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Filed On 7/14/05 9:20pm ET · SEC File 333-124946 · Accession Number 950137-5-8716
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
7/15/05 Acco Brands Corp S-4/A 15:466 950137
Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction · Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4/A Amendment to Registration Statement HTML 2,548K
2: EX-4.1 Form of Rights Agreement HTML 176K
3: EX-5.1 Opinion of Chadbourne & Parke Llp HTML 19K
4: EX-8.1 Opinion of Chadbourne & Parke Llp HTML 18K
5: EX-8.2 Opinion of Skadden, Arps, Slate, Meagher & Flom HTML 17K
Llp
6: EX-10.3 Form of Tax Allocation Agreement HTML 124K
7: EX-10.4 Form of Tax Allocation Agreement HTML 151K
8: EX-10.5 Form of Transition Services Agreement HTML 72K
9: EX-10.17 Amended and Restated Senior Secured Credit HTML 149K
Facilities Commitment Letter
10: EX-23.1 Consent of Pricewaterhousecoopers Llp HTML 7K
11: EX-23.2 Consent of Pricewaterhousecoopers Llp HTML 8K
12: EX-99.2 Form of Proxy Card for the Special Meeting of HTML 13K
Stockholders
13: EX-99.3 Form of Chairman Letter to the Stockholders HTML 16K
14: EX-99.4 Form of Notice of Special Meeting of Stockholders HTML 14K
15: EX-99.5 Form of Chairman Letter to the Stockholders HTML 11K
| Page | (sequential) | | | | (alphabetic) | Top |
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- Alternative Formats (RTF, XML, et al.)
- Accounting Treatment
- ACCO World Corporation Financial Statements
- Additional Agreements Related to the Spin-Off and the Merger
- Background of the Merger
- Certain United States Federal Income Tax Consequences of the Spin-Off and the Merger
- Comparative Per Share Information
- Comparison of Stockholder Rights
- Compensation of Executive Officers of ACCO Brands Corporation
- Date, Time and Place
- Description of the Capital Stock of ACCO Brands Corporation
- Disclosure Regarding Forward-Looking Statements
- Distribution Agreement, The
- Employee Matters Agreement
- Experts
- Federal Securities Law Consequences; Resale Restrictions
- Financing of ACCO Brands Corporation
- Fortune Brands/ ACCO World
- Fortune Brands Reasons for the Spin-Off and the Merger
- Future Stockholder Proposals
- GBC Special Meeting, The
- GBC s Reasons for the Merger
- General Binding Corporation Market Price and Dividend Information
- Information About ACCO Brands Corporation
- Information About ACCO World Corporation
- Information About General Binding Corporation
- Interests of Certain Persons in the Merger
- Lane Industries/ GBC
- Legal Matters
- Listing and Trading of ACCO Brands Common Stock
- Management of ACCO Brands Corporation
- Management s Discussion and Analysis of Financial Condition and Results of Operations of ACCO World Corporation
- Matters for Consideration
- Merger Agreement, The
- No Dissenters or Appraisal Rights
- Opinion of Deutsche Bank Securities, Inc
- Opinion of Goldman, Sachs & Co
- Opinions of GBC s Financial Advisors
- Other Matters
- Ownership of ACCO Brands Common Stock
- Questions and Answers About the Transactions
- Registration Rights Agreement
- Regulatory Approval
- Related Party Transactions
- Required Vote
- Revocation of Proxies
- Risk Factors
- Selected Historical Financial Data of ACCO World Corporation
- Selected Historical Financial Information of ACCO World Corporation
- Selected Historical Financial Information of General Binding Corporation
- Selected Unaudited Pro Forma Combined Condensed Financial Information
- Solicitation of Proxies
- Special Meeting Record Date; Voting Information; Quorum
- Spin-Off Transaction, The
- Structure of the Spin-Off and the Merger
- Summary
- Table of Contents
- Tax Allocation Agreements
- The Distribution Agreement
- The GBC Special Meeting
- The Merger Agreement
- The Spin-Off Transaction
- The Transactions
- Transactions, The
- Transition Services Agreement
- Unaudited Pro Forma Combined Condensed Financial Data of ACCO Brands Corporation
- Voting Agreement
- Voting by GBC Management and Lane Industries, Inc
- Voting by Proxy
- Where You Can Find More Information
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| 1 | 1st Page
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| " | Table of Contents
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| " | Questions and Answers About the Transactions
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| " | Summary
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| " | Selected Historical Financial Information of ACCO World Corporation
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| " | Selected Historical Financial Information of General Binding Corporation
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| " | Selected Unaudited Pro Forma Combined Condensed Financial Information
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| " | Comparative Per Share Information
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| " | General Binding Corporation Market Price and Dividend Information
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| " | Disclosure Regarding Forward-Looking Statements
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| " | Risk Factors
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| " | The GBC Special Meeting
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| " | Date, Time and Place
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| " | Matters for Consideration
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| " | Special Meeting Record Date; Voting Information; Quorum
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| " | Required Vote
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| " | Voting by Proxy
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| " | Revocation of Proxies
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| " | Voting by GBC Management and Lane Industries, Inc
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| " | No Dissenters or Appraisal Rights
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| " | Solicitation of Proxies
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| " | The Transactions
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| " | Structure of the Spin-Off and the Merger
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| " | Background of the Merger
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| " | GBC s Reasons for the Merger
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| " | Fortune Brands Reasons for the Spin-Off and the Merger
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| " | Opinions of GBC s Financial Advisors
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| " | Opinion of Goldman, Sachs & Co
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| " | Opinion of Deutsche Bank Securities, Inc
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| " | Regulatory Approval
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| " | Accounting Treatment
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| " | Interests of Certain Persons in the Merger
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| " | Federal Securities Law Consequences; Resale Restrictions
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| " | Listing and Trading of ACCO Brands Common Stock
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| " | The Merger Agreement
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| " | The Spin-Off Transaction
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| " | The Distribution Agreement
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| " | Additional Agreements Related to the Spin-Off and the Merger
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| " | Voting Agreement
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| " | Registration Rights Agreement
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| " | Employee Matters Agreement
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| " | Tax Allocation Agreements
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| " | Fortune Brands/ ACCO World
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| " | Lane Industries/ GBC
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| " | Transition Services Agreement
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| " | Financing of ACCO Brands Corporation
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| " | Certain United States Federal Income Tax Consequences of the Spin-Off and the Merger
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| " | Information About ACCO Brands Corporation
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| " | Information About ACCO World Corporation
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| " | Information About General Binding Corporation
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| " | Selected Historical Financial Data of ACCO World Corporation
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| " | Management s Discussion and Analysis of Financial Condition and Results of Operations of ACCO World Corporation
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| " | Unaudited Pro Forma Combined Condensed Financial Data of ACCO Brands Corporation
|
| " | Management of ACCO Brands Corporation
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| " | Related Party Transactions
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| " | Compensation of Executive Officers of ACCO Brands Corporation
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| " | Ownership of ACCO Brands Common Stock
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| " | Description of the Capital Stock of ACCO Brands Corporation
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| " | Comparison of Stockholder Rights
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| " | Legal Matters
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| " | Experts
|
| " | Other Matters
|
| " | Future Stockholder Proposals
|
| " | Where You Can Find More Information
|
| " | ACCO World Corporation Financial Statements
|
This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]
Subject to completion, as filed with the Securities and
Exchange Commission on July 15, 2005
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ACCO World Corporation
(to be renamed ACCO Brands Corporation)
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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2782 |
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36-2704017 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(Primary Standard Industrial
Classification Code Number) |
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(I.R.S. Employer
Identification Number) |
300 Tower Parkway
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive
Offices)
ACCO World Corporation
300 Tower Parkway
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
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Edward P. Smith, Esq.
A. Robert Colby, Esq.
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-5100 |
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Mark A. Roche, Esq.
Senior Vice President,
General Counsel and Secretary
Fortune Brands, Inc.
300 Tower Parkway
Lincolnshire, Illinois 60069
(847) 541-9500 |
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Steven Rubin, Esq.
Vice President, Secretary and
General Counsel
General Binding Corporation
One GBC Plaza
Northbrook, Illinois 60062
(847) 272-3700 |
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William R. Kunkel, Esq.
Skadden, Arps, Slate,
Meagher & Flom LLP
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700 |
Approximate date of commencement of proposed sale to
public: As soon as practicable following the effective date
of this Registration Statement and the date on which all other
conditions to the merger of Gemini Acquisition Sub, Inc. with
and into General Binding Corporation pursuant to the merger
agreement described in the enclosed document have been satisfied
or waived.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The information in
this proxy statement/ prospectus-information statement is not
complete and may be changed. ACCO World Corporation may not
distribute or issue the shares of ACCO Brands Corporation common
stock being registered pursuant to this registration statement
until the registration statement filed with the Securities and
Exchange Commission is effective. This proxy statement/
prospectus-information statement is not an offer to distribute
these securities and ACCO World Corporation is not soliciting
offers to receive these securities in any state where such offer
or distribution is not
permitted.
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One GBC Plaza
[ • ],
2005
To the Stockholders of General Binding Corporation:
We cordially invite you to attend a special meeting of GBC
stockholders to be held on
[ • ],
2005 at our headquarters located at One GBC Plaza, Northbrook,
Illinois, at
[ • ],
local time. At the special meeting, we will ask you to consider
and vote on a proposal to adopt the Agreement and
Plan of Merger
we entered into as of
March 15, 2005 with Fortune Brands,
Inc., ACCO World Corporation and Gemini Acquisition Sub, Inc.,
pursuant to which Gemini Acquisition Sub will merge into GBC,
and to approve the merger. As a result of the merger, GBC will
become a wholly-owned subsidiary of ACCO World. The merger will
take place immediately after Fortune Brands spins-off its shares
of ACCO World to its stockholders. ACCO World will be renamed
“ACCO Brands Corporation” prior to the merger. A
condition to the completion of the merger is that the stock to
be received by GBC stockholders be approved for listing on the
New York Stock Exchange. ACCO World will apply to list the ACCO
Brands common stock on the New York Stock Exchange under the
trading symbol
“ABD”.
As GBC stockholders, you will be entitled to receive
1 share of common stock of ACCO Brands Corporation (and one
associated preferred share purchase right) in exchange for each
share of GBC common stock or GBC Class B common stock that
you own. As a result, ACCO Brands will issue approximately
16,966,857 million shares of ACCO Brands common stock in
the merger based on the number of shares of GBC common
stock and Class B common stock outstanding on
July 11,
2005. Immediately following the completion of the merger, GBC
stockholders will hold 34% of the shares of ACCO Brands common
stock on a fully diluted basis.
The GBC board of directors has carefully reviewed and
considered the terms and conditions of the merger agreement.
Based on its review, the GBC board of directors unanimously
determined that the merger is in the best interests of GBC and
its stockholders, approved the merger agreement and recommends
that you vote “FOR” adoption of the merger agreement
and approval of the merger.
Your vote is very important. We cannot complete the
merger unless the merger agreement is adopted by the affirmative
vote of the holders of a majority of the voting power of the
outstanding shares of GBC common stock and Class B common
stock entitled to vote at the special meeting. Only stockholders
who owned shares of GBC stock at the close of business on
June 23, 2005 will be entitled to vote at the special
meeting.
Whether or not you plan to be present at the special
meeting, please complete, sign, date and return the enclosed
proxy card. If you hold your shares in
“street
name”, you should instruct your broker how to vote in
accordance with your voting instruction form. If you do not
submit your proxy, instruct your broker how to vote your shares,
or vote in person at the special meeting, it will have the same
effect as a vote against adoption of the merger agreement and
approval of the merger.
Pursuant to a voting agreement among Fortune Brands, ACCO World
and Lane Industries, Inc., Lane Industries has agreed, subject
to limited exceptions, to vote, and granted to Fortune Brands a
proxy to vote, all its shares of GBC stock for the adoption of
the merger agreement and approval of the merger. By virtue of
its ownership of GBC stock as described in the accompanying
proxy statement/ prospectus-information statement, Lane
Industries controls approximately 86.7% of the voting power of
the shares eligible to vote at the meeting. Accordingly, the
voting power of Lane Industries’ shares is sufficient to
adopt the merger agreement and approve the merger and, as a
result of Lane Industries’ obligations under the voting
agreement, the adoption of the merger agreement and approval of
the merger is practically assured.
The accompanying proxy statement/ prospectus-information
statement explains the spin-off, the merger and the merger
agreement and provides specific information concerning the
special meeting. Please review this document carefully. You
should consider the matters discussed under “Risks Relating
to the Spin-Off and the Merger” on
pages 15 — 19 of the accompanying proxy
statement/ prospectus-information statement before voting.
On behalf of our board of directors, I thank you for your
support and appreciate your consideration of this matter.
Neither the Securities and Exchange Commission nor any state
securities regulator has approved or disapproved the merger
described in this proxy statement/ prospectus-information
statement or the ACCO Brands Corporation common stock to be
issued in connection with the spin-off and merger, or determined
if this proxy statement/ prospectus-information statement is
accurate or adequate. Any representation to the contrary is a
criminal offense.
This proxy statement/ prospectus-information statement is dated
[ • ],
2005,
and is first being mailed to stockholders on or about
[ • ],
2005.
[•], 2005
To the Stockholders of Fortune Brands, Inc.:
On
March 16, 2005, we announced that we would spin-off to our
stockholders our ACCO World Corporation office products unit,
and that ACCO World would then merge with General Binding
Corporation (GBC). After the spin-off and merger, ACCO World,
which will be renamed
“ACCO Brands Corporation,” will
be a separately traded public company that will own and operate
the combined businesses of ACCO and GBC.
We currently estimate that one share of ACCO Brands common stock
will be distributed for each 4.32 shares of Fortune Brands
common stock held on the distribution date. You and all other
holders of Fortune Brands common stock will not be required to
pay for the shares of ACCO Brands common stock you receive and
you will also retain all of your shares of Fortune Brands stock.
Immediately following the merger, Fortune Brands stockholders
and ACCO World’s current minority stockholder will together
own 66%, and GBC’s stockholders will own 34%, of the shares
of common stock of ACCO Brands on a fully diluted basis. ACCO
World will apply to list ACCO Brands common stock on the New
York Stock Exchange under the trading symbol “ABD”.
This transaction represents a significant strategic step that
will sharpen Fortune Brands’ focus on its higher return
Home & Hardware, Spirits & Wine and Golf
businesses. While we believe the spin-off will also allow
Fortune Brands stockholders to benefit from the success and
upside potential of ACCO Brands, there are risks that are
described under “Risks Relating to the Spin-Off and the
Merger” on pages 15-19 of the accompanying proxy
statement/prospectus-information statement.
Fortune Brands’ board of directors has determined that the
spin-off of ACCO World and the combination of ACCO World with
GBC is advisable and in the best interests of Fortune Brands and
its stockholders, and has approved the proposed transaction. You
need not take any action to participate in the spin-off or the
merger — no vote of Fortune Brands stockholders is
required in connection with this transaction.
The following document constitutes an information statement of
Fortune Brands relating to the spin-off and contains important
information describing the terms of the spin-off, the merger,
ACCO World, GBC and the combined business of ACCO Brands. We
encourage you to read it carefully.
We look forward to completing the spin-off and merger this
summer and to the exciting opportunities it presents for our
stockholders.
Sincerely,
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Norman H. Wesley |
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Chairman of the Board and |
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Chief Executive Officer |
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NOTE ON REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/ prospectus-information statement
incorporates by reference important business and financial
information about General Binding Corporation from documents
that are not included in or delivered with this proxy statement/
prospectus-information statement. This information is available
to you without charge upon your written or oral request. You can
obtain the
documents incorporated by reference in this proxy
statement/ prospectus-information statement by requesting them
in writing or by telephone from General Binding Corporation at
the following address and telephone number:
If you would like to request documents, please do so by
[ • ],
2005 in order to receive them before the special meeting.
General Binding Corporation
One GBC Plaza
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD
[ • ],
2005
To the Stockholders of General Binding Corporation:
A special meeting of stockholders of General Binding Corporation
will be held on
[ • ],
2005 at our headquarters located at One GBC Plaza, Northbrook,
Illinois, at
[ • ],
local time. The special meeting is being held for the following
purposes:
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(1) |
To consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated as of March 15, 2005, by and among
Fortune Brands, Inc., ACCO World Corporation, Gemini Acquisition
Sub, Inc. and General Binding Corporation, and approve the
merger provided for by the merger agreement, pursuant to which
(i) Gemini Acquisition Sub, Inc., a wholly-owned subsidiary
of ACCO World Corporation, will merge with and into General
Binding Corporation, after which General Binding Corporation
will become a wholly-owned subsidiary of ACCO World Corporation
(which will have been renamed ACCO Brands Corporation) and
(ii) each outstanding share of GBC common stock and
Class B common stock will be converted into the right to
receive one share of ACCO Brands common stock. |
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(2) |
To transact any and all other business that may properly come
before the special meeting or any adjourned session of the
special meeting. |
Only stockholders who owned shares of GBC common stock or
Class B common stock at the close of business on
June 23, 2005, the record date for the special meeting, are
entitled to notice of, and to vote at, the special meeting and
any adjournment or postponement of it. A stockholders’ list
will be available for inspection by any stockholder entitled to
vote at the special meeting during ordinary business hours at
GBC’s principal offices for ten days prior to the special
meeting as well as at the location of the special meeting for
the entire time of the special meeting.
The merger agreement and the merger, along with the other
transactions which would be effected in connection with the
merger, are described more fully in the attached proxy
statement/ prospectus-information statement, and we urge you to
read it carefully. GBC stockholders have no dissenters’
rights under Delaware law in connection with the merger.
THE GENERAL BINDING CORPORATION BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT GBC STOCKHOLDERS VOTE FOR THE
ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER.
To ensure that your shares of GBC common stock or Class B
common stock are represented at the special meeting, please
complete, date and sign the enclosed proxy card and mail it
promptly in the envelope provided. Any executed but unmarked
proxy cards will be voted FOR adoption of the merger
agreement and approval of the merger. GBC stockholders may
revoke their proxy in the manner described in the accompanying
proxy statement/ prospectus-information statement before it has
been voted at the special meeting.
Northbrook, Illinois
[ • ],
2005
YOUR VOTE IS VERY IMPORTANT
THE MERGER CANNOT PROCEED
UNLESS THE MERGER AGREEMENT AND THE MERGER ARE ADOPTED AND
APPROVED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF
THE VOTING POWER OF THE OUTSTANDING SHARES OF GBC COMMON STOCK
AND CLASS B COMMON STOCK ENTITLED TO VOTE AT THE SPECIAL
MEETING VOTING TOGETHER AS A SINGLE CLASS. WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE SPECIAL MEETING, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
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ii
QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS
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Q: |
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What are General Binding Corporation stockholders being asked
to vote on at the special meeting? |
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A: |
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General Binding Corporation (also referred to herein as
“GBC”) stockholders are being asked to consider and
vote upon a proposal to adopt the merger agreement entered into
among GBC, Fortune Brands, ACCO World Corporation (also referred
to herein as “ACCO World”) and Gemini Acquisition Sub,
Inc. and to approve the merger contemplated by the merger
agreement. |
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Q: |
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What will happen in the spin-off and merger? |
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A: |
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First, ACCO World will be recapitalized and renamed ACCO Brands
Corporation. Fortune Brands will then distribute all of its
outstanding shares of ACCO Brands common stock on a pro rata
basis to Fortune Brands common stockholders. Immediately
following this spin-off, Gemini Acquisition Sub, a wholly-owned
subsidiary of ACCO Brands, will merge with and into GBC. GBC
will survive the merger and will become a wholly-owned
subsidiary of ACCO Brands. |
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What will GBC stockholders receive in the merger? |
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A: |
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Upon completion of the merger, holders of GBC common stock and
Class B common stock will receive one share of ACCO Brands
common stock (and one associated preferred share purchase right)
for each GBC share they own. Immediately following the merger,
34% of ACCO Brands, on a fully diluted basis, will be owned by
GBC stockholders. Because GBC stockholders in the aggregate will
become minority stockholders in ACCO Brands, without additional
votes of other ACCO Brands stockholders, former GBC stockholders
in the aggregate generally will not have the ability to approve
or block approval of proposals to be voted upon by ACCO Brands
stockholders. |
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Q: |
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What will Fortune Brands stockholders receive in the
transactions? |
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A: |
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In the spin-off, Fortune Brands will distribute all of its
outstanding shares of ACCO Brands common stock on a pro rata
basis to Fortune Brands common stockholders. Fortune Brands
currently estimates that one share of ACCO Brands common stock
will be distributed for each 4.32 shares of Fortune Brands
common stock held on the distribution date. Fortune Brands
stockholders will not receive any new shares in the merger and
will continue to hold the shares they received in the spin-off.
Immediately following the spin-off and merger, 66% of ACCO
Brands, on a fully diluted basis, will be owned by Fortune
Brands stockholders and ACCO Brands’ minority stockholder. |
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What stockholder approvals are needed? |
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A: |
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The merger cannot be completed unless the merger agreement is
adopted and the merger is approved by the affirmative vote of
the holders of a majority of the voting power of the outstanding
shares of GBC common stock and Class B common stock
entitled to vote at the special meeting. No vote of Fortune
Brands stockholders is required or being sought in connection
with the spin-off transaction or the merger. |
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Q: |
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Have any of GBC’s stockholders already agreed to vote in
favor of the merger agreement and the merger? |
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A: |
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Yes. In connection with the execution of the merger agreement,
Fortune Brands, ACCO World and Lane Industries, Inc. entered
into a voting agreement pursuant to which Lane Industries has
agreed, subject to limited exceptions, to vote, and granted to
Fortune Brands a proxy to vote, all its shares of GBC stock for
the adoption of the merger agreement and approval of the merger.
By virtue of its ownership of GBC stock as of the record date
for the special meeting, Lane Industries controls approximately
86.7% of the voting power at the meeting. Accordingly, the
voting power of Lane Industries’ shares is sufficient to
adopt the merger agreement and approve the merger and, as a
result of Lane Industries’ obligations under the voting
agreement, the adoption of the merger agreement and approval of
the merger is practically assured. |
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Does GBC’s Board support the merger? |
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Yes. The GBC board of directors has unanimously approved the
merger agreement and the merger and unanimously recommends that
GBC stockholders vote FOR the proposal to |
Q-1
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adopt the merger agreement and approve the merger. |
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Who can vote at the GBC special meeting? |
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Holders of GBC common stock and Class B common stock can
vote their shares at the special meeting if they are holders of
record of those shares at the close of business on June 23,
2005, the record date for the special meeting. |
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When and where is the special meeting of GBC stockholders? |
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The special meeting of GBC stockholders will take place on
[ • ],
2005 at our headquarters located at One GBC Plaza, Northbrook,
Illinois, at
[ • ],
local time. |
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Can GBC stockholders change their vote after they mail their
proxy card? |
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Yes. If you are a holder of record of GBC common stock or
Class B common stock and have properly completed and
submitted your proxy card, you can change your vote in any of
the following ways: |
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• by sending a written notice to the corporate
secretary of GBC that is received prior to the special meeting
stating that you revoke your proxy; |
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• by properly completing a new proxy card bearing a
later date and properly submitting it so that it is received
prior to the special meeting; or |
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• by attending the special meeting and voting in
person. |
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Simply attending the special meeting will not revoke a proxy. |
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If you are a GBC stockholder whose shares are held in
“street name” by your broker and you have directed
such person to vote your shares, you should instruct such person
to change your vote. |
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If my GBC shares are held in “street name” by my
broker, will my broker vote my shares for me? |
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Your broker will vote your GBC shares only if you provide
instructions on how to vote. You should follow the directions
provided by your broker regarding how to instruct your broker to
vote your shares. Without instructions, your shares will not be
voted, which will have the effect of a vote against the adoption
of the merger agreement and approval of the merger. |
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Where will the ACCO Brands Corporation shares be listed? |
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ACCO World will apply to list the ACCO Brands common stock on
the New York Stock Exchange. Approval of the listing of the ACCO
Brands common stock is a condition to completion of the merger. |
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Will shares of GBC common stock continue to be traded on the
Nasdaq National Market after the merger is completed? |
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No. If the merger is completed, shares of GBC common stock
will no longer be listed for trading on the Nasdaq National
Market. |
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What are the material tax consequences to GBC stockholders
and Fortune Brands stockholders resulting from the spin-off and
the merger? |
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We expect that the merger generally will be tax-free to GBC
stockholders for federal income tax purposes (other than with
respect to cash that GBC stockholders may receive instead of
fractional shares). Assuming that the spin-off and the merger
qualify as a tax-free spin-off and reorganization, respectively,
Fortune Brands stockholders will not recognize any taxable gain
or loss for federal income tax purposes as a result of the
spin-off (other than with respect to cash that Fortune Brands
stockholders may receive instead of fractional shares in the
spin-off.) To review the tax consequences of the spin-off and
the merger in greater detail, see “Certain United States
Federal Income Tax Consequences of the Spin-Off and the
Merger” on pages 83 to 86. |
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Can GBC stockholders dissent and require appraisal of their
shares? |
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No. GBC stockholders have no dissenters’ rights under
Delaware law in connection with the merger. |
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When will the merger be completed? |
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We are working to complete the merger as quickly as possible. If
approved by the GBC stockholders, we hope to complete the merger
as early as the summer of 2005. However, it is possible that
factors outside our control could |
Q-2
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require us to complete the merger at a later time or not
complete it at all. |
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When will the spin-off be completed? |
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If the merger is approved by the GBC stockholders, and the other
conditions to the merger and spin-off are satisfied or waived,
the spin-off will occur immediately prior to the completion of
the merger. |
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What should GBC stockholders do now? |
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After carefully reading and considering the information
contained in this proxy statement/ prospectus-information
statement, GBC stockholders should complete, sign and date their
proxy card and return it in the enclosed, postage-paid envelope
as soon as possible so that their shares will be represented and
voted at the GBC special meeting. If a GBC stockholder signs and
sends in their proxy and does not indicate how they want to
vote, GBC will count their proxy as a vote in favor of adoption
of the merger agreement and approval of the merger. Because the
required vote of GBC stockholders is based upon the voting power
of the outstanding shares of GBC common stock and Class B
common stock, rather than upon the shares actually voted, the
failure by the holder of any such shares to submit a proxy or to
vote in person at the special meeting, including abstentions and
broker non-votes, will have the same effect as a vote against
adoption of the merger agreement and approval of the merger. |
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GBC STOCKHOLDERS SHOULD NOT SURRENDER THEIR STOCK
CERTIFICATES AT THIS TIME. AFTER THE MERGER IS COMPLETED, GBC
STOCKHOLDERS WILL RECEIVE A TRANSMITTAL FORM WITH INSTRUCTIONS
FOR THE SURRENDER OF GBC STOCK CERTIFICATES. |
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What should Fortune Brands stockholders do now? |
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Fortune Brands common stockholders should carefully read this
proxy statement/ prospectus-information statement, which
contains important information about the distribution of ACCO
Brands Corporation common stock by Fortune Brands to its
stockholders, the merger, ACCO World, GBC and ACCO Brands.
