- AbitibiBowater Will Be 3rd Largest Public Paper And Forest
Products Company In North America, 8th Largest In World -
Anticipated Annual Cost Synergies Of Approximately US$250 Million -
New Company Will Be Better Positioned To Meet Changing Customer
Needs And Compete More Effectively In An Increasingly Global Market
- Headquarters and Executive Office To Be In Montreal, Quebec; U.S.
Regional Manufacturing and Sales Office To Be In Greenville, SC -
John W. Weaver To Be Executive Chairman; David J. Paterson To Be
President And CEO MONTREAL, QC, and GREENVILLE, SC, Jan. 29
/PRNewswire-FirstCall/ -- Abitibi-Consolidated Inc.
(NYSE:ABYNYSE:TSX:NYSE:A) and Bowater Incorporated (NYSE:
BOWNYSE:TSX:NYSE:BWX) today announced a definitive agreement to
combine in an all-stock merger of equals. The combination will
create a new leader in publication papers - an operationally and
financially stronger company better able to meet changing customer
needs, compete more effectively in an increasingly global market,
adapt to lower demand for newsprint in North America, and deliver
increased value to shareholders. The combined company, which will
be called AbitibiBowater Inc., will have pro forma annual revenues
of approximately US$7.9 billion (C$9.3 billion), making it the 3rd
largest publicly traded paper and forest products company in North
America and the 8th largest in the world. The current combined
enterprise value of the two companies is in excess of US$8 billion
(C$9.4 billion). John W. Weaver, President and Chief Executive
Officer of Abitibi-Consolidated, will be Executive Chairman of
AbitibiBowater, and David J. Paterson, Chairman, President and
Chief Executive Officer of Bowater, will be President and Chief
Executive Officer of AbitibiBowater. The AbitibiBowater Board of
Directors will consist of 14 directors, seven from each company.
AbitibiBowater's headquarters and executive office will be located
in Montreal, Quebec, with a U.S. regional manufacturing and sales
office in Greenville, South Carolina. The company, which will be
incorporated in Delaware as the new parent company, will apply to
list its shares on the New York and Toronto stock exchanges. Under
the terms of the transaction, each common share of
Abitibi-Consolidated will be exchanged for 0.06261 common share of
AbitibiBowater, and each Bowater common share will be exchanged for
0.52 common share of AbitibiBowater. The exchange ratio will result
in 48% of AbitibiBowater being owned by former Abitibi-Consolidated
shareholders and 52% of AbitibiBowater being owned by former
Bowater shareholders. The combination is expected to generate
approximately US$250 million (C$295 million) of annualized cost
synergies from improved efficiencies in such areas as production,
selling, general and administrative (SG&A) costs, distribution
and procurement. These synergies are in addition to cost saving
initiatives already in process at both companies. Mr. Weaver said,
"The new AbitibiBowater will be a global leader headquartered in
Canada with a brighter future than either company would have on its
own. The combined company's ability to realize significant
synergies will increase shareholder value, improve our financial
flexibility and better position us to compete in today's
increasingly competitive global marketplace. Combining our
companies is also the best way to continue to contribute to the
local and regional economies of the communities in which we
operate." Mr. Paterson said, "This is a logical strategic step to
address the realities of today's marketplace. A more efficient
manufacturing platform will enable us to bring our customers better
product quality, new product innovation, and improved logistical
flexibility. Both Abitibi-Consolidated and Bowater shareholders
will benefit from the upside potential of a financially stronger
company that is able to generate significant cost synergies,
improve its balance sheet, and compete more effectively."
AbitibiBowater's product lines will include newsprint, uncoated and
coated mechanical papers, market pulp, and wood products. The
company will also be one of the world's leading consumers of
recycled newspapers and magazines as it builds on the existing
efforts of both companies to be leaders in environmentally
sustainable production practices. AbitibiBowater will own or
operate 32 pulp and paper facilities and 35 wood product facilities
located mainly in Eastern Canada and the Southeastern U.S. Pro
forma combined paper production capacity is approximately 11.3
million tonnes per year and about 3.1 billion board feet of lumber.
