the strong business fit and
strategic rationale for the merger. More importantly, we recognized the
commonality of vision shared by our respective organizations.
Our vision is to be a global producer of high quality, value-added products with
strategic scale, a strong customer focus, significant growth opportunities and
the ability to deliver enhanced shareholder value.
This transaction is about shareholder value. There are several key benefits that
this transaction will bring to shareholders.
First, the transaction creates a stronger, lower-cost, higher return company,
better positioned for accelerated growth.
Second, the combination allows us to achieve significant cost savings and
operational synergies, in the amount of at least $325 million per year on an
ongoing basis. We plan to fully achieve these synergies by the end of the second
year.
Third, we will take the opportunity provided by this transaction to evaluate all
of our businesses and assets. Those that don't meet our strict parameters for
strategic fit, targeted growth and financial returns will be restructured, sold
or closed.
Fourth, the transaction clearly strengthens our financial position. We will have
increased cash flow from synergies, asset sales, and reduced capital
expenditures.
Our improved cash flow, highly invested capital base, and relatively low debt
levels, will allow MeadWestvaco to return greater amounts of capital to
shareholders through dividends and share repurchases. The company will balance
return of capital to shareholders with debt reduction, and capital spending for
appropriate growth opportunities.
And, very importantly, one of the key advantages to our merger is the
combination of two strong management teams and tremendous workforces.
Moving to the next slide.
SLIDE 3: TRANSACTION SUMMARY
- ----------------------------
The transaction will be effected by a stock for stock exchange to form a new
company, MeadWestvaco Corporation. The transaction will be tax-free and
accounted for as a purchase under the new guidelines for business combinations.
We do not expect that there will be any significant ongoing amortization expense
created by the transaction.
Each share of Mead will be exchanged for one MeadWestvaco share and each
Westvaco share for 0.97 MeadWestvaco shares. This will result in a near
fifty-fifty ownership split. Additionally, at closing, Mead holders will receive
a special cash payment of $1.20 per Mead share.
The Board of Directors will be comprised of members split evenly between Mead
and Westvaco directors. Our Corporate headquarters will be Stamford,
Connecticut, and the coated papers division, consumer and office products
business, as well as significant staff, will be located in Dayton, Ohio.
We expect to close the transaction in the fourth calendar quarter of 2001, of
course, subject to customary shareholder and regulatory approvals.
Now, I'd like to turn it over to John to talk further about the key benefits of
the transaction.
SLIDE 5: MEADWESTVACO COMPANY PROFILE [SPEAKER - JL]
- ----------------------------------------------------
Thanks Jerry. MeadWestvaco will be a company with in excess of $10 billion of
total enterprise value, pro forma 2000 sales of more than $8 billion and 2000
EBITDA of greater than $1.6 billion. We will have four distinct segments, with
the largest areas clearly being the high-value packaging business and the coated
papers business. On a pro forma basis, Packaging had 2000 sales of $3.8 billion
and EBITDA of more than $850 million, while the Paper operation had sales of
approximately $3.1 billion and EBITDA of over $580 million. Other key businesses
include Consumer and Office Products and Specialty Chemicals. The company will
also have a substantial forest resource base.
SLIDE 6: WORLDWIDE OPERATIONS [JL]
- ----------------------------------
Slide six shows that MeadWestvaco will be a truly global business with 100
manufacturing facilities and sales offices in 34 countries on 6 continents and
7.7 million tons of primary paper and paperboard production capacity. The
combined global footprint and presence in global markets gives us the
opportunity to cross-sell our products through complementary sales offices and
distribution channels.
SLIDE 7: HIGH QUALITY, MULTINATIONAL CUSTOMER BASE
- --------------------------------------------------
We are each very proud of our high quality, multinational customer bases. Each
company brings long-term relationships with an extraordinary list of "blue-chip"
customers from around the world including such household names as
Anheuser-Busch, Miller, Coca-Cola, Pepsi, Procter & Gamble, Unilever, AOL
Time-Warner, Philip Morris, Sony, R.R. Donnelley and many others.
SLIDE 8: GLOBAL PACKAGING
- --------------------------
As we have mentioned, the business fit between Mead and Westvaco is excellent.
I'd like to take a moment to review our combined business platforms, starting
with Packaging which is on slide 8.
The combination of Mead's and Westvaco's businesses creates a packaging
powerhouse. Together, we are a unique global consumer packaging franchise. We
provide high-value and innovative packaging to market segments with dynamic and
international growth potential, including media and entertainment,
pharmaceutical and health care, cosmetics, food and beverages, and personal care
products.