Fortune Brands stockholders are not required to take any action
to approve the spin-off or the merger. Holders of Fortune Brands
common stock who are entitled to receive shares of ACCO Brands
common stock will be mailed after the merger book-entry
statements evidencing their ownership of ACCO Brands common
stock and other information regarding their receipt of ACCO
Brands common stock. |
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FORTUNE BRANDS STOCKHOLDERS WILL NOT BE REQUIRED TO SURRENDER
THEIR EXISTING FORTUNE BRANDS COMMON SHARES IN THE SPIN-OFF
TRANSACTION OR THE MERGER AND THEY SHOULD NOT SEND IN THEIR
FORTUNE BRANDS STOCK CERTIFICATES. |
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Who can answer my questions? |
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If you are a GBC stockholder and you have any questions about
the merger, the special meeting, or if you need assistance in
voting your shares, please contact: |
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General Binding Corporation
One GBC Plaza
Northbrook, Illinois 60062
Attn: Investor Relations
Tel: (847) 272-3700 |
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If you are a Fortune Brands stockholder and you have any
questions regarding the distribution of ACCO Brands Corporation
shares, the merger or any matter described in this proxy
statement/ prospectus-information statement, please direct your
questions to: |
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Fortune Brands, Inc.
300 Tower Parkway
Lincolnshire, IL 60069
Attn: Investor Relations
Tel: (847) 541-9500 |
Q-3
SUMMARY
This summary highlights selected information from this proxy
statement/ prospectus-information statement and may not contain
all of the information that is important to you. To understand
the transactions fully and for a more complete description of
the legal terms of the spin-off and the merger, you should
carefully read this entire proxy statement/
prospectus-information statement and the other documents to
which we refer you, including in particular the copies of the
merger agreement and the distribution agreement and the opinions
of Goldman, Sachs & Co. and Deutsche Bank Securities,
Inc. that are attached to this proxy statement/
prospectus-information statement as Annexes A through D,
respectively. See also “Where You Can Find More
Information” on page 155. We have included page
references parenthetically to direct you to a more complete
description of the topics presented in this summary.
This proxy statement/ prospectus-information statement is:
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a prospectus of ACCO World Corporation (which will be renamed
ACCO Brands Corporation) relating to the issuance of shares of
ACCO Brands common stock in connection with the merger; |
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a proxy statement of General Binding Corporation for use in
the solicitation of proxies for GBC’s special meeting;
and |
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an information statement of Fortune Brands, Inc. relating to
the spin-off of its shares of ACCO Brands common stock to
Fortune Brands stockholders. |
In this proxy statement/ prospectus-information statement:
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“ACCO World” means ACCO World Corporation before
the spin-off and the merger; |
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“ACCO Brands” means ACCO Brands Corporation
following the spin-off and the merger; |
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“ACCO U.S.” means the ACCO Brands segment of the
business of ACCO World; |
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“GBC” means General Binding Corporation; |
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“Fortune Brands” means Fortune Brands, Inc.; and |
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the terms “we,” “us” and “our”
refer to GBC and ACCO World, jointly. |
General Binding Corporation, a Delaware corporation, is engaged
in the design, manufacture and distribution of office equipment,
related supplies and laminating equipment and films. GBC has
three primary business groups — the Commercial and
Consumer Group, or CCG, the Industrial and Print Finishing
Group, or IPFG, and the Europe Group. In general, the CCG is
responsible for marketing
the company’s binding, desktop
laminating, visual display (writing boards, bulletin boards,
easels, etc.) and other products for use by consumers and
commercial customers. The IPFG targets
“print-for-pay”
and other finishing and trade lamination customers who use
GBC’s professional grade finishing and laminating equipment
and supplies. The Europe Group primarily distributes its CCG
products to customers in Europe. GBC’s products are
marketed in over 100 countries under the GBC, Quartet and
Ibico brands.
1
ACCO World Corporation is a holding company for
subsidiaries
engaged in designing, developing, manufacturing and marketing a
wide variety of traditional and computer-related office
products, supplies, personal computer accessory products,
paper-based time management products, presentation aids and
label products.
ACCO World was incorporated under the laws of Delaware in 1970.
It was acquired by a subsidiary of Fortune Brands (then known as
American Brands, Inc.) in 1987. Certain office products
companies that had been acquired by Fortune Brands prior to
1987, including Swingline, Inc. (manufacturer of staplers and
punching devices) and Wilson Jones Company (manufacturer of
binders and other paper organization products), were later
merged into
subsidiaries of ACCO World. Fortune Brands acquired
Day-Timers in 1988 and merged this business into
subsidiaries of
ACCO World. ACCO World or its
subsidiaries then made a series of
additional acquisitions of small businesses in the 1990’s,
including Nobo Group Plc, Apollo Presentation Products and Boone
International, Inc.
Fortune Brands, Inc., the parent of ACCO World Corporation, is a
$7 billion leading consumer brands company. Its operating
companies have premier brands and leading market positions in
home and hardware products, spirits and wine, golf equipment and
office products. Home and hardware brands include Moen faucets,
Aristokraft, Schrock, Diamond and Omega cabinets, Therma-Tru
door systems, Master Lock padlocks and Waterloo tool storage
sold by units of Fortune Brands Home & Hardware, Inc.
Major spirits and wine brands sold by units of Jim Beam Brands
Worldwide, Inc. include Jim Beam and Knob Creek bourbons,
DeKuyper cordials, The Dalmore single malt scotch, Vox vodka and
Geyser Peak and Wild Horse wines. Acushnet Company’s golf
brands include Titleist, Cobra and FootJoy. Office brands
include Swingline, Wilson Jones, Kensington and Day-Timer sold
by units of ACCO World Corporation. Fortune Brands,
headquartered in Lincolnshire, Illinois, is traded on the New
York Stock Exchange under the ticker symbol “FO” and
is included in the S&P 500 Index and the MSCI World Index.
Special Meeting of GBC Stockholders (page 25)
The special meeting of GBC stockholders will take place on
[ • ],
2005 at our headquarters located at One GBC Plaza, Northbrook,
Illinois, at
[ • ],
local time. At the special meeting, GBC stockholders will be
asked to consider and vote on a proposal to adopt the merger
agreement and approve the merger.
Special Meeting Record Date; Voting Information
(page 25)
GBC stockholders are entitled to vote at the special meeting if
they owned shares of GBC common stock or Class B common
stock at the close of business on
June 23, 2005, the
special meeting record date.
As of the special meeting record date, approximately
14,166,993 shares of GBC common stock and
2,398,275 shares of Class B common stock were issued
and outstanding and entitled to vote at the special meeting and
there were approximately 575 holders of record of GBC common
stock and one holder of record of GBC Class B common stock. Each
share of GBC common stock entitles the holder to one vote at the
special meeting and each share of GBC Class B common stock
entitles the holder to fifteen votes per share at the special
meeting.
Required Vote (page 25)
The affirmative vote of a majority of the voting power of the
outstanding shares of GBC common stock and Class B common
stock entitled to vote on the merger proposal voting together as
a single class is required to adopt the merger agreement and
approve the merger.
2
Voting by GBC Management and Lane Industries, Inc.
(page 26)
At the close of business on the special meeting record date, GBC
directors and executive officers as a group owned and were
entitled to vote 243,183 shares of GBC common stock,
representing approximately .0048% of the outstanding voting
power of GBC common stock and Class B common stock entitled
to vote at the special meeting. All of the directors and
executive officers of GBC that are entitled to vote at the GBC
special meeting have indicated that they intend to vote their
shares of GBC common stock in favor of adoption of the merger
agreement and approval of the merger.
Lane Industries has entered into a voting agreement with Fortune
Brands and ACCO World pursuant to which Lane Industries, which
controls approximately 86.7% of the voting power of GBC common
stock and Class B common stock as of the record date for
the special meeting, has agreed, subject to limited exceptions,
to vote, and granted to Fortune Brands a proxy to vote, its
shares in favor of adoption of the merger agreement and approval
of the merger. Accordingly, the voting power of Lane
Industries’ shares is sufficient to adopt the merger
agreement and approve the merger and, as a result of Lane
Industries’ obligations under the voting agreement, the
adoption of the merger agreement and approval of the merger is
practically assured.
The Spin-off and Merger (page 28)
Fortune Brands, ACCO World and GBC have agreed to merge GBC with
ACCO World pursuant to the terms of the merger agreement. Prior
to the merger, ACCO World will be recapitalized and renamed
“ACCO Brands Corporation” and Fortune Brands will
distribute all of its shares of ACCO Brands common stock to
Fortune Brands common stockholders on a pro rata basis. Once the
spin-off is complete, the merger will commence pursuant to the
terms of the merger agreement. ACCO Brands’ wholly-owned
subsidiary Gemini Acquisition Sub will merge with and into GBC.
GBC will survive the merger as a wholly-owned subsidiary of ACCO
Brands. At the time of the merger, GBC stockholders will receive
the right to receive one share of ACCO Brands common stock for
each share of GBC common stock or Class B common stock they
own. Immediately after consummation of the merger, on a fully
diluted basis, 66% of ACCO Brands will be held by Fortune Brands
common stockholders and ACCO Brands’ minority stockholder
and 34% will be held by stockholders of GBC.
GBC Board of Directors’ Recommendation to GBC
Stockholders (page 25)
The GBC board of directors has determined that the merger is
advisable and fair to, and in the best interests of, GBC and its
stockholders and unanimously recommends that GBC stockholders
vote FOR the proposal to adopt the merger agreement
and approve the merger.
Opinions of GBC’s Financial Advisors (page 39)
In deciding to approve the merger, the GBC board of directors
considered separate opinions delivered to it by its financial
advisors,
Goldman, Sachs & Co. and Deutsche Bank
Securities, Inc.
Goldman, Sachs & Co. delivered its opinion to the GBC
board of directors, which opinion was subsequently confirmed in
writing, that as of
March 15, 2005, and based upon and
subject to the factors and assumptions set forth therein, the
exchange ratio pursuant to the merger agreement is fair from a
financial point of view to the holders of GBC common stock and
Class B common stock, taken together in the aggregate.
Deutsche Bank Securities, Inc. delivered its opinion to the GBC
board of directors, which opinion was subsequently confirmed in
writing, that as of
March 14, 2005, based upon and subject
to the assumptions made, matters considered and limits of the
review undertaken by Deutsche Bank, the exchange ratio was fair
from a financial point of view to the holders of GBC common
stock and Class B common stock.
The full text of the separate written opinions of Goldman Sachs
and Deutsche Bank, which set forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with each opinion, are attached to this
proxy statement/ prospectus-information statement as
3
Annexes C and D, respectively. Goldman Sachs and Deutsche Bank
provided their opinions for the information and assistance of
the GBC board of directors in connection with their
consideration of the transactions contemplated by the merger
agreement and the distribution agreement. These opinions are not
a recommendation as to how any holder of GBC common stock or
Class B common stock should vote with respect to the
transactions contemplated by the merger agreement. GBC
encourages you to read each of these opinions in their entirety.
Regulatory Approval (page 52)
GBC and ACCO World would not be able to complete the spin-off
and the merger until they submitted the filings required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 to
the Department of Justice and the Federal Trade Commission and
the specified waiting period had expired or terminated. GBC and
ACCO World submitted the required filings under the
Hart-Scott-Rodino Act and the waiting period associated with
those filings expired on
May 12, 2005.
GBC and ACCO World obtained approval for the merger from the
Spanish competition authorities on
June 30, 2005 and from
the U.K. Office of Fair Trading on
July 4, 2005. In
addition, GBC and ACCO World made a mandatory filing to obtain
approval of the merger under German law on
June 22, 2005.
In Germany, the implementation of the transaction is subject to
the approval of the German antitrust authorities.
Accounting Treatment (page 53)
The merger will be accounted for under the purchase method of
accounting and ACCO Brands will be considered the acquiror of
GBC for accounting purposes.
Treatment of Stock Options (page 60)
Under the terms of the merger agreement, each option to purchase
GBC shares outstanding immediately prior to the merger will be
converted into an option to purchase the same number of shares
of ACCO Brands common stock at an exercise price per share equal
to the exercise price per share of the GBC stock option
immediately prior to the conversion.
Prior to the merger, options to purchase Fortune Brands common
stock that are outstanding and unvested immediately prior to the
spin-off and held by an employee or former employee of ACCO
World will be converted into options to purchase shares of ACCO
Brands common stock. The number of shares subject to these ACCO
Brands options and their exercise prices will be based on the
number of shares subject to, and the exercise price of, the
corresponding Fortune Brands option and will be adjusted based
on the ratio of the price of Fortune Brands common stock before
the spin-off to the price of ACCO Brands common stock after the
merger.
Exchange of Shares in the Merger; Treatment of Fractional
Shares (page 61)
Unless a physical certificate is requested, GBC stockholders
will receive shares of ACCO Brands common stock in book-entry
form. Upon surrender of the shares of GBC common stock or
Class B common stock, such shares will be cancelled. No
fractional shares of ACCO Brands common stock will be issued to
any holder of shares of GBC upon consummation of the merger. For
each fractional share that would otherwise be issued to each
stockholder, ACCO Brands will pay in cash an amount equal to the
stockholder’s proportionate interest in the net proceeds
from the sale or sales in the open market of the aggregate
fractional ACCO Brands shares that would have been issued in the
merger.
Board of Directors and Management of ACCO Brands After the
Merger (page 128)
Upon completion of the merger, the board of directors of ACCO
Brands will consist of nine individuals, with six persons to be
named by the board of directors of Fortune Brands (one of whom
will be Mr.
David D. Campbell) and three persons to be
named by the board of directors of GBC. GBC and
4
Fortune Brands have agreed that Mr. Campbell will serve as
chairman of the board and an individual selected by GBC and
Fortune Brands prior to the completion of the merger will serve
as independent lead director of the ACCO Brands board. It is
expected that at the completion of the merger, the board of
directors of ACCO Brands will appoint Mr. Pierre E.
Leroy independent lead director of the ACCO Brands board.
Upon completion of the merger, Mr. Campbell, current
Chairman, President and Chief Executive Officer of ACCO World,
will be Chief Executive Officer of ACCO Brands and the other
initial officers of ACCO Brands will consist of individuals
selected by Mr. Campbell from the management of GBC and
ACCO World. It is expected that the new ACCO Brands senior
management team will include Mr. Campbell;
Neal V. Fenwick,
Executive Vice President and Chief Financial Officer; Denny
Chandler, Chief Operating Officer, Office Products Division; and
Boris Elisman, President, Kensington Computer Accessories, each
of whom are currently serving in such capacities at ACCO World.
In addition, John Turner will continue as President of
GBC’s Industrial and Print Finishing Group; and Steven
Rubin, GBC’s General Counsel, will become General Counsel
of ACCO Brands.
Interests of Certain Persons in the Merger (page 53)
In considering the GBC board of directors’ determination to
approve the merger agreement and to recommend that GBC
stockholders vote to adopt the merger agreement and approve the
merger, GBC stockholders should be aware of potential conflicts
of interest of, and the benefits available to, certain GBC
stockholders, directors and officers. These stockholders,
directors and officers may have interests in the merger that are
different from, or in addition to, the interests of GBC
stockholders as a result of, among other things:
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arrangements regarding the appointment of directors and officers
of ACCO Brands; |
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certain outstanding options to purchase GBC common stock issued
under GBC stock plans prior to the date of the merger agreement,
including those held by executive officers and directors, would
become fully exercisable upon completion of the merger and
restrictions upon certain restricted stock units under GBC stock
plans awarded prior to the date of the merger agreement,
including those held by executive officers and directors, would
lapse; |
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employment and severance arrangements maintained for GBC
executive officers that provide for cash severance pay and other
benefits, valued in an aggregate amount of approximately
$10,362,122 (based on levels of pay and other circumstances as
of June 30, 2005), plus tax gross-up payments, if
applicable, if their employment is terminated within specified
periods; |
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special fee payments valued in an aggregate amount of $245,000,
$90,000 of which is payable by GBC and $155,000 of which is
payable by Lane Industries, to be made to directors (or members
of their immediate family) as a result of the merger; |
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the voting agreement entered into by Fortune Brands, ACCO World
and Lane Industries, GBC’s largest stockholder; and |
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the registration rights agreement entered into by ACCO World and
Lane Industries. |
No Dissenters’ or Appraisal Rights (page 27)
GBC stockholders will not be entitled to exercise
dissenters’ or appraisal rights or to demand payment for
their shares in connection with the merger.
5
Conditions to the Completion of the Merger (page 67)
Several conditions must be satisfied or waived before the merger
will be completed. These include:
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the approval and adoption of the merger agreement and the merger
by GBC stockholders; |
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the applicable waiting period under the Hart-Scott-Rodino Act
having terminated or expired (the waiting period expired on
May 12, 2005); |
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all notifications and filings required under
non-U.S. competition laws having been made, and all
consents, approvals and authorizations required under
non-U.S. competition laws in order to complete the merger
having been made or obtained and all applicable waiting periods
under non-U.S. competition laws having been terminated or
expired; |
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the approval for listing on the New York Stock Exchange of the
ACCO Brands common stock to be issued in the spin-off and the
merger; |
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the completion of the spin-off in accordance with the terms of
the merger agreement and the distribution agreement; |
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receipt by each of GBC and Fortune Brands of opinions of their
respective tax counsel stating that the merger will constitute a
reorganization under section 368(a) of the Internal Revenue
Code and receipt by Fortune Brands of an opinion of its tax
counsel stating that the spin-off will constitute a spin-off
under section 355 of the Internal Revenue Code; and |
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other customary contractual conditions set forth in the merger
agreement. |
For a more complete description, see “The Merger
Agreement — Conditions to the Completion of the
Merger” beginning on page 67.
Termination of the Merger Agreement (page 68)
Either Fortune Brands or GBC, by action of its respective board
of directors, may terminate the merger agreement for the
following reasons, among others:
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Fortune Brands and GBC agree to terminate the agreement by
mutual written consent; |
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the merger has not been completed by November 30, 2005,
provided that the terminating party’s failure to fulfill
any obligation under the merger agreement or the distribution
agreement is not the cause of the merger not being completed by
November 30, 2005; or |
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GBC stockholders fail to adopt the merger agreement and approve
the merger at the GBC special meeting. |
In addition, Fortune Brands may terminate the merger agreement
for the following reasons, among others:
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if the GBC board of directors withdraws, modifies or qualifies
(or publicly proposes to withdraw, modify or qualify) its
recommendation to GBC stockholders to adopt the merger agreement
and approve the merger; |
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if the GBC board of directors recommends an alternate
acquisition proposal; or |
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GBC breaches its obligation to call and hold the GBC special
meeting. |
Among other reasons, GBC may terminate the merger agreement in
accordance with and subject to the conditions described in
“The Merger Agreement — No Solicitation”
beginning on page 64 herein.
For a more complete description, see “The Merger
Agreement — Termination of the Merger Agreement”
beginning on page 68.
6
Termination Fee (page 69)
GBC has agreed to pay Fortune Brands a termination fee of
$9.5 million, plus expenses incurred in the transaction, if
the merger agreement has been terminated under specified
circumstances relating to a competing transaction or if Fortune
Brands terminates the merger agreement as a result of certain
actions or failures to act by GBC or its board of directors. See
“The Merger Agreement — Fees and
Expenses — Termination Fee” beginning on
page 69.
The Spin-Off Transaction (page 71)
Prior to the spin-off, ACCO World will be renamed “ACCO
Brands Corporation” and will be recapitalized so that it
has a number of shares of ACCO Brands common stock outstanding
that will represent 66% of the outstanding shares of ACCO Brands
common stock, on a fully diluted basis, immediately following
the merger. ACCO World will also pay prior to the spin-off a
special dividend to its stockholders, including Fortune Brands,
in the aggregate amount of $625.0 million. Immediately
prior to the merger and following the recapitalization, Fortune
Brands will distribute in the spin-off all of the shares of ACCO
Brands common stock owned by Fortune Brands.
Fortune Brands stockholders will not be required to pay for
shares of ACCO Brands common stock received in the spin-off, or
to surrender or exchange shares of Fortune Brands stock or take
any other action in order to be entitled to receive ACCO Brands
common stock. The distribution of ACCO Brands common stock will
not cancel or affect the number of outstanding shares of Fortune
Brands common stock. Fortune Brands stockholders should retain
their Fortune Brands stock certificates.
Fractional shares of ACCO Brands common stock will not be
distributed in the spin-off. The distribution agent will
aggregate fractional shares and sell them in the public market.
The net proceeds of those sales will be distributed ratably to
holders of Fortune Brands common stock entitled to fractional
interests.
Conditions to the Completion of the Spin-Off
(page 73)
The distribution of ACCO Brands common stock is subject to the
satisfaction or waiver of certain conditions set forth in the
distribution agreement, including:
|
|
|
| |
• |
the absence of any law, order or injunction having the effect of
making the spin-off illegal or otherwise prohibiting completion
of the spin-off, and the absence of any proceeding initiated by
any governmental entity seeking, and which is reasonably likely
to result in, such a law, order or injunction; |
| |
| |
• |
each condition to the closing of the merger agreement shall have
been fulfilled or waived by the party for whose benefit such
condition exists (except for the consummation of the spin-off). |
Fortune Brands may (but is not required to) waive any of these
conditions; however, GBC’s consent is required before
Fortune Brands may waive the conditions set forth in the first
bullet above.
Certain United States Federal Income Tax Consequences of
the Spin-Off and the Merger (page 83)
The spin-off and the merger are conditioned upon the receipt by
Fortune Brands and ACCO World of opinions of
Chadbourne & Parke LLP, counsel to Fortune Brands and
ACCO World, to the effect that the spin-off will constitute a
spin-off under section 355 of the Internal Revenue Code and
the merger will constitute a reorganization under
section 368(a) of the Internal Revenue Code. The spin-off
and the merger are also conditioned upon GBC’s receipt of
an opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel to GBC, to the effect that the merger will constitute a
reorganization under section 368(a) of the Internal Revenue
Code. These opinions of counsel to Fortune Brands, ACCO World
and GBC will be based on, among other things, current law and
certain representations as to factual matters made by, among
others, Fortune Brands, ACCO World and GBC, which, if incorrect,
could jeopardize the conclusions reached by such counsel in
their opinions.
7
So long as the spin-off and merger constitute a spin-off under
section 355 of the Internal Revenue Code and a
reorganization under section 368(a) of the Internal Revenue
Code, respectively, then:
|
|
|
| |
• |
no taxable gain or loss will generally be recognized by a
Fortune Brands stockholder as the result of the spin-off or
receipt of ACCO Brands common stock pursuant to the spin-off
(except with respect to cash that a Fortune Brands stockholder
may receive instead of a fractional share interest in ACCO
Brands common stock); |
| |
| |
• |
the distribution of ACCO Brands common stock to Fortune Brands
stockholders in connection with the spin-off will qualify as
tax-free to Fortune Brands so long as the spin-off is not
disqualified as tax-free under section 355(e) of the
Internal Revenue Code because of certain subsequent acquisitions
of Fortune Brands common stock or ACCO Brands common stock by a
third party; and |
| |
| |
• |
no taxable gain or loss will generally be recognized by GBC,
ACCO Brands, an ACCO Brands stockholder or a GBC stockholder in
the merger (except with respect to cash that a GBC stockholder
may receive instead of a fractional share interest in ACCO
Brands common stock). |
8
SELECTED HISTORICAL FINANCIAL INFORMATION OF ACCO WORLD
CORPORATION
The following selected historical financial information of ACCO
World Corporation for each of the past three fiscal years 2004,
2003 and 2002 has been derived from ACCO World’s financial
statements, which were audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm. The financial
data as of
March 25, 2005 and
2004, and for each of the
three-month periods then ended, and the financial data as of
December 27, 2001 and
2000 and for the years then ended,
have been derived from ACCO World’s financial statements
which include, in management’s opinion, all adjustments,
consisting only of normal recurring adjustments, necessary to
present fairly the results of operations and financial position
of ACCO World for the periods and dates presented. This
information is only a summary and should be read in conjunction
with management’s discussion and analysis of results of
operations and financial condition of ACCO World and the
financial statements and notes thereto of ACCO World included in
this proxy statement/ prospectus-information statement on
pages F-1 — F-38.
Selected Financial Data
(in millions)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter Ended | |
|
|
| |
|
March 25, | |
|
Fiscal Year Ended December 27, | |
| |
|
| |
|
| |
| |
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
2000 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
|
(unaudited) | |
|
|
|
|
|
|
|
(unaudited) | |
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net sales(1)
|
|
|
275.2 |
|
|
|
270.9 |
|
|
|
1,175.7 |
|
|
|
1,101.9 |
|
|
|
1,105.4 |
|
|
|
1,176.3 |
|
|
|
1,354.2 |
|
| |
Net income/(loss)
|
|
|
10.5 |
|
|
|
8.6 |
|
|
|
68.5 |
|
|
|
26.7 |
|
|
|
4.2 |
|
|
|
(83.8 |
) |
|
|
(508.0 |
) |
|
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total assets
|
|
|
927.5 |
|
|
|
885.5 |
|
|
|
984.5 |
|
|
|
886.7 |
|
|
|
860.5 |
|
|
|
930.8 |
|
|
|
1,171.2 |
|
| |
External long-term debt(2)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
2.6 |
|
| |
Total stockholders’ equity(3)
|
|
|
656.5 |
|
|
|
459.6 |
|
|
|
616.8 |
|
|
|
533.1 |
|
|
|
528.8 |
|
|
|
672.1 |
|
|
|
890.2 |
|
|
|
| (1) |
The net sales decline from 2000 to 2001 of $177.9 was due to
strategic decisions to minimize reinvestment in declining
product categories (including Day-Timers, labels, filing and
business essentials), strategic product category exits
(including Kensington imaging, joysticks and media), the adverse
impact of foreign exchange translation ($27.1), and economic
slowdown after the September 11th tragedy in the U.S. |
| |
| (2) |
External long-term debt refers only to the portion financed by
third parties, and does not include any portion financed through
banking relationships or lines of credit secured by ACCO
World’s parent company, Fortune Brands. Interest expenses
associated with Fortune Brands’ debt have been allocated to
ACCO World for the periods presented. |
| |
| (3) |
If the stockholders’ equity at March 25, 2005 included
the declaration of the $625.0 dividend payable to ACCO World
stockholders prior to the spin-off, total stockholders’
equity would be reduced to $31.5 on a pro forma basis. |
9
SELECTED HISTORICAL FINANCIAL INFORMATION OF GENERAL BINDING
CORPORATION
The following selected historical financial information of
General Binding Corporation for each of the past five fiscal
years have been derived from General Binding Corporation’s
audited historical financial statements, which for fiscal years
ended
December 31, 2004,
2003 and
2002 were audited by
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, and for fiscal years ended
December 31,
2001 and
2000 were audited by Arthur Andersen LLP. Arthur
Andersen LLP has ceased practicing before the Securities and
Exchange Commission. The financial information as of
March 31, 2005 and
2004, and for each of the three-month
periods then ended, have been derived from GBC’s unaudited
financial statements which include, in management’s
opinion, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the results of
operations and financial position of GBC for the periods and
dates presented. This information is only a summary and should
be read in conjunction with management’s discussion and
analysis of results of operations and financial condition of
General Binding Corporation and the audited and unaudited
consolidated financial statements and notes thereto of General
Binding Corporation
incorporated by reference into this proxy
statement/ prospectus-information statement.