Transaction Details The exchanges of Abitibi-Consolidated and
Bowater common shares for AbitibiBowater common shares will be tax
deferred for U.S. resident holders of Abitibi-Consolidated and
Bowater common shares. Taxable Canadian resident holders of
Abitibi-Consolidated common shares may elect to receive on a
tax-deferred basis exchangeable shares of a Canadian subsidiary of
AbitibiBowater. AbitibiBowater will apply to list these
exchangeable shares on the Toronto Stock Exchange. These shares
will be exchangeable into AbitibiBowater common shares at the
option of their holders. For Abitibi-Consolidated, the combination
will be achieved through a Canadian Court-approved Plan of
Arrangement requiring the affirmative vote of the holders of
two-thirds of the Abitibi-Consolidated common shares present or
represented by proxy at a meeting of Abitibi-Consolidated
shareholders. For Bowater, the combination will be effected through
a Delaware merger requiring the affirmative vote of a majority of
all outstanding Bowater common shares at a meeting of Bowater
shareholders. The combination has been approved unanimously by the
Boards of Directors of both companies, which received fairness
opinions from their respective financial advisors. The combination
is subject to approval by the shareholders of both companies,
regulatory approvals, and customary closing conditions. It is
expected to be completed in the third quarter of 2007.
Abitibi-Consolidated and Bowater will continue to operate
separately until the transaction closes. For Abitibi-Consolidated,
CIBC World Markets Inc. and Credit Suisse Securities (USA) LLC
acted as financial advisors and Paul, Weiss, Rifkind, Wharton &
Garrison LLP, Davies Ward Phillips & Vineberg LLP, and McCarthy
Tetrault LLP acted as legal advisors. For Bowater, Goldman, Sachs
& Co. and UBS Investment Bank acted as financial advisors and
Troutman Sanders LLP, Ogilvy Renault LLP, and Mayer, Brown, Rowe
& Maw LLP acted as legal advisors. Investor Conference Call
------------------------ Abitibi-Consolidated and Bowater will hold
a conference call today at 9:00 a.m. EST for the investment
community. To access the call, please dial (866) 356-3095
(international: (617) 597-5391) and enter code 88036053. A replay
of the conference call will be available as soon as practicable
following the end of the call. To access the rebroadcast, please
dial (888) 286-8010 (international: (617) 801-6888) and enter code
66979865. The call will also be webcast on
http://www.abitibiconsolidated.com/, http://www.bowater.com/ and on
the transaction website: http://www.abitibibowater.com/. A slide
presentation to be referenced on the call will also be made
available on the same websites prior to the call. Participants not
able to listen to the live conference call can access a replay
along with the slide presentation, both of which will be archived
online. Press Conference ---------------- A press conference hosted
by Messrs. Weaver and Paterson will be held today at the Fairmont
Queen Elizabeth Hotel, in the Peribonka Room (900 Rene-Levesque
Blvd. West, Montreal, Quebec) at 11:00 a.m. EST. Media
representatives who are unable to attend in person may participate
by dialing (866) 202-1971 within North America and (617) 213-8842
outside North America and entering code 16060898. A live webcast of
the press conference will be available on the transaction website:
http://www.abitibibowater.com/, which may also be accessed via
links on both companies' websites,
http://www.abitibiconsolidated.com/, and http://www.bowater.com/.
An archived version of this webcast will also be posted on the
dedicated website. About Abitibi-Consolidated Inc.
Abitibi-Consolidated is a global leader in newsprint and commercial
printing papers as well as a major producer of wood products,
serving clients in some 70 countries from its 45 operating
facilities. Abitibi-Consolidated is among the largest recyclers of
newspapers and magazines in North America, diverting annually
approximately 1.9 million tonnes of waste paper from landfills. It
also ranks first in Canada in terms of total certified woodlands.
About Bowater Incorporated Bowater Incorporated is a leading
producer of coated and specialty papers and newsprint. In addition,
the company sells bleached market pulp and lumber products. Bowater
has 12 pulp and paper mills in the United States, Canada and South
Korea. In North America, it also owns two converting facilities and
10 sawmills. Bowater's operations are supported by approximately
835,000 acres of timberlands owned or leased in the United States
and Canada and 28 million acres of timber cutting rights in Canada.
Bowater operates six recycling plants and is one of the world's
largest consumers of recycled newspapers and magazines.
Forward-Looking Statements Any statements made regarding the
proposed transaction between Abitibi-Consolidated and Bowater, the
expected timetable for completing the transaction, benefits or
synergies of the transaction, and other statements contained in
this press release that are not historical fact are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, that are based on management's beliefs, certain
assumptions and current expectations. These statements may be
identified by the use of forward-looking terminology such as the
words "expects," "projects," "intends," "believes," "anticipates"
and other terms with similar meaning indicating possible future
events or actions or potential impact on the businesses or
shareholders of Abitibi-Consolidated and Bowater (separately and
together the "Companies"). Such statements include, but are not
limited to, statements about future financial and operating
results, Abitibi-Consolidated's and Bowater's plans, objectives,
expectations and intentions, the markets for Abitibi-Consolidated's
and Bowater's products, the future development of
Abitibi-Consolidated's and Bowater's business, and the
contingencies and uncertainties to which Abitibi-Consolidated and
Bowater may be subject and other statements that are not historical
facts. The press release also includes information that has not
been reviewed by the Companies' independent auditors. There is no
assurance the transaction contemplated in this press release will
be completed at all, or completed upon the same terms and
conditions described. All forward-looking statements in this press
release are expressly qualified by information contained in each
company's filings with regulatory authorities. The following
factors, among others, could cause actual results to differ
materially from those set forth in the forward-looking statements:
the ability to obtain required governmental or third party
approvals of the combination on the proposed terms and schedule and
without material concessions; the failure of Abitibi-Consolidated
or Bowater shareholders or stockholders to approve the combination;
the exercise by a material percentage of Abitibi-Consolidated
shareholders of their dissent rights; the risk that the businesses
will not be integrated successfully; the risk that the cost savings
and other expected synergies from the transaction may not be fully
realized or may take longer to realize than expected; and
disruption from the transaction making it more difficult to
maintain relationships with customers, employees or suppliers.