We have capabilities in multiple substrates and multiple printing techniques,
which means we are "material and process neutral" when it comes to packaging
design. This is an important factor because it frees us to focus on the best
possible solutions for our customers' packaging needs.
We are also an integrated supplier, which means we can capture strong returns
through the combinations of low-cost, high-quality paperboard production
facilities, coupled with high value-added converting operations. The business
joins 1.7 million tons of bleached board production and 1.0 million tons of
coated natural kraft production with 55 converting facilities strategically
located around the world.
Also included in the Packaging business is 1.5 million tons of containerboard
production capacity and 11 container plants located both in the U.S. and at
Westvaco's Rigesa subsidiary in Brazil. We also have a leading position in
higher value saturating kraft and unbleached kraft paperboard.
In addition, future growth in the Packaging segment will come from continued
focus on high-growth, global end-use markets, cross-selling opportunities with
key multinational customers of both organizations, continued innovation of
proprietary package designs and systems, a clear focus on the customer, and
selected targeted acquisitions.
SLIDE 9: COATED PAPER - A NEW LEADER
- ------------------------------------
Now turning to coated paper. On their own, both Mead and Westvaco participate
strongly in the North American coated papers market. Together we will be a very
powerful combination with significantly enhanced efficiency, quality and
financial returns. We expect to achieve $125 million of cost savings and
operational synergies in this business.
We will be North America's second-largest producer of coated printing papers.
MeadWestvaco manufactures a broad line of coated freesheet and coated groundwood
papers. End-markets include commercial printing, book publishing, catalogs and
direct mail materials. We are unique in that we go to market through both
merchant sales and direct distribution. We currently operate six mills and
produce 1.6 million tons per year of coated freesheet and 615,000 tons per year
of coated groundwood papers. We are also a leading supplier of a number of
specialty paper grades including carbonless copy paper, specialty and industrial
papers and cotton content papers.
MeadWestvaco will have a portfolio of highly efficient, low cost paper machines.
By bringing together the Mead and Westvaco mills into a single integrated
system, we will achieve significant operational synergies. We intend to
permanently close less-efficient, higher-cost paper machines. At the same time,
through mill balancing and optimization of machine utilization, we expect to
maintain our current production levels but at a significantly lower total cost
position.
SLIDE 10: FIRST NAME IN CONSUMER AND OFFICE PRODUCTS
- -----------------------------------------------------
In Consumer and Office Products, MeadWestvaco is the leading manufacturer and
marketer of nationally branded school supplies, commercial office products, and
time management products. The business has strong growth driven by innovative
product development. Cash flows are stable and returns are attractive.
The Consumer and Office Products business benefits from superior marketing and
distribution through multiple channels. Among its highly recognizable brands are
AT-A-GLANCE, Cambridge, and Mead.
As a part of the transaction, Westvaco's Columbian Envelope brand will become a
part of the Consumer and Office Products business, achieving some managerial and
distribution synergies.
SLIDE 11: SPECIALTY CHEMICALS
- -----------------------------
MeadWestvaco will also have a high value, specialty chemicals business focused
on growing global markets. Like the Consumer and Office products business, this
business generates high returns and strong stable cash flows.
The Specialty Chemicals business enjoys leading positions in several markets. We
are the world leader in activated carbon used in car and truck emissions
systems. We have strong positions in printing ink resins and dye dispersants. In
the area of asphalt emulsifiers for use in cold paving applications, we have a
leading position in what is a very high growth area.
SLIDE 12: FOREST RESOURCES
- --------------------------
In addition to our four key operating business segments, we have a highly
valuable forest resource base. Together we own approximately 3.5 million acres
of highly productive timberlands in the Southeast, Midwest and Northeast. These
timberlands provide a secure source of high quality fiber to our mills.
The merger will allow us to achieve certain operating synergies and increase
already significant opportunities to monetize some non-strategic timberlands.
Our strong and innovative forest research capability will drive productivity
improvements and several new commercial ventures.
SLIDE 14: COMPELLING COST SAVINGS AND SYNERGIES
- -----------------------------------------------
I'd like to now take a look at the compelling cost savings and synergies,
which begins on slide 14. As a result of the strong product line and
geographic overlap of Mead and Westvaco, we expect to achieve a total of at
least $325 million of ongoing annual cost savings and operational
synergies. When fully realized, this will add approximately $1.00 per share
to earnings.
Joint teams from our two companies have worked hard over the past few weeks to
identify these synergy opportunities. We are very confident and committed to
achieving these levels, and quite possibly more. We will aggressively pursue the
rapid implementation of these cost savings and synergies, and anticipate that
the savings will be visible in our results: 30% in the first year, 75% in the
second year, with all the synergies realized by the end of the second year.