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|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Quarter Ended | |
|
|
| |
|
March 31, | |
|
Fiscal Year Ended December 31, | |
| |
|
| |
|
| |
| |
|
2005 | |
|
2004 | |
|
2004 | |
|
2003 | |
|
2002 | |
|
2001 | |
|
2000 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
|
(unaudited) | |
|
|
|
|
|
|
|
|
|
|
| |
|
(Amounts in millions, except for per share data) | |
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net sales
|
|
$ |
180.2 |
|
|
$ |
170.9 |
|
|
$ |
712.3 |
|
|
$ |
697.9 |
|
|
$ |
701.7 |
|
|
$ |
711.9 |
|
|
$ |
824.6 |
|
| |
Net income (loss) from continuing operations
|
|
$ |
(3.4 |
) |
|
$ |
0.5 |
|
|
$ |
14.8 |
|
|
$ |
(3.3 |
) |
|
$ |
(1.0 |
) |
|
$ |
(19.5 |
) |
|
$ |
2.4 |
|
| |
Net income (loss) per share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Diluted(1)
|
|
$ |
(0.21 |
) |
|
$ |
0.03 |
|
|
$ |
0.88 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.06 |
) |
|
$ |
(1.24 |
) |
|
$ |
0.15 |
|
| |
|
Basic(1)
|
|
$ |
(0.21 |
) |
|
$ |
0.03 |
|
|
$ |
0.91 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.06 |
) |
|
$ |
(1.24 |
) |
|
$ |
0.15 |
|
|
Balance Sheet Data
(at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total assets
|
|
$ |
545.2 |
|
|
$ |
531.6 |
|
|
$ |
540.4 |
|
|
$ |
530.3 |
|
|
$ |
557.4 |
|
|
$ |
719.6 |
|
|
$ |
761.3 |
|
| |
Long-term obligations
|
|
$ |
260.8 |
|
|
$ |
283.6 |
|
|
$ |
255.2 |
|
|
$ |
282.0 |
|
|
$ |
314.8 |
|
|
$ |
410.7 |
|
|
$ |
397.0 |
|
| |
Cash dividends per
common share(1)
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
| (1) |
Amounts represent per share amounts for both GBC common stock
and Class B common stock. |
10
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
The following selected unaudited pro forma combined condensed
financial information of GBC and ACCO World combine the
consolidated financial information of GBC for the year ended
December 31, 2004 and as of and for the three month period
ended
March 31, 2005, with the consolidated financial
information of ACCO World for the year ended
December 27,
2004 and as of and for the three month period ended
March 25, 2005 after giving effect to the merger of ACCO
World and GBC. The selected unaudited pro forma combined
condensed financial information is derived from the unaudited
pro forma combined condensed financial statements contained
elsewhere in this proxy statement/prospectus-information
statement.
We present the unaudited pro forma combined condensed financial
information for informational purposes only. The pro forma
information is not intended to represent or be indicative of the
combined results of operations or financial condition of ACCO
Brands that would have been reported had the merger been
completed as of the dates presented and should not be taken as
representative of the future combined results of operations or
financial condition of ACCO Brands.
We prepared the unaudited pro forma combined condensed financial
information using the purchase method of accounting. The
unaudited pro forma combined condensed financial information
does not include the realization of any cost savings from
operating efficiencies, synergies or other restructuring
activities which might result from the merger. In addition, the
unaudited pro forma combined condensed financial statements do
not include the effects of dispositions, if any, that might be
required in order to obtain regulatory approval of the merger
transaction.
| |
|
|
|
|
|
|
|
|
|
| |
|
Fiscal Year Ended | |
|
Quarter Ended | |
| |
|
December 27, 2004 | |
|
March 25, 2005 | |
| |
|
| |
|
| |
| |
|
(In millions) | |
|
Income Statement Data:
|
|
|
|
|
|
|
|
|
| |
Net sales
|
|
$ |
1,888.0 |
|
|
$ |
455.4 |
|
| |
Net income
|
|
|
59.2 |
|
|
|
1.2 |
|
|
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,032.5 |
|
|
Long-term debt |
|
|
913.5 |
|
|
Total stockholders’ equity |
|
|
529.5 |
|
11
COMPARATIVE PER SHARE INFORMATION
The following table sets forth certain historical per share data
of GBC common stock and combined per share data of GBC and ACCO
World on an unaudited pro forma combined basis giving effect to
the spin-off and the merger. This information should be read in
conjunction with the selected historical financial data and the
ACCO Brands Corporation Unaudited Pro Forma Condensed Combined
Financial Information and related notes included elsewhere in
this proxy statement/prospectus-information statement, and the
separate historical financial statements of GBC and ACCO World
and the related notes, included or
incorporated by reference in
this proxy statement/prospectus-information statement. The
unaudited pro forma combined information provided below is for
illustrative purposes only. The companies may have performed
differently had they always been combined. You should not rely
on this information as being indicative of the historical
results that would have been achieved had the companies always
been combined or the future results that ACCO Brands will
experience after the merger. The GBC unaudited pro forma
equivalent data was calculated by multiplying the corresponding
unaudited pro forma combined data by one, the exchange ratio in
the merger.
| |
|
|
|
|
|
|
|
|
| |
|
Fiscal Year Ended | |
|
Quarter Ended | |
| |
|
December 27, 2004 | |
|
March 25, 2005 | |
| |
|
| |
|
| |
|
GBC — HISTORICAL(1):
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share from continuing operations
|
|
$ |
0.91 |
|
|
$ |
(0.21 |
) |
|
Diluted net income (loss) per share from continuing operations
|
|
|
0.88 |
|
|
|
(0.21 |
) |
|
Cash dividends declared per common share
|
|
|
— |
|
|
|
— |
|
|
Book value per common share, basic
|
|
|
4.80 |
|
|
|
4.57 |
|
|
Book value per common share, diluted
|
|
|
4.64 |
|
|
|
4.35 |
|
|
PRO FORMA COMBINED:
|
|
|
|
|
|
|
|
|
|
Basic net income per share from continuing operations
|
|
$ |
1.24 |
|
|
$ |
0.03 |
|
|
Diluted net income per share from continuing operations
|
|
|
1.20 |
|
|
|
0.02 |
|
|
Book value per common share, basic |
|
|
11.08 |
|
|
Book value per common share, diluted |
|
|
10.68 |
|
|
GBC — PRO FORMA EQUIVALENTS:
|
|
|
|
|
|
|
|
|
|
Basic net income per share from continuing operations
|
|
$ |
1.24 |
|
|
$ |
0.03 |
|
|
Diluted net income per share from continuing operations
|
|
|
1.21 |
|
|
|
0.02 |
|
|
Book value per common share, basic |
|
|
11.08 |
|
|
Book value per common share, diluted |
|
|
10.68 |
|
|
|
| (1) |
GBC reports its financial information on a calendar period
basis, while ACCO World reports its financial information on a
fiscal year basis. GBC’s financial information is as of and
for the year ended December 31, 2004 and as of and for the
three months ended March 31, 2005. |
12
GENERAL BINDING CORPORATION MARKET PRICE AND DIVIDEND
INFORMATION
GBC common stock is currently traded on the Nasdaq National
Market under the symbol
“GBND”. On
March 15,
2005, the last trading day before the announcement of the
signing of the merger agreement, the last reported sale price of
GBC common stock as reported by the Nasdaq National Market was
$13.08. On
July 13, 2005, the last practicable trading day
prior to the date of this proxy statement/prospectus-information
statement, the last reported sale price of GBC common stock as
reported by the Nasdaq National Market was $23.33. The following
table sets forth the high and low sales prices of GBC common
stock for the periods indicated. The quotations are as reported
in published financial sources. For current price information,
GBC stockholders are urged to consult publicly available
sources. Market price data for GBC Class B common stock has
not been presented as those shares are not publicly traded and
there is no market for those securities. Market price data for
ACCO World has not been presented as ACCO World does not trade
separately from Fortune Brands common shares. GBC has not
declared any cash dividends on its shares of common stock or
Class B common stock during the periods indicated and does
not anticipate paying cash dividends in the future.
| |
|
|
|
|
|
|
|
|
| |
|
General Binding | |
| |
|
Corporation | |
| |
|
Common Stock | |
| |
|
| |
| |
|
High | |
|
Low | |
| |
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
14.66 |
|
|
$ |
11.86 |
|
|
Second Quarter
|
|
$ |
20.00 |
|
|
$ |
14.85 |
|
|
Third Quarter
|
|
$ |
19.65 |
|
|
$ |
14.50 |
|
|
Fourth Quarter
|
|
$ |
15.40 |
|
|
$ |
8.48 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
12.83 |
|
|
$ |
7.90 |
|
|
Second Quarter
|
|
$ |
12.50 |
|
|
$ |
7.60 |
|
|
Third Quarter
|
|
$ |
14.83 |
|
|
$ |
9.25 |
|
|
Fourth Quarter
|
|
$ |
18.68 |
|
|
$ |
11.24 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
19.01 |
|
|
$ |
12.91 |
|
|
Second Quarter
|
|
$ |
17.00 |
|
|
$ |
9.75 |
|
|
Third Quarter
|
|
$ |
15.92 |
|
|
$ |
10.01 |
|
|
Fourth Quarter
|
|
$ |
15.11 |
|
|
$ |
12.83 |
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$ |
21.00 |
|
|
$ |
11.70 |
|
|
Second Quarter
|
|
$ |
22.35 |
|
|
$ |
19.98 |
|
|
|
|
$ |
24.00 |
|
|
$ |
21.74 |
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13
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/ prospectus-information statement includes
forward-looking statements. Some of the forward-looking
statements can be identified by the use of forward-looking terms
such as “believes”, “expects”,
“may”, “will”, “should”,
“could”, “seek”, “intends”,
“plans”, “estimates”,
“anticipates” or other comparable terms.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those in the forward-looking
statements, including those factors discussed in “Risk
Factors.” Factors that could cause actual results to differ
from those reflected in forward-looking statements relating to
the operations and business of GBC, ACCO World and the combined
ACCO Brands include:
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competition within the office products, document finishing and
film lamination industries; |
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the effects of economic and political conditions; |
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the ability of distributors to successfully market and sell our
products; |
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the availability and price of raw materials; |
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dependence on certain suppliers of manufactured products; |
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the effect of consolidation in the office products industry; |
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the ability to obtain governmental approvals of the transaction
on the proposed terms and schedule; |
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the risk that the businesses will not be integrated successfully; |
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the risk that the cost savings and any synergies from the
transaction may not be fully realized or may take longer to
realize than expected; |
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disruption from the transaction making it more difficult to
maintain relationships with customers, employees or
suppliers; and |
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other risks and uncertainties, including those set forth in this
proxy statement/ prospectus-information statement and those
detailed from time to time in GBC’s and ACCO Brands’
filings with the Securities and Exchange Commission. |
You should read this proxy statement/ prospectus-information
statement and the
documents incorporated by reference into it
completely and with the understanding that actual future results
may be materially different from expectations. All
forward-looking statements made in this proxy statement/
prospectus-information statement are qualified by these
cautionary statements. These forward-looking statements are made
only as of the date of this proxy statement/
prospectus-information statement, and GBC, ACCO World, ACCO
Brands and Fortune Brands do not undertake any obligation, other
than as may be required by law, to update or revise any
forward-looking statements to reflect changes in assumptions,
the occurrence of unanticipated events or changes in future
operating results over time.
14
RISK FACTORS
In addition to the other information that we have
incorporated by reference in the proxy statement/
prospectus-information statement, you should carefully consider
and evaluate all of the information in this proxy statement/
prospectus-information statement, including the risk factors
listed below. Any of these risks could materially and adversely
affect ACCO Brands’ business, financial condition and
results of operations, which in turn could materially and
adversely affect the price of ACCO Brands common stock.
Risks Relating to the Spin-Off and the Merger
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ACCO Brands may not realize the anticipated benefits from
the merger. |
The success of the merger will depend, in part, on the ability
of ACCO Brands to realize the anticipated synergies, cost
savings and growth opportunities from integrating the businesses
of GBC with those of ACCO World. ACCO Brands’ success in
realizing these synergies, cost savings and growth
opportunities, and the timing of this realization, depends on
the successful integration of ACCO World’s and GBC’s
operations. Even if ACCO Brands is able to integrate the
business operations of GBC successfully, ACCO Brands cannot
assure you that this integration will result in the realization
of the full benefits of the synergies, cost savings and growth
opportunities that ACCO World and GBC currently expect from this
integration or that these benefits will be achieved within the
anticipated time frame. For example, the elimination of
duplicative costs may not be possible or may take longer than
anticipated, the benefits from the merger may be offset by costs
incurred in integrating the companies and regulatory authorities
may impose adverse conditions on the combined business in
connection with granting approval for the merger.
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The integration of ACCO World and GBC following the merger
may present significant challenges. |
There is a significant degree of difficulty and management
distraction inherent in the process of establishing ACCO Brands
as an independent public company and integrating the ACCO World
and GBC businesses. These difficulties include:
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the challenge of establishing ACCO Brands as a separately traded
independent public company and then integrating the ACCO World
and GBC businesses while carrying on the ongoing operations of
each business; |
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the necessity of coordinating geographically separate
organizations; |
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the challenge of integrating the business cultures of each
company, which may prove to be incompatible; |
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the challenge and cost of integrating the information technology
systems of each company; and |
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the potential difficulty in retaining key officers and personnel
of ACCO World and GBC. |
The process of integrating operations could cause an
interruption of, or loss of momentum in, the activities of one
or more of ACCO Brands’ businesses. Members of ACCO
Brands’ senior management may be required to devote
considerable amounts of time to this integration process, which
will decrease the time they will have to manage the business of
ACCO Brands, service existing customers, attract new customers
and develop new products or strategies. If ACCO Brands’
senior management is not able to effectively manage the
integration process, or if any significant business activities
are interrupted as a result of the integration process, ACCO
Brands’ business could suffer.
We cannot assure you that ACCO Brands will successfully or
cost-effectively integrate the GBC businesses and the existing
businesses of ACCO World. The failure to do so could have a
material adverse effect on ACCO Brands’ business, financial
condition and results of operations.
The
number of shares GBC stockholders will receive in the merger is
not subject to adjustment based on the performance of the ACCO
World or GBC businesses. Accordingly, because this performance
may fluctuate, the relative market values of the ACCO Brands
common stock that GBC stockholders receive in the merger may not
reflect the performance of the individual companies at the time
of the merger.
In the merger, each holder of GBC common stock and Class B
common stock will receive one share of ACCO Brands common stock
(and one associated preferred share purchase right) for each GBC
share
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they own. Fortune Brands common stockholders (who will receive
their shares in the spin-off) will not receive any new shares in
the merger and will continue to hold their existing shares of
Fortune Brands and ACCO Brands common stock. The 1:1 exchange
ratio will not be adjusted for changes in the economic
performance of the ACCO World or GBC businesses or the market
price of GBC common stock. If the economic performance of ACCO
World relative to GBC declines (or the economic performance of
GBC improves) relative to ACCO World prior to the completion of
the merger, the market value of the ACCO Brands common stock
that GBC stockholders receive in the merger may not reflect the
then current performance of the individual companies.
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There is no prior market for ACCO Brands common
stock. |
There is no current public trading market for ACCO Brands common
stock. We cannot predict the prices at which ACCO Brands common
stock may trade following the spin-off and merger. Such trading
prices will be determined by the marketplace and may be
influenced by many factors, including the depth and liquidity in
the market for such shares, investor perceptions of ACCO Brands
and the industry in which it participates, ACCO Brands’
dividend policy and general economic and market conditions.
Until an orderly market develops, the trading prices for these
shares may fluctuate significantly.
ACCO Brands common stock will be freely transferable, except for
shares received by GBC “affiliates,” as that term is
defined under the Securities Act of 1933, or held by affiliates
of ACCO Brands. See “The Transactions — Federal
Securities Law Consequences; Resale Restrictions” on
page 58.
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Sales of ACCO Brands common stock after the merger may
negatively affect its market price. |
The market price of ACCO Brands common stock could decline as a
result of sales of a large number of shares of ACCO Brands
common stock in the market after the completion of the merger or
the perception that these sales could occur. These sales, or the
possibility that these sales may occur, also might make it more
difficult for ACCO Brands to obtain additional capital by
selling equity securities in the future at a time and at a price
that ACCO Brands deems appropriate.
Immediately after the merger, Fortune Brands stockholders,
together with ACCO World’s minority stockholder, will hold,
in the aggregate, 66% of ACCO Brands common stock on a fully
diluted basis. Currently, Fortune Brands stockholders include
index funds tied to the Standard & Poor’s 500
Index or other stock indices, and institutional investors
subject to various investing guidelines. Because ACCO Brands
will not be included in these indices at the time of the merger
or may not meet the investing guidelines of some of these
institutional investors, these index funds and institutional
investors may be required to sell ACCO Brands common stock that
they receive in the spin-off. These sales may negatively affect
ACCO Brands common stock price.
At the close of business on the record date for the special
meeting of GBC stockholders, Lane Industries beneficially owned
and was entitled to vote 7,474,962 shares of GBC common
stock and 2,398,275 shares of GBC Class B common
stock. Following the merger, Lane Industries’ shares are
anticipated to represent approximately 18.5% of ACCO Brands
outstanding common stock on a fully diluted basis. Lane
Industries will be able to sell its shares in the public market
from time to time, subject to certain limitations on the timing,
amount and method of those sales imposed by SEC regulations.
Lane Industries also has the right under a registration rights
agreement entered into with ACCO World, subject to certain
restrictions, including a 180-day waiting period, to cause ACCO
Brands to register the sale of shares of ACCO Brands common
stock owned by it, and to include its shares in future
registration statements relating to ACCO Brands common stock.
For more information on this registration
rights agreement, see
“Additional Agreements Related to the Spin-off and the
Merger — Registration Rights Agreement” beginning
on page 77. If Lane Industries were to sell a large number
of its ACCO Brands shares, the market price of ACCO Brands
common stock could decline significantly. In addition, the
perception in the public markets that sales by Lane Industries
might occur could also adversely affect the market price of ACCO
Brands common stock.
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Regulatory
agencies may delay or impose conditions on approval of the
spin-off and the merger, which may diminish the anticipated
benefits of the merger.
Completion of the spin-off and merger is conditioned upon the
receipt of required government consents, approvals, orders and
authorizations, including required approvals from foreign
regulatory agencies. While we intend to pursue vigorously all
required governmental approvals and do not know of any reason
why we would not be able to obtain the necessary approvals in a
timely manner, the requirement to receive these approvals before
the spin-off and merger could delay the completion of the
spin-off and merger, possibly for a significant period of time
after GBC stockholders have approved the merger proposal at the
special meeting. In addition, these governmental agencies may
attempt to condition their approval of the merger on the
imposition of conditions that could have a material adverse
effect on ACCO Brands’ operating results or the value of
ACCO Brands common stock after the spin-off and merger are
completed. Any delay in the completion of the spin-off and
merger could diminish anticipated benefits of the spin-off and
merger or result in additional transaction costs, loss of
revenue or other effects associated with uncertainty about the
transaction. Any uncertainty over the ability of the companies
to complete the spin-off and merger could make it more difficult
for ACCO World and GBC to retain key employees or to pursue
business strategies. In addition, until the spin-off and merger
are completed, the attention of ACCO World and GBC management
may be diverted from ongoing business concerns and regular
business responsibilities to the extent management is focused on
matters relating to the transaction, such as obtaining
regulatory approvals.
Some
of the directors, officers and stockholders of GBC have
interests that are different from, or in addition to, the
interests of GBC stockholders.
In considering the GBC board of directors’ determination to
approve the merger agreement and to recommend that GBC
stockholders vote to adopt the merger agreement and approve the
merger, GBC stockholders should be aware of potential conflicts
of interest of, and the benefits available to, certain GBC
stockholders, directors and officers. These stockholders,
directors and officers may have interests in the merger that are
different from, or in addition to, the interests of GBC
stockholders as a result of, among other things:
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arrangements regarding the appointment of directors and officers
of ACCO Brands; |
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certain outstanding options to purchase GBC common stock issued
under GBC stock plans prior to the date of the merger agreement,
including those held by executive officers and directors, would
become fully exercisable upon completion of the merger and
restrictions upon certain restricted stock units under GBC stock
plans issued prior to the date of the merger agreement,
including those held by executive officers and directors, would
lapse; |
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employment and severance arrangements maintained for GBC
executive officers; |
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special fee payments to be made to GBC directors as a result of
the merger; |
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the voting agreement entered into by Fortune Brands, ACCO World
and Lane Industries, GBC’s largest stockholder; and |
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the registration rights agreement entered into by ACCO World and
Lane Industries. |
You should read “The Transactions — Interests of
Certain Persons in the Merger” on page 53 for a more
complete description of the interests and benefits listed above.
The
merger agreement and voting agreement contain provisions that
may discourage other companies from trying to acquire
GBC.
The merger agreement and voting agreement contain provisions
that may discourage a third party from submitting a business
combination proposal to GBC that might result in greater value
to GBC stockholders than the merger. The merger agreement
generally prohibits GBC from soliciting any acquisition
proposal. In addition, if the merger agreement is terminated by
GBC or Fortune Brands in
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circumstances that obligate GBC to pay a termination fee and to
reimburse transaction expenses to Fortune Brands, GBC’s
financial condition may be adversely affected as a result of the
payment of the termination fee and transaction expenses, which
might deter third parties from proposing alternative business
combination proposals.
At the close of business on the record date for the special
meeting of GBC stockholders, Lane Industries beneficially owned
and was entitled to vote 7,474,962 shares of GBC common
stock and 2,398,275 shares of GBC Class B common
stock, representing approximately 86.7% of the voting power of
GBC common stock and Class B common stock taken together.
Under the terms of the voting agreement, Lane Industries has
agreed, subject to certain limited exceptions, to vote, and
granted to Fortune Brands a proxy to vote, its shares in favor
of adoption of the merger agreement and approval of the merger
and any other transactions contemplated by the merger agreement
and against any action that would reasonably be expected to
adversely affect or delay the merger.
If
the spin-off does not constitute a spin-off under
section 355 of the Internal Revenue Code or the merger does
not constitute a reorganization under section 368(a) of the
Internal Revenue Code, either as a result of actions taken in
connection with the spin-off or the merger or as a result of
subsequent acquisitions of stock of Fortune Brands or stock of
ACCO Brands, then Fortune Brands, ACCO Brands, Fortune Brands
stockholders and/or GBC stockholders may be responsible for
payment of United States federal income taxes.
The spin-off and the merger are conditioned upon the receipt by
Fortune Brands and ACCO World of opinions of
Chadbourne & Parke LLP, counsel to Fortune Brands and
ACCO World, to the effect that the spin-off will constitute a
spin-off under section 355 of the Internal Revenue Code and
the merger will constitute a reorganization under
section 368(a) of the Internal Revenue Code. The spin-off
and the merger are also conditioned upon GBC’s receipt of
an opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
counsel to GBC, to the effect that the merger will constitute a
reorganization under section 368(a) of the Internal Revenue
Code. These opinions of counsel to Fortune Brands, ACCO World
and GBC will be based on, among other things, current law and
certain representations as to factual matters made by, among
others, Fortune Brands, ACCO World and GBC, which, if incorrect,
could jeopardize the conclusions reached by such counsel in
their opinions.
The tax allocation agreement to be entered into by Fortune
Brands and ACCO World generally provides that ACCO Brands will
be responsible for any taxes imposed on Fortune Brands or ACCO
Brands as a result of either:
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the failure of the spin-off to constitute a spin-off under
section 355 of the Internal Revenue Code, or |
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the subsequent disqualification of the distribution of the ACCO
Brands common stock to Fortune Brands stockholders in connection
with the spin-off as tax-free to Fortune Brands for United
States federal income tax purposes, |
if such failure or disqualification is attributable to certain
post-spin-off actions taken by or in respect of ACCO Brands
(including its
subsidiaries) or its stockholders, such as the
acquisition of ACCO Brands by a third party at a time and in a
manner that would cause such failure or disqualification. For
example, even if the spin-off otherwise qualifies as a spin-off
under section 355 of the Internal Revenue Code, the
distribution of ACCO Brands common stock to Fortune Brands
stockholders in connection with the spin-off may be disqualified
as tax-free to Fortune Brands if there is an acquisition of
stock of ACCO Brands as part of a plan or series of related
transactions that include the spin-off and that results in a
deemed acquisition of 50% or more of the ACCO Brands common
stock.
For purposes of this test, any acquisitions of Fortune Brands
stock or ACCO Brands stock within two years before or after the
spin-off are presumed to be part of such a plan, although ACCO
Brands or Fortune Brands may be able to rebut that presumption.
Also, for purposes of this test, the merger will be treated as
resulting in a deemed acquisition by GBC stockholders of
approximately 34% of the ACCO
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Brands common stock. The process for determining whether a
change of ownership has occurred under the tax rules is complex,
inherently factual and subject to interpretation of the facts
and circumstances of a particular case. If ACCO Brands does not
carefully monitor its compliance with these rules, ACCO Brands
might inadvertently cause or permit a change of ownership to
occur, triggering its obligation to indemnify Fortune Brands
pursuant to the Fortune Brands/ ACCO World tax allocation
agreement. In addition, ACCO Brands’ indemnity obligation
could discourage or prevent a third party from making a proposal
to acquire ACCO Brands. See “Certain United States Federal
Income Tax Consequences of the Spin-Off and the Merger”
beginning on page 83.
Failure
to complete the merger could adversely impact the market price
of GBC as well as GBC’s business and operating
results.
If the merger is not completed for any reason, the price of GBC
common stock may decline to the extent that the market price of
GBC common stock reflects positive market assumptions that the
spin-off and the merger will be completed and the related
benefits will be realized. GBC may also be subject to additional
risks if the merger is not completed, including:
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depending on the reasons for termination of the merger
agreement, the requirement that GBC pay Fortune Brands a
termination fee of $9.5 million plus costs incurred by
Fortune Brands and ACCO World in connection with the transaction; |
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substantial costs related to the merger, such as legal,
accounting, filing, financial advisory and financial printing
fees, must be paid regardless of whether the merger is
completed; and |
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potential disruption to the businesses of GBC and distraction of
its workforce and management team. |
Risks Relating To ACCO Brands’ Business After the
Merger
ACCO
Brands may be unable to anticipate changes in consumer
preferences, which may result in decreased demand for its
products.
ACCO Brands’ success will depend in part on its ability to
anticipate and offer products that appeal to the changing needs
and preferences of its customers in the various market
categories ACCO Brands will compete in after the merger. If it
is not able to anticipate, identify and develop and market
products that respond to these changes in customer preferences,
demand for ACCO Brands’ products may decline and its
operating results may be adversely affected.
