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International Paper bids dlrs 6.2 billion for Champion |
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April 26, 2000
NEW YORK, APR 25 (AP) - International Paper Co., the world's leading paper maker, is bidding dlrs 6.2 billion in cash and stock to acquire rival Champion International Corp., hoping to unseat a competing offer from Finnish paper company UPM-Kymmene.
Champion, which is based in Connecticut, had agreed in February to be acquired by the giant European forestry company, but a subsequent 20 percent slide in UPM's share price caused the value of the UPM's all-stock offer to slip from dlrs 6.6 billion at the time it was announced to about dlrs 5 billion.
The offer announced this morning could trigger a bidding war in the normally staid paper industry, which has had several consolidations recently. Just five days after UPM's merger accord with Champion was announced in February, the Finnish-Swedish forest products company Stora Enso announced a deal to acquire Consolidated Papers Inc. of Wisconsin for about dlrs 4 billion.
International Paper is offering dlrs 43 in cash plus dlrs 21 in its own stock for each share of Champion, valuing the company at dlrs 64 a share, well above Champion's closing value of dlrs 51.43 3/4 Monday on the New York Stock Exchange and also above the value of UPM's offer, which is currently worth about dlrs 52.74 per Champion share.
As part of the deal, IP would also assume about dlrs 2.3 billion in debt from Champion. In a letter to Champion chairman Richard Olson, IP chairman John Dillon called his company's bid a "superior offer" and urged Champion's board to authorize management to enter talks "as soon as possible."
Champion released a statement this morning saying its board of directors would "consider the proposal and respond as appropriate." In Helsinki, UPM released a statement saying it would "consider the situation" created by the rival bid from IP.
Dillon, noting that the headquarters of the two companies are just a few miles apart, said he believed the two companies already had similar cultures and could be integrated easily.
"Many of us have enjoyed close friendships with Champion employees at all levels over many years," Dillon said in the letter. He also said he did not anticipate any regulatory hurdles to the merger.
IP said it expected that a merger with Champion would result in annual cost savings of dlrs 425 million as manufacturing operations are consolidated, and overhead costs are cut, mainly in North America.
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