In addition to the significant ongoing cost savings and operational synergies,
we expect to achieve very significant benefits from several other sources. These
benefits would include a reduction in working capital and proceeds from the
potential sale of non-core businesses. Importantly, the capital needs of the
combined company will be less than the companies would need to spend on their
own.
We also expect increased revenue opportunities through cross-selling of products
and complementary sales teams.
SLIDE 15: TOP PRIORITY - REALIZE SYNERGIES
- -------------------------------------------
Realizing the synergies is a top priority.
Initial opportunities identified are as follows: savings from our paper
operations will total $125 million, from packaging $40 million, purchasing and
logistics $70 million, and from corporate overhead (including research and
information technology) another $90 million.
Savings in our paper operations, which represents a significant portion of the
overall synergies, will largely come from production optimization at the
company's mills. As I mentioned earlier, we have the ability to optimize the
production of coated paper across the combined mill system in a way that allows
us to maintain our current productive capacity, but to do so on fewer, more
efficient paper machines.
The significant savings that we have identified in the corporate overhead and
R&D functions will come, as you would expect, from the elimination of
overlapping functions in such areas as accounting, information systems and
legal.
SLIDE 17: SHARPEN BUSINESS FOCUS
- --------------------------------
Turning to slide 17. This merger provides us with an opportunity to sharpen our
focus on businesses meeting strict parameters for strategic fit, growth
opportunities, and financial returns. Assets determined to be inconsistent with
these criteria, or that may be of higher value to other potential owners, will
be restructured, sold or closed.
While no final determinations have been made, such assets may well include
selected containerboard operations, non-strategic woodlands, and selected
paper or converting operations. We expect to take appropriate action with
regard to these assets within next twelve months.
That said, each company has been thoughtfully reviewing opportunities to
achieve rightsizing and rationalization benefits and you may see
announcements to that effect in the next days and weeks.
With regard to certain of Westvaco's woodland operations, we have already
identified approximately 170,000 acres of non-strategic lands for disposition.
We plan to proceed quickly with these asset sales.
I will now ask Karen Osar, MeadWestvaco's Chief Financial Officer, to walk you
through the pro forma financial profile of MeadWestvaco.
SLIDE 19: COMMITMENT TO DELIVER SHAREHOLDER VALUE [SPEAKER - KAREN OSAR]
- ------------------------------------------------------------------------
Thank you John.
As I hope is clear by now, this transaction is about delivering value to
shareholders.
We believe this merger will enable us to enhance returns on capital and increase
free cash flow generation. We will use our higher free cash flow thoughtfully.
We intend to increase returns of capital to shareholders through dividends and
share repurchase, when appropriate.
We will be disciplined with regard to capital spending as our combined asset
base is well invested. On a pro forma basis, we see opportunities to lower
capital spending. Both companies are already spending below their DD&A levels.
We will be prudent when assessing growth opportunities. We remain committed to
strong investment-grade credit ratings.
With regard to the dividend, we will pay an initial annual dividend of 92 cents
per MeadWestvaco share. This equates to the Westvaco dividend on an exchange
ratio adjusted basis and represents a 24 cent per share increase to the Mead
annual dividend.
SLIDE 20: INCOME STATEMENT
- ---------------------------
MeadWestvaco is a powerful combination both operationally and financially. I
will provide you with a quick snapshot of the pro forma combined financials for
fiscal 2000. Please keep in mind, however, that these numbers are preliminary,
and have not been audited.
On a pro forma basis, sales in 2000 were $8 billion and EBITDA generated in 2000
was in excess of $1.6 billion. On a pro forma basis, MeadWestvaco would have
generated EPS of approximately $2.04 in 2000. However, the power of this
combination can be clearly seen in the potential impact of the full $325 million
of cost savings and synergies on our EPS. If the full run-rate of annual
synergies were achieved on a pro forma basis in 2000, our EPS would have
increased by $1.01 to $3.05. And, because this transaction is a
merger-of-equals, the synergies accrue more or less equally to the benefit of
both Westvaco and Mead shareholders.
SLIDE 21: BALANCE SHEET
- -----------------------
Also, because of the structure of the combination as a merger-of-equals
stock-for-stock exchange, MeadWestvaco's pro forma balance sheet remains
very strong as you can see in slide 21. We will have total debt of $4.5
billion on an asset base of more than $13 billion. Our pro forma
debt-to-capitalization will be 40%.
Now let me return the speaker's role to Jerry for some concluding remarks.