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ACCO Brands substantial indebtedness could adversely
affect its operations and financial condition. |
After the merger, ACCO Brands will have a significant amount of
indebtedness. As currently contemplated as described in
“Financing of ACCO Brands Corporation” beginning on
page 81, ACCO Brands could incur up to $1.0 billion in
indebtedness in connection with the spin-off, merger and related
financing transactions. This indebtedness could have important
consequences to ACCO Brands, such as:
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limiting its ability to obtain additional financing to fund
growth, working capital, capital expenditures, debt service
requirements or other cash requirements; |
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limiting its operational flexibility due to the covenants
contained in its debt agreements; |
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limiting its ability to invest operating cash flow in its
business due to debt service requirements; |
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limiting its ability to compete with companies that are not as
highly leveraged and that may be better positioned to withstand
economic downturns; |
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increasing its vulnerability to economic downturns and changing
market conditions; and |
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to the extent that ACCO Brands’ debt is subject to floating
interest rates, increasing its vulnerability to fluctuations in
market interest rates. |
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ACCO Brands expects to obtain the money to pay its expenses and
to pay the principal and interest on its outstanding debt from
its operations. ACCO Brands’ ability to meet its expenses
and debt service obligations will depend on its future
performance, which will be affected by financial, business,
economic and other factors, including potential changes in
customer preferences, the success of product and marketing
innovation and pressure from competitors. If ACCO Brands does
not have enough money to pay its debt service obligations, it
may be required to refinance all or part of its existing debt,
sell assets or borrow more money. We cannot assure you that ACCO
Brands will be able to, at any given time, refinance its debt,
sell assets or borrow more money on terms acceptable to it or at
all.
ACCO
Brands will be subject to restrictive debt covenants, which may
restrict its operational flexibility.
After the merger, ACCO Brands’ credit facilities will
contain covenants that restrict its ability to incur additional
indebtedness, issue preferred stock, pay dividends on and redeem
capital stock, make other restricted payments, including
investments, sell its assets, transfer all or substantially all
of its assets and enter into consolidations or mergers. After
the merger, the new credit facilities will also require the
company to maintain specified financial ratios and satisfy
financial condition tests. ACCO Brands’ ability to meet
those financial ratios and tests may be affected by events
beyond its control and we cannot assure you that it will meet
those ratios and tests. A breach of any of these covenants,
ratios, tests or restrictions could result in an event of
default under the new credit facilities, in which case the
lenders could elect to declare all amounts outstanding under the
facilities to be immediately due and payable. If the lenders
under the new credit facilities accelerate the payment of the
indebtedness, we cannot assure you that ACCO Brands’ assets
would be sufficient to repay in full the indebtedness and any
other indebtedness that would become due as a result of any
acceleration.
The
ACCO World and GBC businesses are dependent on a limited number
of customers and a substantial reduction in sales to these
customers could significantly impact ACCO Brands’ operating
results.
The office products industry is concentrated in a small number
of major customers, principally office products superstores
(which combine
contract-stationers, retail and mail order),
office products distributors and mass merchandisers. This
concentration increases pricing pressures to which ACCO Brands
will be subject and leads to pressures on its margins and
profits. Additionally, consolidation among customers exposes
ACCO Brands to an increased concentration of customer credit
risk. A relatively limited number of customers account for a
large percentage of the total net sales of GBC and ACCO World.
In 2004, on a pro forma basis, approximately 48% of the net
sales of ACCO World and GBC were to ACCO Brands’ 10 largest
customers, although no single customer accounted for more than
13% of sales on a pro forma basis. Although ACCO Brands will not
be dependent on any single customer, the loss of, or significant
reduction in business from, one or more of ACCO Brands’
major customers could have a material adverse effect on ACCO
Brands’ business, financial position and results of
operations.
If
ACCO Brands does not compete successfully in the competitive
office products industry, its business and revenues may be
adversely affected.
ACCO Brands’ products and services are sold in highly
competitive markets. We believe that the principal points of
competition in its markets are product innovation, quality,
price, merchandising, design and engineering capabilities,
product development, timeliness and completeness of delivery,
conformity to customer specifications and post-sale support.
Competitive conditions may require ACCO Brands to match or
better competitors’ prices to retain business or market
share. We believe that ACCO Brands’ competitive position
will depend on continued investment in innovation and product
development, manufacturing and sourcing, quality standards,
marketing and customer service and support. However, there can
be no assurance that ACCO Brands will have sufficient resources
to make such investments or that it will be successful in
maintaining its competitive position. There are no significant
barriers to entry into the markets for most of ACCO Brands’
products and services. ACCO Brands also faces increasing
competition from its own customers’ private-label and
direct sourcing initiatives.
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ACCO
Brands’ success will depend on its ability to attract and
retain qualified personnel.
ACCO Brands’ success will depend on its ability to attract
and retain qualified personnel, including executive officers and
other key management personnel. We cannot assure you that ACCO
Brands will be able to attract and retain qualified management
and other personnel necessary for the development, manufacture
and sale of its products or that key GBC and ACCO World
employees will remain with ACCO Brands after the merger. If
those GBC and ACCO World employees are not retained, we may
experience substantial disruption in these businesses. The loss
of key management personnel or other key employees or our
inability to attract such personnel may adversely affect our
ability to manage our overall operations and successfully
implement our business strategy.
ACCO
Brands is subject to environmental regulation and environmental
risks.
ACCO Brands and its operations, both in the United States and
abroad, are subject to national, state, provincial and/or local
environmental laws and regulations that impose limitations and
prohibitions on the discharge and emission of, and establish
standards for the use, disposal, and management of, certain
materials and waste. These environmental laws and regulations
also impose liability for the costs of investigating and
cleaning up sites, and certain damages resulting from present
and past spills, disposals, or other releases of hazardous
substances or materials. Environmental laws and regulations can
be complex and may change often. Capital and operating expenses
required to comply with environmental laws and regulations can
be significant, and violations may result in substantial fines
and penalties. In addition, environmental laws and regulations,
such as the Comprehensive Environmental Response, Compensation
and Liability Act (or CERCLA), in the United States impose
liability on several grounds for the investigation and cleanup
of contaminated soil, ground water, buildings, and for damages
to natural resources at a wide range of properties. For example,
contamination at properties formerly owned or operated by ACCO
World or GBC, as well as at properties ACCO Brands will own and
operate, and properties to which hazardous substances were sent
by ACCO World or GBC, may result in liability for ACCO Brands
under environmental laws and regulations. There can be no
assurance that the costs of complying with environmental laws
and regulations and any claims concerning noncompliance, or
liability with respect to contamination will not in the future
have a material adverse effect on ACCO Brands’ financial
position or results of operations.
ACCO
Brands’ business is subject to risks associated with
seasonality, which could adversely affect its cash flow,
financial condition or results of operations.
ACCO Brands’ business, as it concerns both historical sales
and profit, has experienced increased sales volume in the third
and fourth quarters of the calendar year. Two principal factors
have contributed to this seasonality: the office products
industry’s customers and ACCO Brands’ product line.
ACCO Brands will be a major supplier of products related to the
“back-to-school” season, which occurs primarily during
the months of June, July, August and September for its North
American business; and its product line includes several
products which lend themselves to calendar year-end purchase
timing, including Day-Timers planners, paper organization and
storage products (including bindery) and Kensington computer
accessories which increase with traditionally strong fourth
quarter sales of personal computers. If either of these typical
seasonal increases in sales of certain portions of ACCO
Brands’ product line does not meet our expectations, ACCO
Brands could experience a material adverse effect on its
business, financial condition and results of operation for the
year.
The
raw materials and labor costs incurred by ACCO Brands are
subject to price increases that could adversely affect its
profitability.
The primary materials used in the manufacturing of many of ACCO
Brands’ products will be paper, steel, plastics, polyester
and polypropylene substrates, wood, aluminum, melamine and cork.
These materials are available from a number of suppliers, and
ACCO Brands is not dependent upon any single supplier for any of
these materials. In general, ACCO Brands’ gross profit may
be affected from time to time by fluctuations in the prices of
these materials because ACCO Brands’ customers require
advance
21
notice and negotiation to pass through raw material price
increases, giving rise to a delay before cost increases can be
passed to customers. Based on our experience, we believe that
adequate quantities of these materials will be available in
adequate supplies in the foreseeable future. Inflationary and
other increases in costs of materials and labor have occurred in
the past and may recur, and there can be no assurance that such
raw materials will continue to be available in adequate supply
in the future or that shortages in supply will not result in
price increases that could have a material adverse effect on
ACCO Brands’ financial position or results of operations.
ACCO
Brands will be subject to risks associated with international
operations that could harm its business.
Currently, a substantial part of ACCO World’s and
GBC’s business is conducted internationally. On a pro forma
basis, approximately 45% of ACCO Brands’ net sales for the
twelve months ended
December 31, 2004 were from
international sales. ACCO Brands’ international
operations may be significantly affected by economic, political
and governmental conditions in the countries where its products
are manufactured or sold. Additionally, while the recent
relative weakness of the U.S. dollar to other currencies
has been advantageous for ACCO World and GBC sales as the
results of non-U.S. operations have increased when reported
in U.S. dollars, we can give no assurances and make no
predictions about the rate at which the U.S. dollar will
trade against other currencies in the future. If the
U.S. dollar were to become significantly more valuable
relative to other currencies in the global market, such an
increase could harm ACCO Brands’ ability to compete, its
business and its results of operations.
ACCO
Brands will be subject to risks associated with outsourcing that
could harm its business.
Historically, ACCO World and GBC have outsourced certain
manufacturing functions to third party service providers in
China and other countries. Outsourcing generates a number of
risks, including decreased control over the manufacturing
process possibly leading to production delays or interruptions,
possible inferior product quality control and misappropriation
of trade secrets. In addition, performance problems by these
third party service providers could result in cost overruns,
delayed deliveries, shortages, quality issues or other problems
which could result in significant customer dissatisfaction and
could materially and adversely affect ACCO Brands’
business, financial condition and results of operations.
If one or more of these third party service providers becomes
unable or unwilling to continue to provide services of
acceptable quality, at acceptable costs or in a timely manner,
ACCO Brands’ ability to deliver its products to its
customers could be severely impaired. Furthermore, the need to
identify and qualify substitute service providers or increase
its internal capacity could result in unforeseen operational
problems and additional costs. Substitute service providers
might not be available or, if available, might be unwilling or
unable to offer services on acceptable terms. Moreover, if
customer demand for ACCO Brands’ products increases, it may
be unable to secure sufficient additional capacity from its
current service providers, or others, on commercially reasonable
terms, if at all.
ACCO
Brands will depend on certain manufacturing sources whose
inability to perform their obligations could harm ACCO
Brands’ business.
GBC relies, and ACCO Brands will rely, on GMP Co. Ltd., in which
GBC holds an approximately 20% equity interest, as its sole
supplier of many of the laminating machines GBC distributes.
There can be no assurance that GMP will be able to continue to
perform any or all of its obligations to ACCO Brands. GMP’s
equipment manufacturing facility is located in the Republic of
Korea, and its ability to supply ACCO Brands with laminating
machines, may be affected by Korean and other regional or
worldwide economic, political or governmental conditions.
Additionally, GMP has a highly leveraged capital structure and
its ability to continue to obtain financing is required to
ensure the orderly continuation of its operations. If GMP were
unable to supply ACCO Brands with adequate equipment, and ACCO
Brands could not find a suitable alternative supplier on
favorable terms, if at all, it may have a material adverse
effect on the ACCO Brands business.
22
ACCO
Brands’ inability to secure and maintain rights to
intellectual property could harm its business.
After the merger, ACCO Brands will have many patents,
trademarks, brand names and trade names that are, in the
aggregate, important to its business. The loss of any individual
patent or license may not be material to ACCO Brands taken as a
whole, but the loss of a number of patents or licenses that
represented principal portions of the ACCO Brands business, or
expenses related to defending or maintaining the patents or
licenses could have a material adverse effect on the ACCO Brands
business.
As
a result of the spin-off and merger, ACCO Brands will be subject
to financial reporting and other requirements for which its
accounting and other management systems and resources may not be
adequately prepared.
The financial results for ACCO World were previously included
within the consolidated results of Fortune Brands and its
reporting and control systems were appropriate to that of a
segment of a public company. However, as a private company, ACCO
World was not directly subject to reporting and other
requirements of the Securities Exchange Act of 1934, as amended,
also referred to herein as the Exchange Act. As a result of the
spin-off and merger, ACCO Brands will be directly subject to
reporting and other obligations under the Exchange Act,
including the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, which will require annual management
assessments of the effectiveness of ACCO Brands’ internal
controls over financial reporting and a report by ACCO
Brands’ independent auditors addressing these assessments.
These reporting and other obligations will place significant
demands on ACCO Brands’ management, administrative and
operational resources, including accounting resources. We
anticipate that ACCO Brands will need to integrate the ACCO
World and GBC businesses to upgrade its systems, including
information technology, implement additional financial and
management controls, reporting systems and procedures and hire
additional accounting and finance staff. If ACCO Brands is
unable to integrate and upgrade its financial and management
controls, reporting systems, information technology and
procedures in a timely and effective fashion, ACCO Brands’
ability to comply with its financial reporting requirements and
other rules that apply to reporting companies could be impaired.
Any failure to achieve and maintain effective internal controls
could have a material adverse effect on ACCO Brands’
business, operating results and stock price.
Certain
provisions in ACCO Brands’ organizational documents and
Delaware law may make it difficult for someone to acquire
control of ACCO Brands.
ACCO Brands will have in place certain anti-takeover measures
that may affect its common stock. ACCO Brands’ restated
certificate of incorporation, its amended
by-laws and the
Delaware General Corporation Law contain several provisions that
would make more difficult an acquisition of control of the
company in a transaction not approved by ACCO Brands’ board
of directors, such as:
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the division of ACCO Brands’ board of directors into three
classes to be elected on a staggered basis, one class each year; |
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the ability of the ACCO Brands board of directors to issue
shares of preferred stock in one or more series without further
authorization of stockholders; |
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a prohibition on stockholder action by written consent; |
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a prohibition on the right of stockholders to call a special
meeting of stockholders; |
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a requirement that stockholders provide advance notice of any
stockholder nominations of directors or any proposal of new
business to be considered at any meeting of stockholders; |
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a requirement that the affirmative vote of at least 80% of ACCO
Brands’ shares be obtained to amend or repeal the
provisions of the restated certificate of incorporation relating
to the election and removal of directors, the classified board
or the right to act by written consent; and |
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a fair price provision. |
23
In addition to the provisions in ACCO Brands’ restated
certificate of incorporation and amended
by-laws,
Section 203 of the Delaware General Corporation Law
generally provides that a corporation shall not engage in any
business combination with any interested stockholder during the
three-year period following the time that such stockholder
becomes an interested stockholder, unless a majority of the
directors then in office approves either the business
combination or the transaction that results in the stockholder
becoming an interested stockholder or specified stockholder
approval requirements are met.
ACCO
Brands’ stockholder rights plan could prevent its
stockholders from receiving a premium over the market price for
their shares of common stock from a potential acquirer.
ACCO Brands will have a stockholder rights plan, which will be
effective upon completion of the spin-off. This plan entitles
ACCO Brands stockholders to acquire shares of its common stock
at a price equal to 50% of the then current market value in
limited circumstances when a third party acquires 15% or more of
ACCO Brands outstanding common stock or announces its intent to
commence a tender offer for at least 15% of ACCO Brands common
stock, in each case, in a transaction that ACCO Brands’
board of directors does not approve. Because, under these
limited circumstances, all of ACCO Brands’ stockholders
would become entitled to effect discounted purchases of ACCO
Brands common stock, other than the person or group that caused
the rights to become exercisable, the existence of these rights
would significantly increase the cost of acquiring control of
the company without the support of ACCO Brands’ board of
directors. The existence of the rights plan could therefore
deter potential acquirers and thereby reduce the likelihood that
ACCO Brands stockholders will receive a premium for their common
stock in an acquisition.
ACCO
Brands may be affected by significant restrictions with respect
to the issuance of its equity securities for two years after the
spin-off.
Even if the spin-off otherwise qualifies as a spin-off under
section 355 of the Internal Revenue Code, the distribution
of ACCO Brands common stock to Fortune Brands stockholders in
connection with the spin-off may be disqualified as tax-free to
Fortune Brands under section 355(e) of the Internal Revenue
Code if 50% or more of the stock of Fortune Brands or ACCO
Brands is acquired as part of a plan or series of related
transactions that includes the spin-off. For purposes of this
test, any acquisitions of Fortune Brands stock or ACCO Brands
stock within two years before or after the spin-off are presumed
to be part of such a plan, although Fortune Brands or ACCO
Brands may be able to rebut that presumption. Also, for purposes
of this test, the merger will be treated as resulting in a
deemed acquisition by GBC stockholders of approximately 34% of
the ACCO Brands common stock. The process for determining
whether a change of ownership has occurred under the tax rules
is complex, inherently factual and subject to interpretation of
the facts and circumstances of a particular case. If an
acquisition of Fortune Brands stock or ACCO Brands stock
triggers the application of section 355(e) of the Internal
Revenue Code, Fortune Brands would recognize taxable gain but
the spin-off would generally be tax-free to each Fortune Brands
stockholder. Under the Fortune Brands/ ACCO World tax allocation
agreement, ACCO Brands would be required to indemnify Fortune
Brands against that taxable gain if it were triggered by actions
taken by or in respect of ACCO Brands (including its
subsidiaries) or its stockholders. See
“Additional
Agreements Related to the Spin-Off and the Merger —
Tax Allocation Agreements — Fortune Brands/ ACCO
World” beginning on page 79.
Because of the change in control limitation imposed by
section 355(e) of the Internal Revenue Code, ACCO Brands
may be limited in the amount of stock that it can issue to make
acquisitions or raise additional capital in the two years
subsequent to the spin-off and merger. Also, ACCO Brands’
indemnity obligation to Fortune Brands might discourage, delay
or prevent a change of control during this two-year period that
stockholders of ACCO Brands may consider favorable. See
“Certain United States Federal Income Tax Consequences of
the Spin-Off and the Merger” beginning on page 83.
24
THE GBC SPECIAL MEETING
Date, Time and Place
The GBC special meeting will be held on
[ • ],
2005 at our headquarters located at One GBC Plaza, Northbrook,
Illinois, at
[ • ],
local time.
Matters for Consideration
At the special meeting, GBC stockholders will be asked to
consider and vote upon a proposal to adopt the merger agreement
attached as Annex A to this proxy statement/
prospectus-information statement and approve the merger pursuant
to which (i) Gemini Acquisition Sub will merge with and
into GBC, with GBC becoming a wholly-owned subsidiary of ACCO
Brands and (ii) each outstanding share of GBC common stock
and Class B common stock will be converted into the right
to receive one share of ACCO Brands common stock (and one
associated preferred share purchase right). It is not
anticipated that any other matters will be brought before the
special meeting.
THE GENERAL BINDING CORPORATION BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT GBC STOCKHOLDERS VOTE FOR THE
PROPOSAL TO ADOPT THE MERGER AGREEMENT AND APPROVE THE
MERGER.
Special Meeting Record Date; Voting Information; Quorum
The GBC board of directors has fixed the close of business on
June 23, 2005 as the record date for determining the
holders of GBC common stock and Class B common stock
entitled to notice of, and to vote at, the special meeting. Only
holders of record of GBC common stock and Class B common
stock at the close of business on the record date will be
entitled to notice of, and to vote at, the special meeting.
As of the record date, approximately 14,166,993 shares of
GBC common stock and 2,398,275 shares of Class B
common stock were issued and outstanding and entitled to vote at
the special meeting and there were approximately 575 holders of
record of GBC common stock and one holder of record of GBC
Class B common stock. GBC’s amended
by-laws provide
that each share of GBC common stock shall entitle the holder to
one vote on each matter to be considered at the special meeting
and that each share of GBC Class B common stock shall
entitle the holder to fifteen votes per share on each matter to
be considered at the special meeting.
If you are a record holder of GBC common stock or Class B
common stock on the record date, you may vote your shares of GBC
common stock and GBC Class B common stock in person at the
special meeting or by proxy as described below under
“— Voting by Proxy” on page 26.
The presence in person or by proxy at the special meeting of the
holders of at least a majority of the outstanding shares of GBC
common stock and Class B common stock entitled to vote will
constitute a quorum for the special meeting. Properly signed
proxies that are marked “abstain” are known as
abstentions. Properly signed proxies that are held by brokers in
street name on behalf of customers who have not provided their
broker with specific voting instructions on nonroutine matters
are known as broker non-votes. Abstentions and broker non-votes
will be counted for the purposes of determining whether a quorum
exists at the special meeting.
Required Vote
The affirmative vote of a majority of the voting power of the
outstanding shares of GBC common stock and Class B common
stock entitled to vote on the merger proposal, voting together
as a single class, is required to adopt the merger agreement and
approve the merger. Because the required vote of GBC
stockholders is based upon the number of outstanding shares of
GBC common stock and Class B common stock entitled to vote,
rather than upon the number of shares actually voted, the
failure by the holder of any such shares to submit a proxy or
vote in person at the special meeting, including abstentions and
25
broker non-votes, will have the same effect as a vote against
the adoption of the merger agreement and approval of the merger.
Voting by Proxy
GBC stockholders who vote their shares of GBC common stock and
Class B common stock by signing a proxy and returning it in
time for the special meeting will have their shares voted as
indicated on their proxy card. If a proxy is properly executed
but does not contain voting instructions, the proxy will be
voted FOR adoption of the merger agreement and approval
of the merger. If other matters are properly presented before
the special meeting, the persons named in the proxy will have
authority to vote in accordance with their judgment on any other
such matter, including, without limitation, any proposal to
adjourn or postpone the meeting or otherwise concerning the
conduct of the meeting. GBC does not currently expect that any
matter other than as described in this proxy statement/
prospectus-information statement will be brought before the
special meeting.
If your broker holds your shares of GBC common stock or
Class B common stock in street name, you must either direct
your broker on how to vote your shares or obtain a proxy from
your broker to vote in person at the special meeting. Please
check the voting form used by your broker for information on how
to submit your instructions to them.
Revocation of Proxies
GBC stockholders of record may revoke their proxy at any time
prior to the time it is voted at the special meeting.
Stockholders of record may revoke their proxy by:
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sending a written notice to GBC’s corporate secretary that
is received prior to the special meeting stating that you are
revoking your proxy; |
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properly completing a new proxy bearing a later date and
properly submitting it so that it is received prior to the
special meeting; or |
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attending the special meeting and voting it in person. |
Simply attending the special meeting will not revoke your proxy.
If you instructed a broker to vote your shares and you wish to
change your instructions, you must follow your broker’s
directions for changing those instructions. If an adjournment
occurs and no new record date is set, it will have no effect on
the ability of GBC stockholders of record as of the record date
to exercise their voting rights or to revoke any previously
delivered proxies.
Voting by GBC Management and Lane Industries, Inc.
At the close of business on the record date for the special
meeting of GBC stockholders, GBC directors and executive
officers as a group owned and were entitled to vote 243,183
shares of GBC common stock, representing approximately .0048% of
the outstanding voting power of GBC common stock and
Class B common stock entitled to vote at the special
meeting. All of the directors and executive officers of GBC that
are entitled to vote at the GBC special meeting have indicated
that they intend to vote their shares of GBC common stock in
favor of adoption of the merger agreement and approval of the
merger.
In addition, GBC’s majority stockholder, Lane Industries,
has entered into a voting agreement with Fortune Brands and ACCO
World. At the close of business on the record date for the
special meeting of GBC stockholders, Lane Industries
beneficially owned and was entitled to vote
7,474,962 shares of GBC common stock and
2,398,275 shares of GBC Class B common stock,
representing approximately 86.7% of the voting power of GBC
common stock and Class B common stock taken together. Under
the terms of the voting agreement, Lane Industries has agreed,
subject to limited exceptions, to vote, and granted to Fortune
Brands a proxy to vote, its shares in favor of adoption of the
merger agreement, approval of the merger and any other
transactions contemplated by the merger agreement and against any
26
action that would reasonably be expected to adversely affect or
delay the merger. Accordingly, the voting power of Lane
Industries’ shares is sufficient to adopt the merger
agreement and approve the merger and, as a result of Lane
Industries’ obligations under the voting agreement, the
adoption of the merger agreement and approval of the merger is
practically assured.
No Dissenters’ or Appraisal Rights
GBC stockholders will not be entitled to exercise
dissenters’ or appraisal rights or to demand payment for
their shares in connection with the merger because GBC common
stock is traded on the Nasdaq National Market. Under Delaware
law, no appraisal rights are available for shares of any class
or series of stock which, as of the record date fixed to
determine the stockholders entitled to receive notice of and to
vote at the meeting of stockholders to act upon any merger
agreement, were listed on a national securities exchange or
traded on the Nasdaq National Market.
Solicitation of Proxies
GBC is soliciting proxies for the special meeting and will bear
all expenses in connection with solicitation of proxies, except
that expenses incurred in connection with the printing and
mailing of this proxy statement/ prospectus-information
statement will be shared equally by GBC and ACCO World. Upon
request, GBC will pay banks, brokers, nominees, fiduciaries or
other custodians their reasonable expenses for sending proxy
material to, and obtaining instructions from, persons for whom
they hold shares.
GBC expects to solicit proxies primarily by mail, but directors,
officers and other employees of GBC may also solicit in person
or by Internet, telephone or mail.
Stockholders should not send stock certificates with their
proxies. A transmittal form with instructions for the
surrender of GBC common stock and/or Class B common stock
certificates will be mailed to GBC stockholders shortly after
completion of the merger.
27
THE TRANSACTIONS
Structure of the Spin-Off and the Merger
Fortune Brands and GBC have agreed pursuant to the merger
agreement to separate ACCO World from Fortune Brands in the
spin-off and to cause ACCO World to acquire GBC in the merger.
Immediately prior to the spin-off, Fortune Brands and ACCO World
will approve the ACCO Brands Restated Certificate of
Incorporation, attached hereto as Annex E and incorporated
herein by reference, and the Amended
By-Laws of ACCO Brands
Corporation, attached hereto as Annex F and incorporated
herein by reference. Upon such action, ACCO World will be
renamed
“ACCO Brands Corporation.” ACCO World will
also be recapitalized and Fortune Brands will distribute all of
its shares of ACCO Brands common stock to Fortune Brands common
stockholders on a pro rata basis. Prior to the spin-off, ACCO
World will pay a special dividend to its stockholders in the
aggregate amount of $625.0 million. As a stockholder of
ACCO World, Fortune Brands will receive 98.3% of this dividend.
Fortune Brands common stockholders will continue to hold their
shares of Fortune Brands common stock after the distribution of
ACCO Brands common stock.
Once the spin-off is complete, the merger will be completed
pursuant to the terms of the merger agreement. ACCO World’s
wholly-owned subsidiary, Gemini Acquisition Sub, will merge with
and into GBC. GBC will survive the merger as a wholly-owned
subsidiary of ACCO Brands. At the time of the merger, GBC
stockholders will receive the right to receive one share of ACCO
Brands common stock (and one associated preferred share purchase
right) for each share of GBC common stock or GBC Class B
common stock they own. Immediately after consummation of the
merger, on a fully-diluted basis, 66% of ACCO Brands will be
held by Fortune Brands common stockholders and ACCO World’s
minority stockholder and 34% will be held by stockholders of GBC.
We encourage you to read carefully the merger agreement and the
distribution agreement which are attached as Annexes A and B to
this proxy statement/prospectus-information statement and
incorporated herein by reference, respectively, because they set
forth the terms of the merger and the distribution of shares of
ACCO Brands common stock to Fortune Brands’ common
stockholders.