Additional factors that could cause Abitibi-Consolidated's and
Bowater's results to differ materially from those described in the
forward-looking statements can be found in the periodic reports
filed by Abitibi-Consolidated and Bowater with the SEC and the
Canadian securities commissions and available at the SEC's internet
site (http://www.sec.gov/) and on SEDAR (http://www.sedar.com/).
Neither Abitibi-Consolidated nor Bowater undertakes and each
specifically disclaims, any obligation to update or revise any
forward-looking information, whether as a result of new
information, future developments or otherwise. Additional
Information and Where to Find it In connection with the proposed
transaction, AbitibiBowater will file with the Securities and
Exchange Commission (SEC) a registration statement on Form S-4,
which will include a proxy statement/prospectus of Bowater and a
management information circular of Abitibi-Consolidated.
Shareholders are urged to read the joint proxy statement/
prospectus/ management information circular regarding the proposed
transaction when it becomes available, because it will contain
important information. Shareholders will be able to obtain a free
copy of the joint proxy statement/ prospectus/management
information circular, as well as other filings containing
information about Abitibi-Consolidated and Bowater, without charge,
at the SEC's internet site (http://www.sec.gov/) and on SEDAR
(http://www.sedar.com/). Copies of the joint proxy statement/
prospectus/management information circular and the filings with the
SEC and the Canadian securities commissions that will be
incorporated by reference in the joint proxy statement/
prospectus/management information circular can also be obtained,
without charge, by directing a request to Abitibi-Consolidated,
1155 Metcalfe Street, Suite 800, Montreal, Quebec, Canada H3B 5H2,
Attention: Investor Relations, (514) 394-2341,or to Bowater, 55 E.
Camperdown Way, Greenville, SC, USA, 29602, Attention: Investor
Relations, (864) 271-7733. Participants in the Solicitation
Abitibi-Consolidated, Bowater and their respective directors and
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
proposed combination. Information regarding Abitibi-Consolidated's
directors and executive officers is available in the 2005 Annual
Report on Form 40-F filed with the SEC by Abitibi-Consolidated on
March 31, 2006, and the management information circular with
respect to Abitibi-Consolidated's 2006 Annual Meeting of
Shareholders filed by Abitibi-Consolidated on SEDAR on March 31,
2006. Information regarding Bowater's directors and executive
officers is available in the Annual Report on Form 10-K filed with
the SEC by Bowater on March 13, 2006 and the Proxy Statement with
respect to Bowater's 2006 Annual Meeting of Stockholders filed by
Bowater with the SEC on April 12, 2006. Other information regarding
the participants in the proxy solicitation and a description of
their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/
prospectus/management information circular and other relevant
materials to be filed with the SEC and the Canadian securities
commissions when they become available. Contacts --------
Investors: Investors: Abitibi-Consolidated Bowater Francesco Alessi
Duane A. Owens Vice-President, Investor Relations Vice President
and and Taxation Treasurer (514) 394-2341 (864) 282-9488 Media:
Media: Abitibi-Consolidated Bowater Denis Leclerc Jim Barron/Dan
Gagnier/ Director, Public Affairs Kara Findlay (514) 394-3601 Sard
Verbinnen & Co (212) 687-8080 DATASOURCE: ABITIBI-CONSOLIDATED
INC. CONTACT: Investors: Abitibi-Consolidated: Francesco Alessi,
Vice-President, Investor Relations and Taxation, (514) 394-2341, ;
Bowater: Duane A. Owens, Vice President and Treasurer, (864)
282-9488, ; Media: Abitibi-Consolidated: Denis Leclerc, Director,
Public Affairs (514) 394-3601, ; Bowater: Jim Barron/Dan
Gagnier/Kara Findlay, Sard Verbinnen & Co, (212) 687-8080
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