SLIDE 23: EXPERIENCED LEADERSHIP TEAM [SPEAKER: JT]
- ---------------------------------------------------
Thank you Karen. In the short time that our management teams have been working
together, we have been impressed by the excellent chemistry of this group. What
is also apparent is the depth and skill of the team. The merger of Mead and
Westvaco will bring together what we would say is a strong group of managers
that shares the vision and values that will make MeadWestvaco a true industry
leader.
In our new organization, the key members of our management team will be: Jim
Buzzard, who will lead the merger integration activities; Karen Osar will be
Chief Financial Officer; Ray Lane will lead the Packaging Resources Group;
Richard Block and Rita Foley will lead Consumer Packaging; Ian Millar will lead
the expanded Fine Papers business; Tim McLevish will head our Strategic Planning
effort and will also lead a diverse business group comprised of Specialty
Papers, Consumer and Office Products, and Forest Resources; Sam Torrence will
lead Specialty Chemicals; Wendell Willkie, General Counsel; Mark Watkins,
Technology; Jim McGrane, Information Resources; and Linda Schreiner, Human
Resources.
SLIDE 24: A COMBINATION TO CREATE SHAREHOLDER VALUE [SPEAKER - JT]
- ------------------------------------------------------------------
As you can tell, John and I, and the entire MeadWestvaco management team, are
extremely enthusiastic about the creation of this new company. We are eager to
get to your questions, so let me conclude with these four thoughts:
First, this merger creates a company with a superb portfolio of value-added
businesses, businesses with leading market positions in several important areas:
packaging, coated and specialty papers, consumer and office products and
specialty chemicals.
Second, the strategic fit of this new company creates a solid platform for
growth, growth through cross-marketing opportunities resulting from this
expanded company, organic growth through new product development, and growth
through targeted acquisitions.
Third, this new company begins on firm footing with a solid financial position.
We will build on this foundation, evaluating all of our businesses and assets to
ensure they meet rigorous standards for fit, growth and returns.
Finally, with an experienced management team, we have a unique opportunity to
create value for shareholders through an aggressive pursuit of cost savings and
operating synergies of at least $325 million annually. And we look forward to
reporting to you on our progress.
We believe the merits of this transaction are compelling, and the results will
be born out with increased value for shareholders of both Mead and Westvaco.
Now we will be happy to respond to your questions.
# # #
The Mead Corporation ("Mead") and Westvaco Corporation ("Westvaco")
will be filing a joint proxy statement/prospectus and other relevant
documents concerning the proposed transaction with the SEC. INVESTORS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ON THE PROPOSED TRANSACTION. Investors will be able to
obtain the documents free of charge at the SEC's website (www.sec.gov). In
addition, documents filed with the SEC by Mead or Westvaco with respect to
the proposed transaction may be obtained free of charge by contacting The
Mead Corporation, Mead World Headquarters, Courthouse Plaza Northeast,
Dayton, Ohio 45463, Attention: Mark Pomerleau, Director of Investor Relations
(tel.: (937) 495-3456), or Westvaco Corporation, One High Ridge Park,
Stamford, Connecticut 06905, Attention: John W. Hetherington (tel.: (203)
461-7500). INVESTORS SHOULD READ THE JOINT PROXY STATEMENT/PROSPECTUS
CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION.
Mead and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Mead shareholders. The
directors and executive officers of Mead include: John G. Breen, Duane E.
Collins, William E. Hoglund, James G. Kaiser, Robert J. Kohlhepp, John A.
Krol, Susan J. Kropf, Raymond W. Lane, Sue K. McDonnell, Timothy R. McLevish,
Ian Millar, Heidi G. Miller, Lee J. Styslinger, Jr., Jerome F. Tatar and J.
Lawrence Wilson. Collectively, as of January 31, 2001, the directors and
executive officers of Mead beneficially owned less than 1% of the outstanding
shares of Mead's common stock (excluding shares subject to options).
Shareholders may obtain additional information regarding the interests of
such participants by reading the joint proxy statement/prospectus when it
becomes available.
Westvaco and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Westvaco stockholders. The
directors and executive officers of Westvaco include: Michael E. Campbell,
Dr. Thomas W. Cole, Jr., David F. D'Alessandro, David L. Hopkins, Jr.,
Richard B. Kelson, Douglas S. Luke, William R. Miller, Jane L. Warner,
Richard A. Zimmerman, Rudolph G. Johnstone, Jr., John A. Luke, Jr., Robert C.
McCormack, David E. McIntyre, Karen R. Osar and Wendell L. Willkie, II.
Collectively, as of November 30, 2000, the directors and executive officers
of Westvaco beneficially owned approximately 4.8% of the outstanding shares
of Westvaco's common stock. Stockholders may obtain additional information
regarding the interests of such participants by reading the joint proxy
statement/prospectus when it becomes available.