Background of the Merger
During the spring and summer of 2003, GBC management and the GBC
board of directors considered alternatives available to GBC in
light of
the company’s stock performance and various
developments occurring in the office products industry. In
particular, GBC management and the GBC board of directors
considered whether the limited liquidity and trading volume of
the company’s stock was negatively affecting GBC and its
stockholders and what impact that changing industry conditions,
such as customer consolidation, might have on GBC’s
business prospects. GBC management and the GBC board of
directors also considered whether increased scale might
alleviate these pressures. The GBC board of directors determined
that it would be in the best interests of GBC stockholders for
GBC to consider strategic alternatives for enhancing GBC’s
value, including remaining a stand-alone company and seeking to
grow its business organically or engaging in a possible business
combination transaction involving
the company. In connection
with this strategic review, the board formed a committee of
directors consisting of Messrs. Forrest M. Schneider,
George V. Bayly and Richard U. DeShutter, referred to herein as
the
“strategic options committee,” to work with GBC
management in considering these strategic alternatives. The GBC
board also had discussions with Goldman Sachs regarding
potential alternatives
the company might pursue.
In December 2003, the GBC board of directors formally retained
Goldman Sachs as financial advisor to assist the GBC board and
GBC management in the strategic review. GBC management and the
strategic options committee, with the assistance of Goldman
Sachs, began identifying potential business partners and
preparing information for use in evaluating whether a business
combination involving
the company should be pursued. In
addition, Goldman Sachs assisted GBC management and the strategic
28
options committee with the preparation of marketing materials
for use in soliciting expressions of interest with respect to a
possible business combination or other transaction involving GBC.
On
January 28, 2004, the GBC board of directors met to
discuss, among other things, the ongoing strategic review. At
the meeting, the GBC board discussed strategic alternatives
available to GBC, including the following:
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a stand-alone scenario, whereby GBC would continue to sell and
innovate in its current area of strategic focus; |
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a strategic business combination scenario, whereby GBC would
seek to partner with another company in the office products
industry in an effort to strengthen both companies by expanding
their mutual product offerings; or |
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a financial business combination scenario, whereby GBC would
seek to partner with a financial sponsor having an interest in
the office products industry. |
The GBC board also discussed with Goldman Sachs various
strategies for implementing a process whereby GBC could explore
a potential business combination which could optimize value to
GBC stockholders. After extensive discussion, the board
determined to authorize GBC management, with the assistance of
Goldman Sachs, to complete the marketing materials it had been
preparing and to make contact with potential strategic partners.
Commencing in late February 2004, Goldman Sachs contacted five
companies considered to have a potential strategic interest in
GBC and requisite financial capacity to discuss a possible
business combination or other transaction with GBC. ACCO World
had been identified as a potential strategic partner with GBC,
but was not included in the initial list of contacted companies
due to concerns that Fortune Brands would not be interested in a
transaction in which it would retain a significant interest in a
combined entity and that initiating discussions with ACCO World
could have negative consequences to GBC if the discussions were
to become public, but a transaction with ACCO World was not
completed. Goldman Sachs provided each interested party that
executed a confidentiality agreement with the prepared marketing
materials and invited interested parties to participate in
presentations to be given by GBC management. Two potential
strategic partners accepted invitations to participate in the
management presentations, which were given during March 2004.
During the following weeks, each of the potential strategic
partners indicated that it did not intend to submit a
preliminarily indication of interest regarding a transaction
with GBC.
On
February 26, 2004, at a meeting of the GBC board of
directors, Goldman Sachs provided an update concerning the
contacts with the potential strategic partners, including
informing the board of the potential partners who had been
contacted and of the initial response to these contacts.
On
March 30, 2004, the GBC board of directors met to
discuss, among other things, the status of discussions with
potential strategic partners. The board discussed the results of
the contacts with the potential strategic partners and whether
also contacting potential financial partners could possibly lead
to a business combination that would provide to the GBC
stockholders value superior to the alternative of remaining a
stand-alone entity. Following extensive discussion among the GBC
board of directors, GBC management and Goldman Sachs, the GBC
board directed Goldman Sachs to expand the scope of potential
business partners and to contact potential financial partners.
Following the March 30th meeting, Goldman Sachs contacted
eight financial sponsors that were thought to have both an
interest in the office products industry and access to
sufficient financing to engage in a transaction with GBC. Five
potential financial partners accepted invitations to participate
in management presentations, which were given during April 2004.
Two potential financial partners submitted preliminary
indications of interest regarding a transaction with GBC on
May 3, 2004.
29
On
May 5, 2004, the GBC board of directors met and, among
other things, reviewed GBC’s strategic alternatives with
GBC management and Goldman Sachs. At this meeting, Goldman Sachs
reviewed the preliminary indications of interest received by GBC
from the potential financial partners. The GBC board of
directors authorized management and Goldman Sachs to proceed
with the process of soliciting definitive offers from the
potential financial partners that had submitted preliminary
indications of interest.
From May 2004 through early June 2004, GBC management and
Goldman Sachs provided the remaining potential partners and
their legal and financial advisors with access to GBC documents
and financial projections assembled for their due diligence
review. During this review, GBC management participated in
informal discussions with the remaining potential partners
during which GBC management became aware that any definitive
offers from the potential bidders would value GBC at less than
desirable amounts.
On
June 23, 2004, the GBC board of directors met to review
the status of discussions with potential business partners and
to consider possible alternatives. Following extensive
discussions among the GBC board of directors, GBC management and
Goldman Sachs, the GBC board of directors determined to conclude
the solicitation of third party bids as the process had not led
to any bids for GBC at desirable levels and to pursue other
alternatives, including consideration of whether to approach
Fortune Brands regarding a potential transaction with ACCO
World. The GBC board directed GBC management and Goldman Sachs
to consider the viability of a potential transaction with ACCO
World prior to the board’s
August 12, 2004 meeting.
On
August 12, 2004, at a meeting of the GBC board of
directors, GBC management and Goldman Sachs made presentations
describing a potential transaction structure whereby ACCO World
would be spun-off from Fortune Brands in a tax-free distribution
of shares to Fortune Brands’ stockholders and would then
immediately merge with GBC. Following extensive discussion
regarding, among other things, the potential advantages that
could develop for GBC as a result of such a transaction,
including the increased scale, scope and diversity of
operations, the efficiencies that may be achievable through
complementary businesses, distribution channels, product lines,
served markets and customers resulting from such a transaction
and the likelihood that a business combination with ACCO World
would provide to GBC stockholders value superior to what had
been informally indicated during GBC’s prior solicitation
of third party bids, the GBC board of directors authorized the
initiation of discussions with Fortune Brands regarding a
potential business combination with ACCO World.
During September 2004, the GBC board formed a committee of
directors consisting of Messrs. Bayly, Schneider and
G. Thomas Hargrove, referred to herein as the
“transaction committee,” to assist GBC management in
conducting any negotiations with Fortune Brands and ACCO World.
On
September 23, 2004, Mr. Bayly contacted
Mr. Norman H. Wesley, Fortune Brands’ Chairman and
Chief Executive Officer, to arrange a meeting with members of
Fortune Brands’ management to discuss a potential business
combination.
On
September 29, 2004, Messrs. Hargrove and Bayly met
with Messrs. Wesley and
Christopher J. Klein, Fortune
Brands’ Senior Vice President, Strategy and Business
Development. The meeting included a general discussion of the
perceived benefits of a transaction involving ACCO World and GBC
and the spin-off/merger transaction structure proposed by GBC.
On
October 6, 2004, representatives of Goldman Sachs met
with Mr. Klein and representatives of Citigroup Global
Markets Inc., Fortune Brands’ financial advisor, to further
discuss the transaction structure proposed by GBC. At this
meeting, Goldman Sachs discussed the proposed structure of the
spin-off and subsequent merger and described key tax
requirements of the proposed structure.
On
October 18, 2004, members of GBC’s transaction
committee met with Mr. Klein. At this meeting,
Mr. Klein presented Fortune Brands’ response to
GBC’s proposed transaction. Among other things, this
response provided that a spin-off/merger structure may be
acceptable to Fortune Brands, but that certain criteria would
need to be agreed upon before Fortune Brands and ACCO World
would be willing to proceed with negotiations with GBC. These
criteria included an agreement that Fortune Brands’
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stockholders own greater than 50% of a combined entity following
a merger and that ACCO World senior executives be the senior
executives of a combined company.
On
October 21, 2004, the GBC board of directors met and,
among other things, reviewed Fortune Brands’ response to
GBC’s proposal. After discussing the response with the
transaction committee, GBC management and Goldman Sachs, the
board of directors authorized the transaction committee to
continue discussions with Fortune Brands with respect to the
proposed transaction, subject to negotiation of certain of
Fortune Brands’ conditions to proceed and Fortune Brands
and GBC agreeing to negotiate exclusively with one another for a
mutually agreeable period.
On
October 25, 2004, Mr. Schneider met with
Mr. Klein to discuss GBC’s response to Fortune
Brands’ October 18th proposals.
On
October 28, 2004, GBC and Fortune Brands entered into a
confidentiality agreement to facilitate the exchange of
confidential information as part of a mutual due diligence
process.
On
November 5, 2004, GBC and Fortune Brands provided one
another with historical financial information regarding the GBC
and ACCO World businesses.
On
November 9, 2004, Messrs. Hargrove, Schneider,
Dennis J. Martin, GBC’s Chairman, President and Chief
Executive Officer, Don Civgin, GBC’s Senior Vice President
and Chief Financial Officer, and
Steven Rubin, GBC’s Vice
President, Secretary and General Counsel, along with
representatives of Goldman Sachs and Skadden, Arps, Slate,
Meagher & Flom LLP, GBC’s legal advisor, met with
Messrs. Wesley, Klein,
Mark A. Roche, Fortune Brands’
Senior Vice President, General Counsel and Secretary, David D.
Campbell, ACCO World’s Chairman, President and Chief
Executive Officer,
Neal V. Fenwick, ACCO World’s Executive
Vice President of Finance and Administration and chief financial
officer, and Denny Chandler, then President of ACCO U.S., along
with other representatives of ACCO World’s senior
management, Citigroup and Bain & Company, management
consultants assisting ACCO World. At this meeting, the GBC and
ACCO World representatives presented an overview of their
respective businesses, assets and strategy. In addition, the
parties discussed potential synergy opportunities arising from a
combination of the GBC and ACCO World businesses.
On
November 12, 2004, Mr. Civgin, along with
representatives of Goldman Sachs, met with Mr. Fenwick,
along with representatives of Citigroup, to continue discussions
regarding potential synergy opportunities between the companies.
These opportunities were further discussed at a meeting between
Mr. Civgin, along with representatives of Goldman Sachs,
and Mr. Fenwick, along with representatives of Citigroup,
on
November 19, 2004 and a meeting between
Messrs. Hargrove, Martin and Civgin, along with
representatives of Goldman Sachs, and Messrs. Campbell,
Fenwick and Chandler, along with representatives of Citigroup,
on
November 23, 2004.
On
December 2, 2004, at a meeting of the GBC board of
directors, the transaction committee and GBC management updated
the board as to the status of discussions with Fortune Brands
and ACCO World. The transaction committee and GBC management
also reviewed with the board a summary of terms proposed to be
delivered to Fortune Brands. At this meeting, representatives of
Goldman Sachs made a presentation regarding the potential
financial implications of the combination of GBC and ACCO World,
including the implications of various possible ownership
percentages of a combined entity. Following extensive
discussion, the GBC board of directors authorized the
transaction committee and GBC management to deliver the summary
of proposed terms to Fortune Brands.
On
December 3, 2004, Skadden, Arps forwarded to Fortune
Brands and Chadbourne & Parke LLP, Fortune Brands’
and ACCO World’s legal advisor, the summary of proposed
terms of the transaction. Throughout the week of
December 6, 2004, GBC and Fortune Brands, and their
respective legal and financial advisors, negotiated the summary
of proposed terms.
On
December 13, 2004, each of GBC and Fortune Brands
agreed, as a preliminary matter, and subject to further due
diligence and the negotiation of material terms, to the
provisions of a non-binding term sheet providing for a
spin-off/merger transaction. In the non-binding term sheet, GBC
and Fortune
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Brands established a framework for determining the post-merger
ownership split for the combined entity, which split would be
fixed at the time a merger agreement was signed. The
determination of the ownership split was to be subject to a
number of adjustments which would be quantified, reviewed and
agreed upon following more extensive due diligence, and would
include adjustments relating to matters affecting the relative
EBITDA and levels of indebtedness to be contributed by each of
GBC and ACCO World to the combined entity. Based on the
information GBC and Fortune Brands provided to one another as of
December 13, 2004, the framework yielded an ownership split
for GBC stockholders of 37.2% of a combined entity on a fully
diluted basis. The non-binding term sheet also provided for ACCO
World to declare a dividend not to exceed $625.0 million to
its stockholders prior to Fortune Brands’ distributing its
shares of ACCO World common stock to Fortune Brands’
stockholders, for commitment letters for financing such dividend
as well as to restructure GBC’s and ACCO World’s debt
to be obtained prior to the signing of any definitive agreements
and for Mr. Campbell to be the CEO of the combined entity.
GBC and Fortune Brands also entered into a 60-day exclusivity
agreement providing that until
February 11, 2005 the
parties would not negotiate a transaction involving GBC or ACCO
World with another person and would not provide non-public
information regarding GBC or ACCO World to another person who
may be considering such a transaction. GBC and Fortune Brands
also agreed that, as a condition to Fortune Brands entering into
a definitive agreement with GBC, Lane Industries would be
required to enter into an agreement committing to vote its
shares of GBC stock in favor of the proposed merger.
On
December 14, 2004, Messrs. Hargrove and Schneider,
along with representatives of GBC’s senior management,
Goldman Sachs and Skadden, Arps, met with representatives of
Fortune Brands’ senior management, Citigroup and
Chadbourne & Parke to discuss the due diligence process
for the proposed transaction. During the period through the
execution of the merger agreement in March 2005, representatives
of GBC engaged in a due diligence review of ACCO World and
representatives of Fortune Brands and ACCO World engaged in a
due diligence review of GBC.
On
December 24, 2004, Messrs. Hargrove, Schneider and
Civgin, along with Ms. Jamie Knez, Lane Industries’
Treasurer, and Messrs. Klein, Mark Hausberg, Fortune
Brands’ Senior Vice President, Finance and Treasurer, and
Fenwick met with representatives of Citigroup and Goldman Sachs
to discuss the financing of the proposed transaction.
On
January 5, 2005, Messrs. Hargrove, Schneider, and
Civgin met with Messrs. Wesley, Klein, Campbell and Fenwick
to review and discuss ACCO World’s business and the manner
in which the GBC and ACCO World businesses might be integrated.
On
January 10, 2005, Chadbourne & Parke
distributed a proposed draft merger agreement to Skadden, Arps.
During the following two weeks, Chadbourne & Parke
distributed proposed drafts of the other transaction documents
to Skadden, Arps.
On
January 18, 2005, Mr. Hargrove had a telephone
conversation with Mr. Wesley to discuss compensation and
benefit matters for employees of the combined entity that would
result from the proposed transaction.
On January 19 and 21, 2005, members of GBC’s senior
management, along with representatives of Goldman Sachs,
Skadden, Arps, and Ernst & Young LLP, GBC’s
accounting advisors, met with members of Fortune Brands’
and ACCO World’s senior management, along with
representatives of Citigroup, KPMG LLP, Fortune Brands’ and
ACCO World’s accounting advisors, and Bain &
Company to conduct due diligence sessions regarding GBC’s
business and financial condition.
Also on
January 21, 2005, Skadden, Arps sent comments on
the proposed merger agreement to Chadbourne & Parke.
On January 25 and 27, 2005, members of the transaction
committee and GBC’s senior management, along with
representatives of Goldman Sachs, Skadden, Arps, and
Ernst & Young, met with members of ACCO World’s
senior management and divisional heads of ACCO World’s
businesses, along with
32
representatives of Citigroup and KPMG, to conduct due diligence
sessions regarding ACCO World’s business and financial
condition.
On
January 31, 2005, Messrs. Hargrove, Schneider,
Bayly and Rubin and representatives of Goldman Sachs and
Skadden, Arps met with Messrs. Klein and Roche and
representatives of Citigroup and Chadbourne & Parke to
negotiate certain terms of the proposed transaction documents.
In light of Goldman Sachs’ potential participation in the
financing of the proposed transaction, on
February 1, 2005,
GBC engaged Deutsche Bank Securities, Inc. to provide a separate
review of the fairness, from a financial point of view, to the
GBC stockholders of the exchange ratio which may be agreed to in
the proposed transaction documents.
On
February 11, 2005, Mr. Rubin and representatives of
Skadden, Arps met with Mr. Roche and representatives of
Chadbourne & Parke to continue negotiations of the
terms of the proposed transaction documents.
Also on
February 11, 2005, Messrs. Hargrove, Schneider
and Bayly met with Mr. Wesley. At this meeting, the parties
discussed various compensation and benefits issues, including
salaries for senior executives of the combined entity, the
treatment of incentive awards previously issued to GBC employees
and the manner in which a combined entity would develop a
long-term incentive plan for the combined entity’s
employees. The parties also discussed governance matters for the
combined entity, including individuals who would be expected to
be named to the board of directors of the combined entity,
Mr. Campbell’s being appointed both CEO and Chairman
of the combined entity and the board of directors of the
combined entity having an independent lead director.
On
February 15, 2005, Mr. Hargrove and members of
GBC’s senior management, along with representatives from
Goldman Sachs and Skadden, Arps, met with Mr. Klein and
other members of Fortune Brands’ senior management, along
with representatives from Citigroup, to discuss the results of
the parties’ due diligence reviews and other matters to
which the parties had agreed the post-merger ownership split
tentatively reached in December 2004 would be subject, such as
domestic and foreign tax issues, employee pension and benefit
plan costs, public company costs, contingent liabilities and
EBITDA calculation adjustments. At this meeting, Mr. Klein
proposed that GBC stockholders would own 33% of a combined
entity on a fully diluted basis after the merger of GBC and ACCO
World and explained that the proposal reflected Fortune
Brands’ analysis of the additional information provided
during the due diligence process and its quantification of the
adjustments contemplated by the agreed framework.
On
February 21, 2005, Mr. Hargrove had a telephone
conversation with Mr. Wesley to discuss the proposed
ownership percentages of a combined entity. During this
conversation, Messrs. Hargrove and Wesley discussed the
methodology used by Fortune Brands when making its proposal and
whether the adjustments would lead to ownership percentages that
accurately reflected the relative contributions of GBC and ACCO
World to the combined entity. The parties were unable to reach
any agreement on ownership percentages during this discussion.
On
February 23, 2005, Messrs. Hargrove and Bayly met
with Mr. Klein to continue negotiations regarding the
proposed ownership percentages, the result of which was that the
parties generally agreed that GBC stockholders would own 34% of
a combined entity on a fully diluted basis after the merger.
This agreement, however, remained subject to approval of the
parties’ respective boards of directors and negotiation of
definitive transaction documents.
On
February 24, 2005, the GBC board of directors met to
review the status of discussions with Fortune Brands and ACCO
World. Representatives of Skadden, Arps reviewed in detail the
board’s fiduciary duties, both generally and in the
specific context of the proposed transaction, and provided the
board the opportunity to ask questions regarding its legal due
diligence findings which had been previously reported to the
board. GBC’s management and Ernst & Young also made
presentations to the board regarding their due diligence
findings. Goldman Sachs then discussed certain valuation
sensitivity analyses, including implications of various
ownership percentages of a combined entity, based on its review
of updated information regarding GBC and ACCO World. Following
extensive discussion, the board of
33
directors authorized and directed GBC’s management and the
transaction committee to continue negotiations with Fortune
Brands and ACCO World.
Over the course of the next several weeks, the parties and their
legal advisors conducted further negotiations. The negotiations
focused primarily on (1) the mechanics of determining the
number of shares to be distributed to Fortune Brands’
stockholders in the spin-off, (2) the scope of the
representations regarding their respective businesses that GBC
and ACCO World would provide one another and the extent to which
Fortune Brands would jointly and severally provide those
representations with ACCO World, (3) the restrictions an
agreement would place on GBC’s ability to contact and
engage in discussions with other potential partners and whether
Fortune Brands and ACCO World would have similar restrictions,
(4) limitations on GBC’s and ACCO World’s
conduct, other than in the ordinary course of business,
(5) the termination provisions of the merger agreement,
(6) the circumstances under which termination fees would be
payable and the amount of those fees and (7) the treatment
of employee benefits matters. During this period, Fortune
Brands, ACCO World and Lane Industries also negotiated the terms
and conditions of the voting agreement and registration rights
agreement to be entered with Lane Industries.
On
March 7, 2005, representatives of Citigroup, Goldman
Sachs and Deutsche Bank attended a management presentation given
by ACCO World management in connection with the financing of the
proposed transaction. Also in attendance at this meeting were
Messrs. Hargrove, Schneider, Martin and Civgin,
Ms. Knez of Lane Industries and Mr. Klein of Fortune
Brands. During the period through the execution of the merger
agreement, ACCO World and GBC negotiated the terms of commitment
letters setting forth proposed terms for the financing.
On
March 14, 2005, the board of directors of GBC met to
consider the proposed merger agreement and other transaction
documents. At this meeting, Messrs. Campbell and Fenwick
spoke to the board regarding ACCO World and their perspectives
regarding the proposed combined entity. After
Messrs. Campbell and Fenwick were excused from the meeting,
representatives from Skadden, Arps reviewed in detail the
principal terms of the various agreements to be entered into in
connection with the transaction. Deutsche Bank presented its
financial analyses of the transactions contemplated by the
merger agreement and the distribution agreement and delivered
its oral opinion, subsequently confirmed in writing, to the
effect that, as of the date of such opinion, and based upon and
subject to the factors and assumptions set forth in the opinion,
the exchange ratio pursuant to the merger agreement is fair from
a financial point of view to the holders of GBC common stock and
Class B common stock. Goldman Sachs also presented its
preliminary financial analysis of the transactions contemplated
by the merger agreement and the distribution agreement and
presented a detailed review of a draft opinion letter prepared
by Goldman Sachs which provided that, as of the date of such
letter, and based upon and subject to the factors and
assumptions set forth in the letter, the exchange ratio pursuant
to the merger agreement is fair from a financial point of view
to the holders of GBC common stock and Class B stock, taken
together in the aggregate. Goldman Sachs informed the GBC board
of directors that it was not rendering an opinion at the time,
but that Goldman Sachs expected that it would be prepared to
deliver its oral opinion and subsequently to confirm such oral
opinion in writing upon the finalizing of the merger agreement
and distribution agreement in substantially the form previously
provided to Goldman Sachs. Following extensive discussion of,
among other things, relative prospects of GBC as a stand-alone
entity and of GBC and ACCO World on a combined basis, the GBC
board approved the proposed merger agreement and other
transaction documents to be entered into by GBC as being in the
best interests of GBC and its stockholders, and authorized the
execution and delivery of the merger agreement and other
transaction documents, with final terms to be negotiated and
approved by the transaction committee of the board. The GBC
board also approved the merger agreement and the voting
agreement among Lane Industries, Fortune Brands and ACCO World
and transactions contemplated thereby for purposes of
Section 203 of the Delaware General Corporation Law.
Messrs. Schneider, Jeffrey P. Lane, Nelson P. Lane and Mark
Knez abstained from voting on the Section 203 approval in
light of their relationships with Lane Industries.
34
Negotiations regarding the terms of the merger agreement and
other transaction documents continued through
March 15,
2005. On
March 15, 2005, Goldman Sachs distributed its
financial analyses of the transactions contemplated by the
merger agreement and the distribution agreement to the board of
directors of GBC. In addition, Goldman Sachs delivered its oral
opinion, which opinion was subsequently confirmed in writing,
that, as of
March 15, 2005, and based upon and subject to
the factors and assumptions set forth in its opinion, the
exchange ratio pursuant to the merger agreement is fair from a
financial point of view to the holders of GBC common stock and
Class B common stock, taken together in the aggregate. On
March 15, 2005, the transaction committee discussed the
final terms of the merger agreement and other transaction
documents and authorized their execution and delivery by GBC.
Following the close of trading on the Nasdaq National Market on
March 15, 2005, ACCO World received the signed commitments
of Citigroup and Goldman Sachs to provide financing for the
proposed transactions. After receipt, the appropriate parties
entered into the merger agreement, distribution agreement,
voting agreement, registration
rights agreement and employee
matters agreement.
On the morning of
March 16, 2005, before the open of
trading on the Nasdaq National Market, GBC and Fortune Brands
issued a joint
press release announcing the transaction.
GBC’s Reasons for the Merger
At a special meeting held on
March 14, 2005, the GBC board
of directors unanimously determined that the merger is in the
best interests of GBC and its stockholders, approved the merger
agreement and recommended that GBC stockholders vote
FOR
adoption of the merger agreement and approval of the merger.
In reaching its decision to approve the merger agreement and
recommend that GBC stockholders vote to adopt the merger
agreement and approve the merger, the GBC board of directors
considered a number of factors weighing positively in favor of
the merger, including the following:
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Form of Merger Consideration. The GBC board of
directors considered that the merger would allow GBC
stockholders to exchange their shares of GBC common stock and
Class B common stock for shares of ACCO Brands common stock
and retain an equity interest in the combined enterprise and the
related opportunity to share in its future growth. The GBC board
of directors also considered that the merger would create a
larger company with capital stock potentially having greater
liquidity and trading volume than GBC common stock, an expanded
investor base and the potential to generate enhanced analyst
coverage. |
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Business, Condition and Prospects. The GBC board
of directors considered information concerning the business,
operations, financial condition, earnings and prospects of each
of GBC and ACCO World as separate entities and on a combined
basis, including their revenues, their complementary businesses
and the potential for revenue enhancement and cost savings, as
well as current industry, economic and market conditions and
trends. The GBC board of directors also reviewed GBC’s
future prospects if it were to remain independent, including the
risks inherent in remaining independent. Further, the GBC board
of directors explored possible alternatives to the merger
(including the possibility of continuing to operate as an
independent entity), the range of possible benefits to GBC
stockholders from these alternatives and the possible timing and
likelihood of accomplishing these alternatives. |
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Strategic Advantages. The GBC board of directors
considered the expected enhanced strategic and market position
of ACCO Brands following the merger. The GBC board of directors
also considered the increased scale, scope and diversity of
operations, distribution channels, efficiencies that may be
achievable through complementary businesses, product lines,
served markets and customers resulting from combining GBC’s
and ACCO World’s businesses and that the larger market
capitalization of ACCO Brands following the merger may allow it
to have increased access to debt and equity markets than GBC
would as a stand-alone entity. |
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Management/ Culture. The GBC board of directors
considered whether ACCO World’s executive management has
demonstrated the skills necessary to successfully address the
structural, operational, product, financial and marketing issues
required to enhance the performance of the businesses of ACCO
Brands. Further, the GBC board of directors considered the
compatibility of GBC’s and ACCO World’s corporate
values and management styles. |
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Ability to Accept Superior Proposal Upon Payment of
Termination Fee. The GBC board of directors considered
GBC’s ability to terminate the merger agreement prior to
stockholder approval of the merger in order to enter into an
alternative transaction in response to a superior proposal,
although GBC’s ability to enter into an alternative
transaction would be restricted in that it could not solicit
competing offers and would be required to pay, in connection
with accepting a superior proposal, a $9.5 million
termination fee, plus costs and expenses incurred by Fortune
Brands and ACCO World in connection with the transaction. |
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Tax Treatment. The GBC board of directors
considered the structure of the merger as a tax-free
reorganization for federal income tax purposes. |
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Opinions of Financial Advisors. The GBC board of
directors considered Goldman Sachs’ presentation of its
financial analyses of the transactions contemplated by the
merger agreement and the distribution agreement and its opinion
that, as of March 15, 2005, and based upon and subject to
the factors and assumptions set forth therein, the exchange
ratio pursuant to the merger agreement is fair from a financial
point of view to the holders of the GBC common stock and the
Class B common stock, taken together in the aggregate. The
GBC board of directors also considered Deutsche Bank’s
presentation of its financial analyses of the transactions
contemplated by the merger agreement and the distribution
agreement and its opinion that, as of March 14, 2005, based
upon and subject to the assumptions made, matters considered and
limits of the review undertaken by Deutsche Bank, the exchange
ratio is fair from a financial point of view to the holders of
GBC common stock and Class B common stock. The full text of
the separate written opinions of Goldman Sachs and Deutsche
Bank, which set forth assumptions made, procedures followed,
matters considered and limitations on the review undertaken in
connection with each opinion, are attached to this proxy
statement/ prospectus-information statement as Annexes C and D,
respectively. |
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Additional Considerations. In the course of its
deliberations on the merger, the GBC board of directors
consulted with members of GBC’s management and GBC’s
legal, financial, accounting and tax advisors on various legal,
business and financial matters. Additional factors considered by
the GBC board of directors in determining whether to approve the
merger agreement and recommend that GBC stockholders vote to
adopt the merger agreement and approve the merger included:
(1) the likelihood of the merger being approved by the
appropriate regulatory authorities; (2) the uncertainty of
an alternative transaction that would yield a superior value to
GBC stockholders; (3) the terms and conditions of the
merger agreement; and (4) the fact that GBC stockholders
will have an opportunity to vote on the proposed merger. |
In addition to these factors, the GBC board of directors also
considered the potential adverse impact of factors weighing
negatively against the merger, including the following:
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the potential diversion of management resources from operational
matters and the opportunity costs associated with the proposed
merger prior to the completion of the merger; |
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the possibility that the increased revenues, earnings and
synergies expected to result from the merger would fail to
materialize within the projected time frames; |
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the challenges of integrating GBC’s and ACCO World’s
businesses; |
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the inability to adjust the exchange ratio based upon events
that may occur between signing of the merger agreement and the
completion of the merger; |
36
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ACCO Brands’ potential liabilities to Fortune Brands and
Lane Industries under the tax allocation agreements following
the merger; |
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the possibility that the merger might not be completed as a
result of one or more closing conditions not being satisfied,
which could result in significant distractions of GBC’s
employees and increased expenses from an unsuccessful attempt to
complete the merger; |
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GBC being required to conduct its business only in the ordinary
course consistent with past practice and subject to operational
restrictions prior to the completion of the merger; and |
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GBC being required to pay a $9.5 million termination fee,
plus costs and expenses incurred by Fortune Brands and ACCO
World in connection with the transaction, if the merger
agreement is terminated under circumstances specified in the
merger agreement and, in some cases, if GBC later agrees to or
consummates a takeover proposal. |
The above discussion is not intended to be exhaustive, but GBC
believes that it addresses the material positive and negative
factors considered by the GBC board of directors in its
consideration of the merger. In view of the variety of factors
and the amount of information considered, the GBC board of
directors did not find it practicable to, and did not make
specific assessments of, quantify or otherwise assign relative
weights to, the specific factors considered in reaching its
determination. In particular, the GBC board of directors did not
reach any observations or conclusions with respect to any
individual analyses conducted by its financial advisors, but
instead considered its financial advisors’ presentations as
a whole, based upon all of the analyses provided to the board.
The GBC board of directors viewed its determination as being
based on an overall analysis and on the totality of the
information presented to and factors considered by it. In
addition, individual members of GBC’s board of directors
may have given different weights to different factors.
In considering the recommendation of the GBC board of directors
to approve the merger agreement and the merger, GBC stockholders
should be aware that certain executive officers and directors of
GBC have certain interests in the proposed merger that may be
different from, or in addition to, the interests of GBC
stockholders generally. The GBC board of directors was aware of
these interests and considered them when approving the merger
agreement and recommending that GBC stockholders vote to adopt
the merger agreement and approve the merger. See
“— Interests of Certain Persons in the
Merger” beginning on page 53.
Fortune Brands’ Reasons for the Spin-Off and the
Merger
Fortune Brands’ board of directors believes that the
spin-off and merger will accomplish a number of important
business objectives and, by enabling Fortune Brands and ACCO
World to develop their respective businesses separately, should
better position the two companies for enhanced performance.
These important business objectives include:
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Facilitate the Merger. The spin-off will
facilitate the merger of ACCO World and GBC, resulting in a
combined office products company with a breadth and strength of
product brands that is better positioned in key geographic
markets, that can respond better to large customers and that can
realize potential cost reductions through careful integration
and efficiencies. |
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Greater Strategic Focus. The spin-off separates
ACCO World’s office products business from Fortune
Brands’ remaining businesses, so that each of Fortune
Brands and ACCO World can adopt strategies and pursue objectives
appropriate to its specific businesses. The spin-off will permit
the management of each company to prioritize the allocation of
its respective management and financial resources for
achievement of its own corporate objectives. It will also permit
Fortune Brands’ management to focus more on its higher
return businesses: spirits and wine, golf and hardware and home
improvement. |
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Focused Incentives and Greater Accountability for
Employees. The distribution will allow each company to
seek to attract, motivate and retain qualified personnel by
enabling Fortune Brands and |
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ACCO Brands to provide incentive compensation programs that are
more closely based on the performance of the respective business
in which such individuals are employed. |
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Direct Access to Capital Markets. The
establishment of ACCO Brands common stock as a separate,
publicly-traded equity security will allow Fortune Brands and
ACCO Brands separately to seek to issue debt or equity
securities to fund its growth. It will also afford investors the
opportunity to invest in either or both of Fortune Brands or
ACCO Brands. |
In reaching its decision to approve the spin-off and merger, the
Fortune Brands board of directors consulted with members of
Fortune Brands’ management and Fortune Brands’ legal
and financial advisors and considered a wide variety of
additional factors in favor of the spin-off and the merger,
including, but not limited to, the following:
|
|
|
| |
• |
the strategic and competitive benefits of a combined ACCO World
and GBC including the expected ability of the combined company
to respond better to large customers who, because of
consolidation in the customer tier, increasingly want to deal
with suppliers with strong product development capabilities; |
| |
| |
• |
the potential cost reductions attributable to efficiencies and
synergies to be realized by the combination of ACCO World and
GBC such as facility integration, headcount reduction, supply
chain optimization and revenue enhancement, and the expectation
of compatibility and smooth integration between GBC and ACCO
World on a business level as well as with respect to brands,
product lines and cultures; |
| |
| |
• |
strategic alternatives available to Fortune Brands and the
potential risks and benefits of each such alternative, including
selling ACCO World or attempting to grow ACCO World by acquiring
related or unrelated product lines; |
| |
| |
• |
the $625.0 million dividend to be paid by ACCO Brands in
connection with the spin-off and merger; |
| |
| |
• |
the proposed deal structure, involving the spin-off immediately
followed by the merger, would be a tax-efficient structure for
Fortune Brands and Fortune Brands stockholders; and |
| |
| |
• |
the other terms and conditions of the merger agreement, the
distribution agreement and the related agreements, which are
summarized in this document. |
The Fortune Brands board of directors also considered certain
countervailing factors during its deliberations that did not
favor the spin-off and merger, including the possibility that
the increased revenues and earnings expected to result for ACCO
Brands from the merger would fail to materialize and the
potential impact such failure would have on Fortune Brands
stockholders receiving ACCO Brands common shares in the
transaction.
The above discussion is not intended to be exhaustive, but
Fortune Brands believes that it addresses the material
information and factors considered by the Fortune Brands board
of directors in its consideration of the spin-off and merger,
including factors that support the spin-off and the merger as
well as those that may weigh against the spin-off and the
merger. In view of the variety of factors and the amount of
information considered, the Fortune Brands board of directors
did not find it practicable to, and did not make specific
assessments of, quantify or otherwise assign relative weights
to, the specific factors considered in reaching its
determination. In addition, the Fortune Brands board of
directors did not undertake to make any specific determination
as to whether any particular factor, or any aspect of any
particular factor, was favorable or unfavorable to its ultimate
determination, and individual members of Fortune Brands’
board of directors may have given different weights to different
factors.
38
Opinions of GBC’s Financial Advisors
Goldman, Sachs & Co. delivered its opinion to the GBC
board of directors, which opinion was subsequently confirmed in
writing, that as of
March 15, 2005, and based upon and
subject to the factors and assumptions set forth therein, the
exchange ratio pursuant to the merger agreement is fair from a
financial point of view to the holders of GBC common stock and
Class B common stock, taken together in the aggregate.
The full text of the written opinion of Goldman Sachs, dated
March 15, 2005, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion is attached as
Annex C to this proxy statement/prospectus-information
statement. Goldman Sachs provided its opinion for the
information and assistance of the GBC board of directors in
connection with its consideration of the transactions
contemplated by the merger agreement and the distribution
agreement. The Goldman Sachs opinion is not a recommendation as
to how any holder of GBC common stock or Class B common
stock should vote with respect to the transactions contemplated
by the merger agreement and the distribution agreement.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
|
|
|
| |
• |
the merger agreement; |
| |
| |
• |
the distribution agreement; |
| |
| |
• |
annual reports to stockholders and Annual Reports on
Form 10-K of GBC and Fortune Brands for the four years
ended December 31, 2003; |
| |
| |
• |
Annual Reports on Form 10-K of GBC and Fortune Brands for
the year ended December 31, 2004; |
| |
| |
• |
audited consolidated financial statements for ACCO World and its
subsidiaries for the four years ended December 27, 2004; |
| |
| |
• |
certain interim reports to stockholders and Quarterly Reports on
Form 10-Q of GBC and Fortune Brands; |
| |
| |
• |
certain other communications from GBC and Fortune Brands to
their respective stockholders; |
| |
| |
• |
certain internal financial analyses and forecasts for GBC
prepared by GBC management; |
| |
| |
• |
certain internal financial analyses and forecasts for ACCO World
prepared by ACCO World management; and |
| |
| |
• |
certain internal financial analyses and forecasts for ACCO
Brands (pro forma for the merger) prepared by ACCO World
management, or the Pro Forma Forecasts, including certain cost
savings and operating synergies projected to result from the
distribution and the merger, or the Synergies. |
Goldman Sachs also held discussions with members of the senior
management of GBC and ACCO World regarding their assessment of
the strategic rationale for, and the potential benefits of, the
distribution and the merger, and the past and current business
operations, financial condition and future prospects of ACCO
Brands (pro forma for the merger), including the Pro Forma
Forecasts. In addition, Goldman Sachs reviewed the reported
price and trading activity for GBC common stock, compared
certain financial and stock market information for GBC and
financial information for ACCO World with similar financial and
stock market information for certain other companies the
securities of which are publicly traded, and performed such
other studies and analyses, and considered such other factors,
as it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all
of the financial, accounting, legal, tax and other information
discussed with or reviewed by it and assumed such accuracy and
completeness for purposes of rendering the opinion described
above. In that regard, Goldman Sachs assumed with the
39
consent of GBC that the Synergies have been reasonably prepared
on a basis reflecting the best currently available estimates and
judgments of ACCO World. In addition, Goldman Sachs did not make
an independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or
off-balance-sheet assets and liabilities) of GBC or ACCO World
or any of their respective
subsidiaries, nor was any evaluation
or appraisal of the assets or liabilities of GBC or ACCO World
or any of their respective
subsidiaries furnished to Goldman
Sachs. In addition, Goldman Sachs assumed that all governmental,
regulatory or other consents and approvals necessary for the
consummation of the distribution and the merger will be obtained
without any adverse effect on GBC or ACCO World or on the
expected benefits of the distribution and the merger in any way
meaningful to the analysis of Goldman Sachs. Goldman Sachs’
opinion does not address the underlying business decision of GBC
to engage in the distribution and the merger. In addition,
Goldman Sachs did not express any opinion as to the prices at
which the shares of ACCO Brands common stock will trade at any
time nor did Goldman Sachs express any view as to the allocation
of the shares of ACCO Brands common stock to be received
pursuant to the merger agreement among the holders of GBC common
stock and Class B common stock.
The following is a summary of the material financial analyses of
the transactions contemplated by the merger agreement and the
distribution agreement distributed by Goldman Sachs to the board
of directors of GBC in connection with rendering the opinion
described above. The following summary, however, does not
purport to be a complete description of the financial analyses
performed by Goldman Sachs, nor does the order of analyses
described represent relative importance or weight given to those
analyses by Goldman Sachs. Some of the summaries of the
financial analyses include information presented in tabular
format. The tables must be read together with the full text of
each summary and are alone not a complete description of Goldman
Sachs’ financial analyses. Except as otherwise noted, the
following quantitative information, to the extent that it is
based on market data, is based on market data as it existed on
or before
March 15, 2005 and is not necessarily indicative
of current market conditions. On
March 14, 2005, Goldman
Sachs presented its preliminary financial analyses of the
transactions contemplated by the merger agreement and the
distribution agreement to the GBC board of directors, based on
market data as it existed on or before
March 11, 2005. The
quantitative data provided below does not differ materially from
the quantitative data presented to the GBC board of directors on
March 14, 2005.
Historical Stock Trading Analysis. Goldman Sachs reviewed
the historical trading prices for GBC common stock for the
three-year period ended
March 15, 2005. Goldman Sachs also
reviewed the average historical trading prices for various time
periods ended
March 15, 2005. Goldman Sachs performed this
historical stock trading analysis in order to permit a
comparison of the GBC closing price on
March 15, 2005 to
the average closing price of the previous one-month, six-month,
one-year and three-year periods. For each of these periods, the
average closing price per GBC share was between $13.20 and
$13.62.
Selected Companies Analysis. Goldman Sachs reviewed and
compared certain financial information, ratios and public market
multiples, where applicable, for GBC, ACCO World and ACCO Brands
(pro forma for the merger) to corresponding information for the
following publicly traded corporations:
Selected Office Products Companies
|
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| |
• |
Avery Dennison Corporation |
| |
| |
• |
Buhrmann NV |
| |
| |
• |
Cenveo, Inc. |
| |
| |
• |
Global Imaging Systems, Inc. |
| |
| |
• |
MeadWestvaco Corporation |
| |
| |
• |
Newell Rubbermaid Inc. |
40
Selected Industrial Companies
|
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|
| |
• |
Dorel Industries Inc. |
| |
| |
• |
Escalade, Incorporated |
| |
| |
• |
Furniture Brands International, Inc. |
| |
| |
• |
Hooker Furniture Corporation |
| |
| |
• |
Jakks Pacific, Inc. |
| |
| |
• |
Knoll, Inc. |
| |
| |
• |
The Scotts Miracle-Gro Company (f.k.a. “The Scotts
Company”) |
| |
| |
• |
Select Comfort Corporation |
| |
| |
• |
Stanley Furniture Company, Inc. |
Although none of the selected companies is directly comparable
to GBC, ACCO World or ACCO Brands (pro forma for the merger),
the companies included were chosen because they are publicly
traded companies with operations that for purposes of analysis
may be considered similar to certain operations of GBC, ACCO
World and ACCO Brands (pro forma for the merger).
The multiples and ratios for GBC were calculated using the GBC
closing price on
March 15, 2005 and were based on the most
recent publicly available information and Institutional Brokers
Estimate System (referred to as IBES) estimates. The ratios for
ACCO World and ACCO Brands (pro forma for the merger) were based
on historical financial data provided by ACCO World management.
The multiples and ratios for each of the selected companies were
calculated using their respective closing prices on
March 15, 2005 and were based on the most recent publicly
available information, IBES estimates when available, and Wall
Street research when IBES estimates were not available.
With respect to the selected companies and GBC, Goldman Sachs
calculated the levered market capitalization as a multiple of
latest twelve months, or LTM, earnings before interest, taxes
and depreciation and amortization, or EBITDA. Goldman Sachs also
compared the LTM EBITDA margins for the selected companies to
those for GBC, ACCO World and ACCO Brands (pro forma for the
merger). The results of these analyses are summarized as follows:
| |
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|
ACCO | |
| |
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|
Brands | |
| |
|
Selected Office Products | |
|
Selected Industrial | |
|
|
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|
(pro | |
| |
|
Companies | |
|
Companies | |
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|
forma | |
| |
|
| |
|
| |
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|
ACCO | |
|
for | |
| |
|
Range | |
|
Median | |
|
Range | |
|
Median | |
|
GBC | |
|
World | |
|
merger) | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Levered Market Capitalization as a multiple of LTM EBITDA
|
|
|
7.0x-12.2x |
|
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|
9.7x |
|
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|
7.3x-13.6x |
|
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|
9.3x |
|
|
|
6.7x |
|
|
|
NA |
|
|
|
NA |
|
|
LTM EBITDA Margin
|
|
|
5.2%-14.8% |
|
|
|
12.5 |
% |
|
|
8.6%-14.4% |
|
|
|
11.6 |
% |
|
|
10.5 |
% |
|
|
14.2 |
% |
|
|
12.2 |
% |
Goldman Sachs calculated the selected companies’ estimated
calendar year 2005 price-to-earnings ratio and compared such
ratio to the results for GBC. Goldman Sachs also considered the
estimated five-year earnings per share, or EPS, compounded
annual growth rate, which is referred to as CAGR, for the
selected companies. The following table presents the results of
these analyses:
| |
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|
ACCO | |
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Brands | |
| |
|
Selected Office Products | |
|
Selected Industrial | |
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(pro | |
| |
|
Companies | |
|
Companies | |
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|
forma | |
| |
|
| |
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| |
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|
ACCO | |
|
for | |
| |
|
Range | |
|
Median | |
|
Range | |
|
Median | |
|
GBC | |
|
World | |
|
merger) | |
| |
|
| |
|
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|
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|
Price/ Earnings Ratio (2005E)
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|
13.7x-22.1x |
|
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|
18.3x |
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|
9.9x-21.9x |
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13.2x |
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10.5x |
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NA |
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|
NA |
|
|
5-Year EPS CAGR
|
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|
5.0%-17.5% |
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9.5 |
% |
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|
10.0%-20.0% |
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|
16.5 |
% |
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NA |
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|
NA |
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|
NA |
|
41
In its review of the Selected Companies Analysis, Goldman Sachs
did not seek to derive any illustrative per share value
indications for GBC, ACCO World or ACCO Brands (pro forma
for the merger). Rather, Goldman Sachs performed the selected
companies analysis in order to permit a comparison of how the
equity capital markets value GBC relative to publicly traded
companies with operations that, for purposes of analysis, may be
considered similar to certain operations of GBC. Such a
comparison is one measure of whether the valuation of GBC in the
equity capital markets as of
March 15, 2005 reasonably
reflected the inherent value of GBC.
Discounted Cash Flow Sensitivity Analysis. Goldman Sachs
performed a discounted cash flow sensitivity analysis on GBC
using GBC management projections as of
January 17, 2005.
Goldman Sachs calculated illustrative prices per share of GBC
common stock by calculating (a) the sum of (i) the
illustrative net present value indications of unlevered free
cash flows for GBC for the years 2005 through 2008 using
discount rates ranging from 8.0% to 10.0% and (ii) the
present value of the illustrative terminal value indications as
of year-end 2008 based on terminal multiples ranging from 6.1x
EBITDA to 7.3x EBITDA using discount rates ranging from 8.0% to
10.0% less (iii) GBC’s net debt as of
December 31, 2004 divided by (b) GBC’s total
outstanding diluted shares. The following table presents the
results of this analysis:
| |
|
|
|
|
| |
|
Illustrative per Share | |
| |
|
Value Indications | |
| |
|
| |
|
GBC
|
|
$ |
12.22-$18.93 |
|
Goldman Sachs also performed a discounted cash flow sensitivity
analysis on ACCO Brands (pro forma for the merger) using the Pro
Forma Forecasts. Goldman Sachs calculated illustrative prices
per share of ACCO Brands common stock (pro forma for the merger)
by calculating (a) the sum of (i) the illustrative net
present value indications of unlevered free cash flows for ACCO
Brands (pro forma for the merger) for the years 2005 through
2008 using discount rates ranging from 8.0% to 10.0% and
(ii) the present value of the illustrative terminal value
indications as of year-end 2008 based on terminal multiples
ranging from 6.1x EBITDA to 7.3x EBITDA using discount rates
ranging from 8.0% to 10.0% less (iii) the net debt of ACCO
Brands (pro forma for the merger) as of
December 31, 2004
divided by (b) the total outstanding diluted shares of ACCO
Brands (pro forma for the merger). The following table presents
the results of this analysis:
| |
|
|
|
|
| |
|
Illustrative per Share | |
| |
|
Value Indications | |
| |
|
| |
|
ACCO Brands (pro forma for the merger)
|
|
$ |
12.88-$20.20 |
|
Goldman Sachs performed these various discounted cash flow
analyses because such analyses — which are based on
management’s estimates of future cash flows and the
perceived riskiness of achieving such projections —
result in illustrative per share equity values for GBC and ACCO
Brands (pro forma for the merger), respectively.
Pro Forma Merger Analysis. Goldman Sachs prepared
illustrative pro forma analyses of the potential financial
impact of the merger using (a) earnings estimates for GBC
prepared by its management and (b) the Pro Forma Forecasts,
including the Synergies. For each of the years 2005, 2006 and
2007, Goldman Sachs compared the projected diluted earnings per
share of GBC common stock and Class B common stock, on a
standalone basis, to the projected diluted earnings per share of
the common stock of ACCO Brands (pro forma for the merger).
Based on such analyses, the proposed transaction would be
accretive to GBC’s stockholders on a diluted earnings per
share basis in all of the years 2005, 2006 and 2007. Goldman
Sachs performed this pro forma merger analysis because such
analysis results in a measure of how accretive or dilutive the
transaction is expected to be to the earnings per share for the
GBC stockholders.
42
Goldman Sachs also compared the implied value per share of the
ACCO Brands common stock to be received in exchange for each
share of GBC common stock and Class B common stock, taken
together in the aggregate, to the market price of a share of GBC
common stock as of
March 15, 2005. Goldman Sachs calculated
the implied value per share of the ACCO Brands common stock to
be received in exchange for each share of GBC common stock and
Class B common stock, taken together in the aggregate,
based on 2004 EBITDA for ACCO Brands (pro forma for the merger)
and multiples ranging from 6.1x EBITDA to 7.3x EBITDA. Goldman
Sachs performed this calculation both pro forma before Synergies
and pro forma for Synergies expected for the first full year
following the merger. The following table presents the results
of this analysis:
| |
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|
|
|
|
|
|
|
| Implied Value per Share of ACCO Brands Common Stock to be Received in Exchange for Each Share of GBC | |
| Common Stock and Class B Common Stock vs. GBC Share Price as of March 15, 2005 ($13.08) | |
| | |
| ACCO Brands 2004 (pro forma for |
|
Pro Forma | |
|
Pro Forma for | |
| the merger) |
|
Before | |
|
Synergies in First | |
| EBITDA Multiple |
|
Synergies | |
|
Full Year | |
| |
|
| |
|
| |
|
6.1x
|
|
|
(28.9 |
)% |
|
|
(6.5 |
)% |
|
6.3x
|
|
|
(21.8 |
)% |
|
|
+1.4 |
% |
|
6.5x
|
|
|
(14.7 |
)% |
|
|
+9.2 |
% |
|
6.7x
|
|
|
(6.1 |
)% |
|
|
+18.7 |
% |
|
6.9x
|
|
|
(0.5 |
)% |
|
|
+24.9 |
% |
|
7.1x
|
|
|
+6.6 |
% |
|
|
+32.7 |
% |
|
7.3x
|
|
|
+13.7 |
% |
|
|
+40.6 |
% |
Goldman Sachs also calculated the 2004 EBITDA multiple for ACCO
Brands (pro forma for the merger) at which the implied value per
share of the ACCO Brands common stock to be received in exchange
for each share of GBC common stock and Class B common
stock, taken together in the aggregate, would be equal to the
market price of a share of GBC common stock as of
March 15,
2005. This multiple was approximately 6.9x excluding Synergies
and approximately 6.3x including Synergies expected in the first
full year following the merger.
Contribution Analysis. Goldman Sachs analyzed the
potential contribution of GBC and ACCO World to ACCO Brands (pro
forma for the merger), without Synergies, based on actual 2004
and estimated years 2005, 2006 and 2007 adjusted EBITDA,
adjusted operating income and net income of GBC and ACCO World.
The analysis was done on both an absolute contribution and
debt-adjusted contribution basis, and was based on (a) GBC
public filings, historical financial data and management
projections and (b) ACCO World consolidated financial
statements and management projections. The following table
presents the results of this analysis:
| |
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|
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|
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|
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|
|
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|
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|
|
|
| |
|
GBC Absolute Contribution to | |
|
GBC Debt-Adjusted Contribution to | |
| |
|
ACCO Brands | |
|
ACCO Brands | |
| |
|
| |
|
| |
| |
|
|
|
Adjusted | |
|
|
|
|
|
Adjusted | |
|
|
| |
|
Adjusted | |
|
Operating | |
|
|
|
Adjusted | |
|
Operating | |
|
|
| |
|
EBITDA | |
|
Income | |
|
Net Income | |
|
EBITDA | |
|
Income | |
|
Net Income | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
2004A
|
|
|
31 |
% |
|
|
28 |
% |
|
|
N/A |
|
|
|
31 |
% |
|
|
25 |
% |
|
|
17 |
% |
|
2005E
|
|
|
29 |
% |
|
|
26 |
% |
|
|
N/A |
|
|
|
27 |
% |
|
|
22 |
% |
|
|
16 |
% |
|
2006E
|
|
|
29 |
% |
|
|
27 |
% |
|
|
N/A |
|
|
|
27 |
% |
|
|
23 |
% |
|
|
19 |
% |
|
2007E
|
|
|
30 |
% |
|
|
28 |
% |
|
|
N/A |
|
|
|
29 |
% |
|
|
25 |
% |
|
|
21 |
% |
Goldman Sachs performed the contribution analysis in order to
compare the 34% ownership by GBC’s stockholders in ACCO
Brands immediately following the merger to GBC’s
contribution to various actual and estimated pro forma financial
results for ACCO Brands (pro forma for the merger). Such a
comparison is one measure of whether the GBC stockholders are
receiving a fair share of the equity ownership of the combined
company.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above,
43
without considering the analyses as a whole, could create an
incomplete view of the processes underlying Goldman Sachs’
opinion. In arriving at its fairness determination, Goldman
Sachs considered the results of all of its analyses and did not
attribute any particular weight to any factor or analysis
considered by it. Rather, Goldman Sachs made its determination
as to fairness on the basis of its experience and professional
judgment after considering the results of all of its analyses.
No company used in the above analyses as a comparison is
directly comparable to GBC or ACCO World.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs’ providing its opinion to the GBC board of directors
as to the fairness from a financial point of view of the
exchange ratio, pursuant to the merger agreement, provided to
the holders of GBC common stock and Class B common stock,
taken together in the aggregate. These analyses do not purport
to be appraisals nor do they necessarily reflect the prices at
which businesses or securities actually may be sold. Analyses
based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly
more or less favorable than suggested by these analyses. Because
these analyses are inherently subject to uncertainty, being
based upon numerous factors or events beyond the control of the
parties or their respective advisors, none of GBC, ACCO World,
Goldman Sachs or any other person assumes responsibility if
future results are materially different from those forecast.
As described above, Goldman Sachs’ opinion to the GBC board
of directors was one of many factors taken into consideration by
the GBC board of directors in making its determination to
approve the merger. The foregoing summary does not purport to be
a complete description of the analyses performed by Goldman
Sachs in connection with the fairness opinion and is qualified
in its entirety by reference to the written opinion of Goldman
Sachs attached as Annex C to this proxy statement/
prospectus-information statement.
Goldman Sachs and its affiliates, as part of their investment
banking business, are continually engaged in performing
financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private
placements and other transactions as well as for estate,
corporate and other purposes. Goldman Sachs acted as financial
advisor to GBC in connection with, and participated in certain
of the negotiations leading to, the distribution and the merger.
In addition, Goldman Sachs has provided certain investment
banking services to GBC and its affiliates from time to time.
Goldman Sachs has also provided certain investment banking
services to Fortune Brands and its affiliates from time to time,
including having been retained by Fortune Brands as financial
advisor in August 2000 in connection with its exploration of
strategic alternatives related to ACCO World; and having acted
as financial advisor to Fortune Brands in connection with its
sale of a minority equity interest in ACCO World in January 2002.
Goldman Sachs Credit Partners L.P. (“GSCP”), an
affiliate of Goldman Sachs, Citicorp North America, Inc.
(“CNAI”), ABN AMRO Bank N.V., ABN AMRO Incorporated
and ACCO World have entered into a commitment letter and related
fee letter pursuant to which GSCP, CNAI and ABN AMRO Bank have
agreed to establish the senior secured credit facilities
described therein, the proceeds of which will be used to provide
financing in connection with the distribution and the merger. In
addition, Goldman Sachs, Citigroup Global Markets Inc.
(“CGMI”), ABN AMRO Incorporated and ACCO World have
entered into an engagement letter pursuant to which ACCO World
has engaged Goldman Sachs, CGMI and ABN AMRO Incorporated to
provide certain capital markets services as described therein to
ACCO World in connection with the distribution and the merger.
Goldman Sachs and its affiliates also may provide investment
banking services to ACCO Brands, GBC, Fortune Brands, ACCO World
and their respective affiliates in the future. In connection
with the above-described investment banking services Goldman
Sachs and its affiliates have received, and may receive in the
future, compensation.
Goldman Sachs is a full service securities firm engaged, either
directly or through its affiliates, in securities trading,
investment management, financial planning and benefits
counseling, risk management, hedging, financing and brokerage
activities for both companies and individuals. In the ordinary
course of these activities, Goldman Sachs and its affiliates may
provide such service to ACCO Brands, GBC,
44
Fortune Brands, ACCO World and their respective affiliates, may
actively trade the debt and equity securities (or related
derivative securities) of ACCO Brands, GBC, Fortune Brands and
ACCO World for their own account and for the accounts of their
customers and may at any time hold long and short positions of
such securities.
The board of directors of GBC selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the distribution and the merger.
Pursuant to a letter agreement dated
December 10, 2003, as
amended
March 15, 2005, GBC engaged Goldman Sachs to act as
its financial advisor in connection with the distribution and
the merger. Pursuant to the terms of this engagement letter, GBC
has agreed to pay Goldman Sachs a transaction fee equal to a
percentage of the aggregate consideration paid to GBC
stockholders in connection with the merger, all of which is
payable upon consummation of the merger. The percentage is
dependent upon the average of the last sales prices of GBC
common stock on the five trading days ending five trading days
prior to the consummation of the merger. Based on this formula,
if the transaction had been consummated on
July 13, 2005,
the transaction fee paid to Goldman Sachs would be approximately
$5,610,000. In addition, GBC has agreed to reimburse Goldman
Sachs for its expenses, including attorneys’ fees and
disbursements, and to indemnify Goldman Sachs and related
persons against various liabilities, including certain
liabilities under the federal securities laws.
|
|
|
Opinion of Deutsche Bank Securities, Inc. |
Deutsche Bank Securities, Inc. has acted as a financial advisor
to GBC in connection with the proposed merger. At the
March 14, 2005 meeting of GBC’s board of directors,
Deutsche Bank delivered its oral opinion, subsequently delivered
in writing on
March 15, 2005, to GBC’s board of
directors to the effect that, as of the date of such opinion,
based upon and subject to the assumptions made, matters
considered and limits of the review undertaken by Deutsche Bank,
the exchange ratio was fair from a financial point of view to
the holders of GBC common stock and Class B common stock.
The full text of Deutsche Bank’s written opinion, dated
March 14, 2005, which sets forth, among other things, the
assumptions made, procedures followed, matters considered and
limitations on the review undertaken in connection with the
opinion is attached as Annex D to this proxy statement/
prospectus-information statement. We urge you to read this
opinion carefully and in its entirety. The Deutsche Bank opinion
is directed to the board of directors of GBC, addresses only the
fairness from a financial point of view of the exchange ratio
pursuant to the merger agreement to the holders of GBC common
stock and Class B common stock, and does not address any
other aspect of the merger or constitute a recommendation to any
GBC stockholder as to how to vote at the special meeting. This
summary is qualified in its entirety by reference to the full
text of the opinion.
In connection with rendering the opinion described above and
performing its related financial analysis, Deutsche Bank, among
other things:
|
|
|
| |
• |
reviewed certain publicly available financial and other
information concerning ACCO World and GBC and certain internal
analyses and financial and other information furnished to it by
ACCO World and GBC, respectively; |
| |
| |
• |
reviewed certain financial forecasts prepared by management
relating to ACCO World and GBC, respectively; |
| |
| |
• |
reviewed certain financial forecasts and projections relating to
the merger, including information relating to the certain
financial and operational benefits anticipated from the merger,
provided by the management of ACCO World (including potential
synergies); |
| |
| |
• |
held discussions with members of the senior managements of ACCO
World and GBC regarding the businesses and prospects of their
respective companies and the joint prospects of a combined ACCO
Brands following the merger, including the financial and
operational benefits anticipated from the merger (including
potential synergies); |
45
|
|
|
| |
• |
compared the pro forma impact of the merger on earnings per
share, cash flow, consolidated capitalization and financial
ratios to GBC and GBC common stock and Class B common
stock, as appropriate; |
| |
| |
• |
reviewed information relating to the relative contributions of
ACCO World’s business and GBC’s business to ACCO
Brands; |
| |
| |
• |
reviewed the reported prices and trading activity for GBC common
stock; |
| |
| |
• |
compared certain financial and stock market information for ACCO
World and GBC with similar information for certain other
companies whose securities are publicly traded; and |
| |
| |
• |
reviewed the terms of the merger agreement, the distribution
agreement and certain related documents in each case as set
forth in drafts dated as of March 8, 2005. |
In preparing its opinion, Deutsche Bank did not assume
responsibility for the independent verification of, and did not
independently verify, any information, whether publicly
available or furnished to it, concerning GBC or ACCO World,
including, without limitation, any financial information,
forecasts or projections, considered in connection with the
rendering of its opinion. Accordingly, for purposes of its
opinion, Deutsche Bank assumed and relied upon the accuracy and
completeness of all such information. Deutsche Bank did not
conduct a physical inspection of any of the properties or
assets, and did not prepare or obtain any independent evaluation
or appraisal of any of the assets or liabilities of GBC or ACCO
World. With respect to the financial forecasts and projections,
including the analyses and forecasts of certain cost savings,
operating efficiencies, revenue effects and financial synergies
expected to be achieved as a result of the proposed merger,
which are referred to herein as Potential Synergies, made
available to Deutsche Bank and used in its analyses, Deutsche
Bank assumed that they were reasonably prepared on bases
reflecting the best currently available estimates and judgments
of the management of GBC or ACCO World, as the case may be, as
to the matters covered thereby. In rendering its opinion,
Deutsche Bank expressed no view as to the reasonableness of such
forecasts and projections, including the Potential Synergies, or
the assumptions on which they are based. Deutsche Bank was not
authorized to contact, nor did it contact, any party regarding a
potential transaction with GBC. Deutsche Bank’s opinion was
necessarily based upon economic, market and other conditions as
in effect on, and the information made available to Deutsche
Bank as of, the date of such opinion.
For purposes of rendering its opinion, Deutsche Bank assumed
that, in all respects material to its analysis:
|
|
|
| |
• |
the representations and warranties of GBC, ACCO World and Gemini
Acquisition Sub contained in the merger agreement are true and
correct; |
| |
| |
• |
GBC, ACCO World and Gemini Acquisition Sub will each perform all
of the covenants and agreements to be performed by it under the
merger agreement; |
| |
| |
• |
all conditions to the obligations of each of GBC, ACCO World and
Gemini Acquisition Sub to consummate the merger and the related
transactions will be satisfied without any waiver or
modification thereof; |
| |
| |
• |
all material governmental, regulatory or other approvals and
consents required in connection with the completion of the
transactions contemplated by the merger agreement will be
obtained; |
| |
| |
• |
in connection with obtaining any necessary governmental,
regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or
orders to which either GBC or ACCO World is a party or is
subject or by which it is bound, no limitations, restrictions or
conditions will be imposed or amendments, modifications or
waivers made that would have a material effect on GBC or ACCO
World or materially reduce the contemplated benefits of the
merger to GBC; |
| |
| |
• |
the distribution will qualify under section 355 of the
Internal Revenue Code as a “spin-off”; and |
46
|
|
|
| |
• |
the merger will constitute a tax-free reorganization within the
meaning of section 368(a) of the Internal Revenue Code and
a “plan of reorganization” for purposes of
section 354 and 361 of the Internal Revenue Code. |
The following is a summary of the material financial analyses
performed by Deutsche Bank in connection with its opinion. These
summaries of financial analyses include information presented in
tabular format. In order to fully understand the financial
analyses used by Deutsche Bank, the tables must be read together
with the text of each summary. The tables alone do not
constitute a complete description of the financial analyses.
Implied Percentage Ownership Analysis
Deutsche Bank used three methodologies to calculate ranges of
implied percentage ownership by current stockholders of GBC in
ACCO Brands after the merger. Deutsche Bank compared these
ranges of implied percentage ownership to the ownership of 34.0%
of ACCO Brands by current GBC stockholders after the merger
pursuant to the exchange ratio.
Deutsche Bank based these analyses on projections for GBC
developed by the management of GBC and projections for ACCO
World developed by the management of ACCO World with, as
necessary, pro forma adjustments to restate the projections of
ACCO World as if it was an independent publicly traded company
with $625 million of net debt as of
December 31, 2004.
Public Market Valuation. Deutsche Bank compared certain
financial information and commonly used valuation measurements
for each of GBC and ACCO World to corresponding information and
measurements for a group of 13 publicly traded companies that
participate in part or in whole in the office products market or
are diversified manufacturers who sell through similar
distribution channels. This group consisted of Avery Dennison
Corporation, Brady Corporation, Deluxe Corporation, Dorel
Industries Inc., Ennis, Inc., Hooker Furniture Corporation, John
H. Harland Company, Kimball International, Knoll, Inc., Nashua
Corporation, Newell Rubbermaid, Inc., Steelcase Inc., and The
Standard Register Company. We refer to this group of companies
as the Selected Companies. Such financial information and
valuation measurements included, among other things,
(1) ratios of common equity market prices per share, or
equity value, to estimated 2004, and projected 2005 and 2006
earnings per share, or EPS; and (2) ratios of common equity
market value as adjusted for debt and cash, or enterprise value,
to estimated calendar year 2004, and projected calendar year
2005 and calendar year 2006 earnings from operations before
interest expense, income taxes and depreciation and amortization
adjusted to include certain unusual or non-recurring items, or
EBITDA. To calculate the Enterprise Value to EBITDA trading
multiple, Deutsche Bank used publicly available SEC filings,
press releases and the most recently available research guidance
from analyst equity reports. To calculate the Equity Value to
EPS trading multiples, Deutsche Bank used publicly available
information concerning projected financial performance,
including published earnings estimates reported by KeyBanc
Capital Markets equity research and the Institutional Brokers
Estimate System (referred to as IBES). The multiple ranges
resulting from this analysis are summarized below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Low | |
|
High | |
|
Median | |
|
Mean | |
| |
|
| |
|
| |
|
| |
|
| |
|
Equity Value to EPS Multiple
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
10.1x |
|
|
|
31.9 |
x |
|
|
21.1 |
x |
|
|
20.5x |
|
|
2005
|
|
|
9.8x |
|
|
|
44.3 |
x |
|
|
15.2 |
x |
|
|
20.0x |
|
|
2006
|
|
|
8.8x |
|
|
|
40.8 |
x |
|
|
15.5 |
x |
|
|
17.4x |
|
|
Enterprise Value to EBITDA Multiple
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
6.5x |
|
|
|
15.6 |
x |
|
|
9.7 |
x |
|
|
10.4x |
|
|
2005
|
|
|
6.6x |
|
|
|
14.5 |
x |
|
|
9.0 |
x |
|
|
9.6x |
|
|
2006
|
|
|
6.4x |
|
|
|
10.9 |
x |
|
|
8.2 |
x |
|
|
8.5x |
|
47
From this data, Deutsche Bank derived ranges of multiples deemed
most meaningful for its analysis, applied such ranges of
multiples to the corresponding financial projections for GBC and
ACCO World and, as a result, arrived at ranges of implied
enterprise values for GBC and ACCO World. Deutsche Bank then
subtracted net debt of $283 million and $625 million,
respectively, from GBC and ACCO World to arrive at their implied
equity values. The results of this analysis are summarized below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Relevant |
|
|
|
|
|
|
| |
|
Multiple |
|
Equity | |
|
|
|
Equity | |
| |
|
Ranges |
|
Value Low | |
|
|
|
Value High | |
| |
|
|
|
| |
|
|
|
| |
| |
|
|
|
|
|
(US$ in millions) | |
|
GBC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 EBITDA
|
|
|
6.6x |
|
|
|
- |
|
|
9.2x |
|
$ |
201.3 |
|
|
|
- |
|
|
$ |
392.0 |
|
|
2004 net income
|
|
|
13.2x |
|
|
|
- |
|
|
18.9x |
|
$ |
194.9 |
|
|
|
- |
|
|
$ |
279.0 |
|
|
2005E EBITDA
|
|
|
6.6x |
|
|
|
- |
|
|
9.0x |
|
$ |
169.4 |
|
|
|
- |
|
|
$ |
333.8 |
|
|
2005E net income
|
|
|
11.5x |
|
|
|
- |
|
|
15.3x |
|
$ |
163.8 |
|
|
|
- |
|
|
$ |
217.9 |
|
|
2006E EBITDA
|
|
|
6.6x |
|
|
|
- |
|
|
9.0x |
|
$ |
211.7 |
|
|
|
- |
|
|
$ |
391.4 |
|
|
2006E net income
|
|
|
10.1x |
|
|
|
- |
|
|
14.7x |
|
$ |
192.4 |
|
|
|
- |
|
|
$ |
280.0 |
|
|
ACCO World
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 EBITDA
|
|
|
7.0x |
|
|
|
- |
|
|
9.7x |
|
$ |
513.2 |
|
|
|
- |
|
|
$ |
952.2 |
|
|
2004 net income
|
|
|
13.2x |
|
|
|
- |
|
|
19.6x |
|
$ |
591.9 |
|
|
|
- |
|
|
$ |
879.0 |
|
|
2005E EBITDA
|
|
|
6.6x |
|
|
|
- |
|
|
9.0x |
|
$ |
503.1 |
|
|
|
- |
|
|
$ |
913.3 |
|
|
2005E net income
|
|
|
12.2x |
|
|
|
- |
|
|
15.3x |
|
$ |
737.9 |
|
|
|
- |
|
|
$ |
925.4 |
|
|
2006E EBITDA
|
|
|
6.6x |
|
|
|
- |
|
|
9.0x |
|
$ |
566.3 |
|
|
|
- |
|
|
$ |
999.5 |
|
|
2006E net income
|
|
|
10.1x |
|
|
|
- |
|
|
14.7x |
|
$ |
667.9 |
|
|
|
- |
|
|
$ |
972.2 |
|
Using the high and low values from the ranges of the implied
equity values resulting from the public market valuation
analysis for each of GBC and ACCO World, Deutsche Bank
calculated the following implied relative ownership by current
GBC stockholders of a combination of GBC and ACCO World:
| |
|
|
|
|
|
|
|
|
| |
|
Implied Ownership by Current GBC | |
| |
|
Stockholders of ACCO Brands | |
| |
|
Corporation | |
| |
|
| |
| |
|
Low Values of | |
|
|
| |
|
GBC and ACCO | |
|
High Values of GBC | |
| Implied Equity Values Based on: |
|
World | |
|
and ACCO World | |
| |
|
| |
|
| |
|
GBC
|
|
|
|
|
|
|
|
|
|
2004 EBITDA
|
|
|
28.2 |
% |
|
|
29.2 |
% |
|
2004 net income
|
|
|
24.8 |
% |
|
|
24.1 |
% |
|
2005E EBITDA
|
|
|
25.2 |
% |
|
|
26.8 |
% |
|
2005E net income
|
|
|
18.2 |
% |
|
|
19.1 |
% |
|
2006E EBITDA
|
|
|
29.6 |
% |
|
|
30.0 |
% |
|
2006E net income
|
|
|
22.4 |
% |
|
|
22.4 |
% |
None of the 13 companies utilized as a comparison are
identical to either GBC or ACCO World. Accordingly, Deutsche
Bank believes the analysis of publicly traded comparable
companies is not simply mathematical. Rather, it involves
complex considerations and qualitative judgments, reflected in
Deutsche Bank’s opinion, concerning differences in
financial and operating characteristics of the comparable
companies and other factors that could affect the public trading
value of the comparable companies. On the other hand, each of
the 13 companies chosen participates in part or in whole in
similar industries or utilizes similar distribution channels to
GBC. These derived metrics represent how public equity markets
value companies similar to GBC and ACCO World. Deutsche Bank
employed this public market valuation
48
analysis as one of various techniques to gauge whether, from a
financial point of view, the equity ownership in the combined
company received by GBC stockholders is fair.
Discounted Cash Flow Analysis
Deutsche Bank performed a discounted cash flow analysis for each
of GBC and ACCO World. Deutsche Bank calculated the discounted
cash flow values as the sum of the net present values of
(1) the estimated future cash flow that each of GBC and
ACCO World will generate for the years 2005 through 2009, plus
(2) the terminal value of each of GBC and ACCO World at the
end of such period. The estimated future cash flows were based
on the financial projections for GBC and ACCO World for the
years 2005 through 2009 prepared by their respective
managements. The terminal values of each of GBC and ACCO World
were calculated based on projected EBITDA for 2009 and a range
of multiples of 7.0x to 8.0x. Deutsche Bank used such multiples
based on its review of the trading characteristics of the common
stock of certain of the Selected Companies. Further, Deutsche
Bank calculated the implied perpetuity growth rates for GBC and
ACCO World which ranged from 3.6% to 6.3% and 1.9% to 4.7%,
respectively. Deutsche Bank used discount rates ranging from
10.0% to 12.0% for GBC and discount rates ranging from 9.5% to
11.5% for ACCO World based on its GBC weighted average cost of
capital calculation and its judgment of the weighted average
cost of capital for ACCO World. The results of this analysis are
summarized below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Implied Equity | |
|
Equity Value | |
| |
|
Value | |
|
per Share | |
| |
|
| |
|
| |
| |
|
Low | |
|
High | |
|
Low | |
|
High | |
| |
|
| |
|
| |
|
| |
|
| |
| |
|
(US$ in millions) | |
|
GBC
|
|
$ |
223 |
|
|
$ |
319 |
|
|
$ |
13.29 |
|
|
$ |
19.07 |
|
|
ACCO World
|
|
$ |
550 |
|
|
$ |
772 |
|
|
|
NA |
|
|
|
NA |
|
Using the high and low values from the ranges of the implied
Equity Values resulting from the discounted cash flow analysis
for each of GBC and ACCO World, Deutsche Bank calculated the
following implied relative ownership of GBC stockholders of ACCO
Brands. Potential synergies and cost savings from the merger
were not taken into consideration in this analysis.
| |
|
|
|
|
| |
|
Implied Equity | |
| |
|
Ownership by | |
| |
|
Current GBC Stockholders | |
| Implied Equity Values Based on: |
|
of ACCO Brands | |
| |
|
| |
|
High End of Ranges
|
|
|
29.3 |
% |
|
Low End of Ranges
|
|
|
28.8 |
% |
Deutsche Bank performed this discounted cash flow analysis for
each of GBC and ACCO World based on estimated future cash flow
projections prepared by the respective management teams. These
analyses derive equity value per share for each of GBC and ACCO
World and serve as one basis for determining implied equity
ownership by current GBC stockholders of ACCO Brands.
Contribution Analysis. Deutsche Bank analyzed the
relative contributions of GBC to the combination of GBC and ACCO
World based on EBITDA and net income of each of GBC and ACCO
World for calendar year 2004 and projected calendar years 2005
and 2006. Potential synergies and cost savings from the merger
were not taken into consideration in this analysis.
This analysis indicated the following relative contributions of
GBC to a combination of GBC and ACCO World:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Contribution of GBC to a Combination of | |
| |
|
GBC and ACCO World | |
| |
|
| |
| Financial Metric |
|
2004 | |
|
2005 (Projected) | |
|
2006 (Projected) | |
| |
|
| |
|
| |
|
| |
|
EBITDA
|
|
|
31.1 |
% |
|
|
28.6 |
% |
|
|
29.3 |
% |
|
Net Income
|
|
|
24.8 |
% |
|
|
19.1 |
% |
|
|
22.4 |
% |
49
Using the previous EBITDA analysis, Deutsche Bank derived an
implied enterprise value for ACCO Brands by applying GBC’s
relative contribution of EBITDA to a combination of GBC and ACCO
World to its current enterprise value of $492 million.
Deutsche Bank then subtracted GBC’s current enterprise
value from the implied enterprise value of ACCO Brands to derive
the implied enterprise value of ACCO World. Deutsche Bank then
subtracted net debt of $625 million from ACCO World to
arrive at ACCO World’s implied equity value. Deutsche Bank
then calculated GBC’s implied equity ownership from these
results. On a net income basis, the implied equity ownership is
the same as that derived in the previously mentioned analysis.
The results of this analysis are summarized below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Implied Equity Ownership of ACCO Brands | |
| |
|
| |
| Financial Metric |
|
2004 | |
|
2005 (Projected) | |
|
2006 (Projected) | |
| |
|
| |
|
| |
|
| |
|
EBITDA
|
|
|
31.0 |
% |
|
|
25.8 |
% |
|
|
27.2 |
% |
|
Net Income
|
|
|
24.8 |
% |
|
|
19.1 |
% |
|
|
22.4 |
% |
Deutsche Bank analyzed the relative contribution of GBC to the
combination of GBC and ACCO World based on actual and estimated
pro forma financial results of the companies for the purpose of
comparing those results in relation to the 34% post merger
ownership by GBC stockholders in ACCO Brands. Deutsche Bank
employed this analysis as one of various techniques to gauge
whether, from a financial point of view, the equity ownership in
the combined company received by GBC stockholders is fair.
Pro Forma Merger Analysis
EPS Accretion/ Dilution Analysis. Deutsche Bank analyzed
the pro forma financial impact of the merger on estimated EPS to
GBC stockholders based on their ownership of ACCO Brands.
Deutsche Bank based its analysis on, among other things:
|
|
|
| |
• |
Financial projections for ACCO Brands based on projections
developed by the management of GBC and ACCO World; and |
| |
| |
• |
Estimates of cost savings and the potential synergies resulting
from the merger developed by the management of GBC and ACCO
World. |
For the purpose of this analysis, Deutsche Bank excluded the
impact on earnings of certain one-time transaction-related
expenses and other unusual items. This analysis indicated the
following pro forma earnings impact to current GBC stockholders
relative to GBC EPS for 2005 and 2006 as estimated by GBC’s
management and KeyBanc Capital Markets equity research,
respectively:
| |
|
|
|
|
|
|
|
|
| |
|
Implied | |
| |
|
Pro Forma | |
| |
|
Accretion to | |
| |
|
Current GBC | |
| |
|
Stockholders | |
| |
|
| |
| Source of GBC EPS Estimates |
|
2005 | |
|
2006 | |
| |
|
| |
|
| |
|
GBC Management
|
|
|
76.5 |
% |
|
|
52.2 |
% |
|
KeyBanc Capital Markets Equity Research
|
|
|
20.0 |
% |
|
|
NA |
|
Deutsche Bank analyzed the pro forma financial impact of the
merger on estimated earnings per share to gauge the accretion or
dilution to the shares of ACCO Brands common stock held by the
current GBC stockholders post merger.
Pro Forma Discounted Cash Flow Analysis. Deutsche Bank
performed a discounted cash flow analysis of ACCO Brands.
Deutsche Bank calculated the discounted cash flow values as the
sum of the net present values of (1) the estimated future
cash flow that ACCO Brands will generate for the years 2005
through 2009, plus (2) the terminal value of ACCO Brands at
the end of such period. The estimated future cash flow was based
on the financial projections for ACCO Brands for the years 2005
through 2009 prepared by ACCO World’s management and
reviewed by GBC’s management. The terminal value of ACCO
Brands was calculated based on projected EBITDA for 2009 and a
range of multiples of 7.0x to
50
8.0x. Deutsche Bank used such multiples based on its review of
the trading characteristics of the common stock of certain of
the Selected Companies. Deutsche Bank used discount rates
ranging from 9.0% to 11.0% for ACCO Brands. Deutsche Bank then
compared the implied equity value range for GBC relative to
ownership of 34.0% of ACCO Brands pursuant to the exchange ratio
in the merger. The following table presents the range of equity
values for GBC and ACCO Brands, respectively.
Using the high and low values from the ranges of the implied
equity values resulting from the discounted cash flow analysis
for each of GBC and ACCO Brands, Deutsche Bank calculated the
implied increase in equity value of GBC relative to 34%
ownership in ACCO Brands pursuant to the exchange ratio:
| |
|
|
|
|
|
|
|
|
|
| |
|
Implied Equity | |
| |
|
Value | |
| |
|
| |
| |
|
Low | |
|
High | |
| |
|
| |
|
| |
| |
|
(US$ in millions) | |
|
GBC (standalone)
|
|
$ |
223 |
|
|
$ |
319 |
|
|
34% of ACCO Brands
|
|
$ |
249 |
|
|
$ |
365 |
|
| |
% difference
|
|
|
11.7 |
% |
|
|
14.2 |
% |
Deutsche Bank employed this analysis as one of various
techniques to gauge whether, from a financial point of view, the
equity ownership in the combined company received by GBC
stockholders is fair.
The foregoing summary is not a comprehensive description of all
analyses performed and factors considered by Deutsche Bank in
connection with preparing its opinion. The preparation of a
fairness opinion is a complex process involving the application
of subjective business judgment in determining the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances
and, therefore, is not readily susceptible to summary
description. Deutsche Bank believes that its analyses must be
considered as a whole and that considering any portion of such
analyses and of the factors considered without considering all
analyses and factors could create a misleading view of the
process underlying the opinion. In arriving at its fairness
determination, Deutsche Bank did not assign specific weights to
any particular analyses.
In conducting its analyses and arriving at its opinions,
Deutsche Bank utilized a variety of generally accepted valuation
methods. The analyses were prepared solely for the purpose of
enabling Deutsche Bank to provide its opinion to GBC’s
board of directors as to the fairness from a financial point of
view of the exchange ratio to the holders of GBC common stock
and Class B common stock and do not purport to be
appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold, which are inherently subject
to uncertainty. In connection with its analyses, Deutsche Bank
made, and was provided by GBC and ACCO World management with,
numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many
of which are beyond GBC’s and ACCO World’s control.
Analyses based on estimates or forecasts of future results are
not necessarily indicative of actual past or future values or
results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or
events beyond the control of GBC, ACCO World or their respective
advisors, neither GBC nor Deutsche Bank nor any other person
assumes responsibility if future results or actual values are
materially different from these forecasts or assumptions. In
addition, Deutsche Bank’s opinion did not in any manner
address the prices at which ACCO Brands common stock will trade
at any time.
The terms of the merger were determined through negotiations
among GBC, Fortune Brands and ACCO World and were approved by
GBC’s board of directors. The decision to enter into the
merger agreement was solely that of GBC’s board of
directors. As described above, the opinion and presentation of
Deutsche Bank to GBC’s board of directors was only one of a
number of factors taken into consideration by GBC’s board
of directors in making its determination to approve the merger.
Deutsche Bank’s opinion was provided to GBC’s board of
directors to assist it in connection with its consideration of
the merger and does not constitute a recommendation to any
holder of GBC common stock or Class B
51
common stock as to how to vote with respect to the merger
agreement. In addition, Deutsche Bank was not asked to, and its
opinion does not address, the fairness to, or any consideration
of, the holders of any class of securities, creditors or other
constituencies of GBC, other than holders of GBC’s common
stock and Class B common stock.
GBC selected Deutsche Bank as a financial advisor in connection
with the merger based on Deutsche Bank’s qualifications,
expertise, reputation and experience in mergers and
acquisitions. GBC has retained Deutsche Bank pursuant to an
engagement letter agreement dated
February 1, 2005. As
compensation for Deutsche Bank’s services relating to its
fairness evaluation in connection with the merger, GBC agreed to
pay Deutsche Bank (i) $200,000 on the date on which the
engagement letter was entered into, (ii) $800,000 on the
date on which Deutsche Bank rendered its opinion and
(iii) $250,000 on the date on which the merger is
completed. Regardless of whether the merger is completed, GBC
has agreed to reimburse Deutsche Bank for reasonable fees and
disbursements of Deutsche Bank’s counsel and all of
Deutsche Bank’s reasonable travel and other out-of-pocket
expenses incurred in connection with the merger or otherwise
arising out of the retention of Deutsche Bank under the
engagement letter, which are not to exceed $50,000 without
GBC’s prior written consent. GBC has also agreed to
indemnify Deutsche Bank and certain related persons to the full
extent lawful against certain liabilities, including certain
liabilities under the federal securities laws arising out of its
engagement or the merger.
Deutsche Bank is an internationally recognized investment
banking firm experienced in providing advice in connection with
mergers and acquisitions and related transactions. Deutsche Bank
is an affiliate of Deutsche Bank AG (together with its
affiliates, the DB Group). One or more members of the DB Group
have, from time to time, provided investment banking, commercial
banking (including extension of credit) and other financial
services to GBC or its affiliates for which they have received
compensation. In the ordinary course of business, members of the
DB Group may actively trade in the securities and other
instruments and obligations of GBC and Fortune Brands for their
own accounts or the accounts of their customers and,
accordingly, may from time to time hold a long or short position
in such securities, instruments and obligations.
Regulatory Approval
United States Antitrust. Under the Hart-Scott-Rodino
Antitrust Improvements Act and related rules, certain
transactions, including the merger, may not be completed until
notifications have been given and information furnished to the
Antitrust Division of the Department of Justice and the Federal
Trade Commission and the specified waiting period requirements
have been satisfied. GBC and Lane Industries filed Notification
and Report Forms with the Antitrust Division of the Department
of Justice and the Federal Trade Commission on
April 6,
2005 and Fortune Brands and ACCO World filed these forms on
April 12, 2005. The waiting period expired on
May 12,
2005.
German and Spanish Approvals. In connection with the
merger, ACCO World and GBC are required to provide notifications
to, and obtain the approval from, the German and Spanish
competition authorities (the Bundeskartellamt and the Servicio
de Defensa de la Competencia, respectively). ACCO World and GBC
provided notification to the Spanish competition authorities on
May 18, 2005 and obtained approval for the merger on
June 30, 2005. ACCO World and GBC provided notification to
the German competition authorities on
June 22, 2005. In
Germany, the implementation of the transaction is subject to the
approval of the German antitrust authorities.
Other Approvals. In addition, Fortune Brands, ACCO World
and GBC have elected to file a pre-closing notification with the
U.K. Office of Fair Trading. The filing to the Office of Fair
Trading was made on
April 22, 2005 and approval for the
merger was obtained on
July 4, 2005.
52
General. It is possible that any of the above
governmental entities with which filings are made may seek, as
conditions for granting approval of the merger, various
regulatory concessions. There can be no assurance that:
|
|
|
| |
• |
Fortune Brands, ACCO World or GBC will be able to satisfy or
comply with such conditions; |
| |
| |
• |
compliance or non-compliance will not have adverse consequences
on ACCO Brands after completion of the merger; or |
| |
| |
• |
the required regulatory approvals will be obtained within the
time frame contemplated by Fortune Brands, ACCO World and GBC
and referred to in this proxy statement/ prospectus-information
statement or on terms that will be satisfactory to Fortune
Brands, ACCO World and GBC. |
See “The Merger Agreement — Conditions to the
Completion of the Merger” beginning on page 67.
At any time before or after the completion of the merger, the
Antitrust Division, the Federal Trade Commission or others
(including states and private parties) could take action under
the antitrust laws, including seeking to prevent the merger, to
rescind the merger or to conditionally approve the merger. Such
conditions could possibly include, among others, the divestiture
of assets of Fortune Brands, ACCO World or GBC. There can be no
assurance that a challenge to the merger on antitrust grounds
will not be made or, if such a challenge is made, that it would
not be successful.
Accounting Treatment
The merger will be accounted for using the purchase method of
accounting and ACCO World will be considered the acquiror of GBC
for accounting purposes. Accordingly, the historical financial
statements of ACCO World will become the historical financial
statements of ACCO Brands following the merger.
Interests of Certain Persons in the Merger
In considering the recommendation of the GBC board of directors
with respect to the merger, GBC stockholders should be aware
that certain executive officers and directors of GBC have
certain interests in the merger that may be different from, or
in addition to, the interests of GBC stockholders generally.
These interests are summarized below.
Positions with ACCO Brands. The merger agreement provides
that upon completion of the merger, the board of directors of
ACCO Brands will consist of nine persons, three of whom will be
named by the GBC board of directors. It is anticipated that the
GBC board of directors will name Messrs. G. Thomas
Hargrove, Forrest M. Schneider and George V. Bayly, each of whom
is currently a GBC director, to the ACCO Brands board of
directors. Additionally, the merger agreement provides that the
initial officers of ACCO Brands will consist of individuals
selected by Mr.
David D. Campbell, the Chief Executive
Officer of ACCO Brands following the completion of the merger.
It is anticipated that Mr. Campbell will name
Messrs. John Turner and
Steven Rubin, each of whom is
currently a GBC executive officer, to be officers of ACCO Brands.
Stock Options and Other Stock-Based Awards. Pursuant to
stock option agreements entered into in connection with grants
of stock options under GBC stock plans prior to 2005, all
outstanding pre-2005 options to purchase GBC common stock held
by executive officers and directors would become fully
exercisable upon completion of the merger. Based upon options
outstanding as of
July 11, 2005, options held by GBC’s
executive officers and directors relating to 333,125 shares
of GBC common stock would be subject to accelerated vesting upon
completion of the merger. Stock option agreements entered into
in connection with the grant of stock options in 2005 provide
that outstanding 2005 options to purchase GBC common stock would
not become fully exercisable upon completion of the merger,
however if an employee (including an executive officer other
than Mr.
Dennis J. Martin, GBC’s Chairman, President
and Chief Executive Officer) is terminated at the time of or
after the merger is completed in a manner that would cause the
employee to be entitled to receive severance pursuant to any
written plan of GBC or written agreement between GBC and the
employee, in lieu of any full vesting to which the employee may
be
53
entitled under such plan or agreement, the options would
continue to vest during the period over which severance is paid
and/or calculated. If Mr. Martin’s employment is
terminated due to a “change in control termination”
(as defined in Mr. Martin’s employment agreement with
GBC), the 100,000 options at a strike price of $12.77 per option
granted to Mr. Martin in 2005 would immediately become
vested and exercisable in full pursuant to the terms of
Mr. Martin’s employment agreement with GBC.
In addition, all restrictions imposed on the following classes
of unvested restricted stock units granted under the GBC stock
plans, including those held by GBC executive officers and
directors, would immediately lapse upon completion of the merger
and each of those restricted stock units would be converted into
one unrestricted share of ACCO Brands common stock:
|
|
|
| |
• |
unvested restricted stock units granted under the GBC stock
plans in 2003 and 2004 which have been earned as of the date of
the completion of the merger pursuant to certain performance
criteria; |
| |
| |
• |
remaining unvested restricted stock units granted under the GBC
stock plans in 2003 which remain subject to target awards for
the year 2005; and |
| |
| |
• |
a pro rata portion of remaining unvested restricted stock units
granted under the GBC stock plans in 2004 which remain subject
to target awards for the years 2005 and 2006. |
Based upon grants outstanding as of
July 11, 2005,
restricted stock units held by GBC’s executive officers and
directors relating to 139,756 shares of GBC common stock
would be subject to accelerated vesting upon completion of the
merger. Pursuant to the employee matters agreement, upon
completion of the merger, restricted stock units granted to GBC
employees in 2004, including executive officers and directors,
which have not yet been earned as of the date of the completion
of the merger and which are not part of the pro-rata portion of
the remaining awards mentioned above will convert into
restricted stock units with respect to shares of ACCO Brands
common stock with a vesting date of
February 26, 2007 (with
the recipient of such restricted stock units needing to be
employed by GBC or an affiliate thereof on
February 26,
2007 in order for such restricted stock units to vest).
Additionally, restricted stock units granted in 2005 to
Mr. Thomas Stenebring, a GBC executive officer, provide
that if Mr. Stenebring is terminated at the time of or
after the completion of the merger in a manner that would cause
Mr. Stenebring to be entitled to receive severance pursuant
to any written plan of GBC or written agreement between GBC and
Mr. Stenebring, in lieu of any full vesting to which
Mr. Stenebring may be entitled under such plan or
agreement, the restricted stock units would continue to vest
during the period over which severance is paid and/or calculated.
The following table sets forth, as of
July 11, 2005, the
number of shares subject to unvested options held by GBC’s
executives and directors which will become fully exercisable
upon completion of the merger and the weighted average exercise
prices of those options and the number of shares subject to
grants of restricted stock units which will immediately
accelerate upon completion of the merger:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of Shares | |
| |
|
|
|
|
|
Subject to Grants | |
| |
|
|
|
|
|
of Restricted Stock | |
| |
|
Number of Shares | |
|
Weighted Average | |
|
Units which | |
| |
|
Subject to Unvested | |
|
Exercise Price per | |
|
Immediately | |
| Name |
|
Options | |
|
Share ($) | |
|
Accelerate | |
| |
|
| |
|
| |
|
| |
|
|
|
|
162,500 |
|
|
|
13.35 |
|
|
|
49,446 |
|
| |
Director, Chairman of the
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Board, President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George V. Bayly,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Thomas Hargrove,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Knez,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
54
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of Shares | |
| |
|
|
|
|
|
Subject to Grants | |
| |
|
|
|
|
|
of Restricted Stock | |
| |
|
Number of Shares | |
|
Weighted Average | |
|
Units which | |
| |
|
Subject to Unvested | |
|
Exercise Price per | |
|
Immediately | |
| Name |
|
Options | |
|
Share ($) | |
|
Accelerate | |
| |
|
| |
|
| |
|
| |
|
Jeffery P. Lane,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nelson P. Lane,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arthur C. Nielsen, Jr.,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forrest M. Schneider,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Stucker,
|
|
|
3,000 |
|
|
|
21.07 |
|
|
|
0 |
|
| |
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Stenebring,
|
|
|
17,500 |
|
|
|
10.56 |
|
|
|
20,754 |
|
| |
President, Europe Group,
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Worldwide Office Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John E. Turner,
|
|
|
32,500 |
|
|
|
13.35 |
|
|
|
15,321 |
|
| |
Group President, Industrial and
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Print Finishing Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Govind K. Arora,
|
|
|
32,500 |
|
|
|
13.35 |
|
|
|
21,692 |
|
| |
Senior Vice President,
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Worldwide Manufacturing and
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Logistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don Civgin,
|
|
|
40,625 |
|
|
|
13.36 |
|
|
|
19,152 |
|
| |
Senior Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,750 |
|
|
|
13.47 |
|
|
|
5,745 |
|
| |
Vice President, Secretary and
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perry S. Zukowski,
|
|
|
11,750 |
|
|
|
13.47 |
|
|
|
7,656 |
|
| |
Vice President, Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
Under the terms of the merger agreement, each outstanding option
to purchase GBC common stock existing at the time of the
completion of the merger, including those held by executive
officers and directors, will convert into an option to purchase
the same number of shares of ACCO Brands common stock at an
exercise price per share equal to the exercise price per share
specified in the GBC stock option immediately prior to the
conversion. For a more complete description of the treatment of
GBC stock options under the merger agreement, see “The
Merger Agreement — Treatment of Stock Options” on
page 60.
CEO Employment Agreement. GBC has entered into an
executive employment agreement with Mr.
Dennis J. Martin.
Under the terms of Mr. Martin’s employment agreement,
Mr. Martin would be entitled to severance payments and
other benefits (as summarized below) if Mr. Martin’s
employment with GBC is terminated within twenty-four months
following a
“change in control” (or prior to a change
in control but at the request of any third party participating
in the change in control or otherwise in connection with or in
anticipation of a change in control) without
“cause”
or by Mr. Martin for
“good reason” (each as
defined in Mr. Martin’s employment agreement), or if
Mr. Martin’s employment is terminated by
Mr. Martin for any reason within the thirty-day period
beginning on the six-month anniversary of a change in control.
In the event of an eligible termination, GBC must pay
Mr. Martin a single lump-sum cash payment equal to three
times the sum of his annual base salary at the time of
termination plus the greater of either his target bonus for the
year in which the change in control takes place or his bonus
based on actual performance for that year. Completion of the
merger would constitute a change in control under
Mr. Martin’s employment agreement.
55
If Mr. Martin’s employment terminates in a
“change in control termination” and he is entitled to
receive severance payments under his employment agreement,
Mr. Martin would also receive:
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• |
continued participation in GBC’s medical and dental plans
on a cost-sharing basis for three years following termination; |
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• |
to the extent not already vested and exercisable, the ability to
exercise any or all stock options that were outstanding
immediately prior to the change in control for the earlier of
two years following termination or the expiration date of the
stock option; |
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• |
a lump sum payment equal to the amount of retirement plan
payments made by GBC for Mr. Martin in the two calendar
years prior to termination; and |
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• |
a gross-up for any “golden parachute” excise tax that
may be payable by Mr. Martin under Section 4999 of the
Internal Revenue Code, and any income and employment withholding
taxes on the gross-up payment, with respect to the severance
payments and other benefits due to Mr. Martin (whether
under the change in control plan or otherwise), unless the
amount of any “excess parachute payments” paid or
payable to Mr. Martin do not exceed 330% of
Mr. Martin’s base pay as determined pursuant to
Section 280G of the Internal Revenue Code, in which case
the gross-up payment shall not be paid and the amounts payable
to Mr. Martin will be reduced so that no amounts paid or
payable to Mr. Martin will be deemed “excess parachute
payments” for purposes of Section 4999 of the Internal
Revenue Code. |
Executive Severance/ Change in Control Agreements. GBC
has entered into an Executive Severance/ Change in Control
Agreement, referred to in this proxy statement/
prospectus-information statement as the
“change in control
agreements”, with each of the following executive officers
of
the company: Messrs. Don Civgin, Govind K. Arora, John
E. Turner, Thomas Stenebring,
Steven Rubin and Perry S.
Zukowski. The change in control agreements generally provide for
severance and change in control payments and benefits to each of
the executive officers under the same terms and conditions as
those described for Mr. Martin above, except the executive
officers do not have the ability to terminate their employment
for any reason within the thirty-day period beginning on the six
month anniversary of a change in control and receive change in
control payments and, in the event of an eligible termination:
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• |
GBC must pay the executive officer a single lump-sum cash
payment equal to 2.25 times (2.0 times for Messrs. Civgin
and Stenebring) the sum of the executive’s annual base
salary plus the greater of either the executive’s target
bonus for the year in which the change in control takes place or
the executive’s bonus based on actual performance for that
year; |
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• |
the executive officer would be entitled to continued
participation in GBC’s medical and dental plans on a
cost-sharing basis for two years following termination; |
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• |
to the extent not already vested and exercisable, the executive
officer would be entitled to exercise any or all stock options
(other than stock options issued in 2005 with respect to a
change in control caused by the merger (See
“— Stock Options and Other Stock Based
Awards” on page 53)) that were outstanding immediately
prior to the change in control for the earlier of one year
following termination or the expiration date of the stock option; |
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• |
the executive officer would be entitled to outplacement services
of an amount not to exceed ten percent of the executive’s
base salary in effect at the time of termination; and |
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• |
a gross-up for any “golden parachute” excise tax that
may be payable by the executive under Section 4999 of the
Internal Revenue Code, and any income and employment withholding
taxes on the gross-up payment, with respect to the severance
payments and other benefits due to the executive officer
(whether under the change in control plan or otherwise), unless
the amount of any “excess parachute payments” paid or
payable to the executive do not exceed 330% of the
executive’s base pay as determined pursuant to
Section 280G of the Internal Revenue Code, in which case
the gross-up payment shall not be paid and the severance payable
to the executive will |
56
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be reduced so that no amounts paid or payable to the executive
will be deemed “excess parachute payments” for
purposes of Section 4999 of the Internal Revenue Code. |
Additionally, following the execution of the merger agreement,
on
March 17, 2005, GBC entered into agreements with
Messrs. Rubin, Turner and Arora amending each of their
change in control agreements to provide that, if the respective
executive’s employment with GBC is terminated in a
“change in control termination” as described above or
for certain other reasons, the executive will be deemed to have
satisfied the age and service requirements for retiree medical
benefits as in effect on
February 10, 2005 and he and his
eligible dependents may commence coverage for such retiree
benefits at any time following the expiration of the active
employee medical and dental continuation coverage period as
described in his respective change in control agreement to the
same extent and on the same cost-sharing basis as do other GBC
retirees with the same combined age and years of service as of
the executive’s date of termination.
The following chart sets forth, for Mr. Martin and for each
of the executive officers entering into change in control
agreements, the value of the cash severance pay and other
benefits due the executive officer (based on levels of pay and
other circumstances as of
June 30, 2005), excluding the
amount of any excise tax gross-up, if applicable, if the
executive officer terminated employment in a
“change in
control termination” under his employment or change in
control agreement:
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Payment and | |
| Name |
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Benefit Amounts ($) | |
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4,383,460 |
|
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Chairman of the Board, President and
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Chief Executive Officer
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Thomas Stenebring,
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1,352,540 |
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President, Europe Group, Senior Vice
|
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President, Worldwide Office Products
|
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John E. Turner,
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1,122,484 |
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Group President, Industrial and Print
|
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Finishing Group
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Govind K. Arora,
|
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874,653 |
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Senior Vice President, Worldwide
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Manufacturing and Logistics
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Don Civgin,
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1,206,042 |
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Senior Vice President and Chief
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Financial Officer
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770,991 |
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Vice President, Secretary and General
|
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Counsel
|
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Perry S. Zukowski,
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651,952 |
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Vice President, Human Resources
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|
2005 Bonuses. Under the terms of the employee matters
agreement, bonuses to applicable GBC employees, including
executive officers, under GBC’s 2005 short term incentive
plan would be paid pro rata at target as soon as practicable
following the completion of the merger and will remain in effect
for the remainder of 2005 following the completion of the
merger, with the actual bonus amount being offset (but not below
zero) by the pro rata payment.
Transaction Committee Fees. During September 2004, the
GBC board formed a committee of directors consisting of
Messrs. G. Thomas Hargrove, Forrest M. Schneider and George
V. Bayly, referred to herein as the
“transaction
committee”, to assist GBC management in conducting any
negotiations with Fortune Brands and ACCO World. On
March 14, 2005, the GBC board of directors unanimously
voted special fee payments of $50,000 to Mr. Hargrove and
$20,000 to each of Messrs. Bayly and Schneider which would
be payable to them upon completion of the merger.
Lane Industries Transaction Bonuses. We have been
informed by Lane Industries that, on
May 4, 2005, the board of
directors of Lane Industries unanimously approved the payment of
a special transaction bonus to Mr. Schneider and each other
officer of Lane Industries. This program provided for the payment
57
to Mr. Schneider of $50,000 immediately and the payment of
$50,000 to him upon completion of the merger and the payment to
Ms. Jamie Knez, the spouse of Mr. Marc Knez, of $27,500
immediately and the payment of $27,500 to her upon completion of
the merger.
Relationship with Lane Industries. Messrs. Jeffrey
P. Lane and Nelson P. Lane, current directors of GBC, are also
directors and stockholders of Lane Industries, which controls
approximately 86.7% of the voting power of the outstanding GBC
common stock and Class B common stock as of the record date
for the special meeting of GBC stockholders. In addition,
Mr. Schneider is the President and Chief Executive Officer
of Lane Industries and Mr. Marc Knez’s spouse serves
as an officer of Lane Industries. In connection with the merger
agreement, Lane Industries entered into a voting agreement
pursuant to which Lane Industries has agreed, subject to limited
exceptions, to vote, and granted to Fortune Brands a proxy to
vote, all its shares of GBC stock for the adoption of the merger
agreement and approval of the merger. See
“Additional
Agreements Related to the Spin-Off and the Merger —
Voting Agreement” beginning on page 75 for a
discussion of the terms of the voting agreement. Lane Industries
has also entered into a registration
rights agreement with ACCO
Brands that will become effective upon the completion of the
merger that grants registration rights with respect to stock of
ACCO Brands issued to Lane Industries, and Lane Industries will
enter into a tax allocation agreement with ACCO Brands and GBC
prior to the completion of the merger that, among other things,
will terminate the current tax allocation agreements between
Lane Industries and GBC and will provide indemnification rights
to Lane Industries for certain tax obligations. See
“Additional Agreements Related to the Spin-Off and the
Merger — Registration Rights Agreement” beginning
on page 77 for a discussion of the terms of the
registration
rights agreement and
“Additional Agreements
Related to the Spin-Off and the Merger — Tax
Allocation Agreements — Lane Industries/ GBC”
beginning on page 80 for a discussion of the terms of the
tax allocation agreement.
Indemnification and Insurance. The merger agreement
requires ACCO Brands to maintain for a period of six years after
the merger, for the benefit of GBC’s directors and
officers, directors’ and officers’ liability insurance
and fiduciary liability insurance policies currently maintained
by GBC, or policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no
less advantageous to the insured than the current insurance
maintained by GBC with respect to claims arising from facts or
events that occurred on or before the effective time of the
merger. ACCO Brands is not, however, required to expend in any
one year an amount in excess of 250% of the current annual
premiums paid by GBC for this insurance.
The GBC board of directors was aware of the interests described
above and considered them, among other matters, when adopting
the merger agreement and recommending that GBC stockholders vote
to adopt the merger agreement and approve the merger.
Federal Securities Law Consequences; Resale Restrictions
ACCO Brands common stock issued in the merger will not be
subject to any restrictions on transfer arising under the
Securities Act of 1933, except for shares issued to any GBC
stockholder who may be deemed to be an “affiliate” of
GBC or ACCO Brands for purposes of Rule 145 under the
Securities Act. It is expected that each affiliate will agree
not to transfer any ACCO Brands common stock received in the
merger except in compliance with the resale provisions of
Rule 144 or 145 under the Securities Act or as otherwise
permitted under the Securities Act. The merger agreement
requires GBC to use its reasonable best efforts to cause its
affiliates to enter into such agreements.
In connection with GBC’s entering into the merger
agreement, Lane Industries, an affiliate of GBC, has entered
into a registration
rights agreement with ACCO World that will
become effective upon the completion of the merger under which
Lane Industries, subject to certain restrictions, including a
180-day waiting period, has the right to cause ACCO Brands to
register the sale of ACCO Brands common stock owned by it, and
to include its shares in future registration statements relating
to ACCO Brands common stock. See
“Additional Agreements
Related to the Spin-Off and the Merger — Registration
Rights Agreement” beginning on page 77 for a
discussion of the terms of the registration
rights agreement.
58
Listing and Trading of ACCO Brands Common Stock
There is no current trading market for ACCO Brands common stock.
We cannot assure you as to the price at which ACCO Brands common
stock will trade, whether before, on or after the distribution
date. See “Risk Factors — Risks Relating to the
Spin-Off and the Merger” beginning on page 15.
ACCO World will apply to list ACCO Brands common stock on the
New York Stock Exchange under the trading symbol
“ABD”. ACCO Brands initially will have approximately
[ • ] stockholders
of record, based on the number of record holders of Fortune
Brands common stock and GBC common stock and Class B common
stock as of
[ • ],
2005. For certain information regarding options to purchase ACCO
Brands common stock that will be or may become outstanding after
the spin-off and merger, see “The Merger
Agreement — Treatment of Stock Options” on
page 60.
Shares of GBC common stock will be delisted from the Nasdaq
National Market following completion of the merger.
59
THE MERGER AGREEMENT
The following is a summary of the material terms and provisions
of the merger agreement, which is attached as Annex A to
this proxy statement/ prospectus-information statement and
incorporated by reference. We encourage you to read the entire
merger agreement.
The Merger
Under the merger agreement and in accordance with Delaware law,
Gemini Acquisition Sub will merge with and into GBC. As a result
of the merger, the separate corporate existence of Gemini
Acquisition Sub will terminate and GBC will continue as the
surviving corporation.
Merger Consideration
The merger agreement provides that each share of GBC common
stock and Class B common stock issued and outstanding
immediately prior to the time of the merger will be converted
into the right to receive one share of ACCO Brands common stock.
Treatment of Stock Options
Each option to purchase GBC shares outstanding immediately prior
to the merger will cease to represent a right to purchase GBC
common stock and be converted into an option to purchase the
same number of shares of ACCO Brands common stock at an exercise
price per share equal to the exercise price per share specified
in the GBC stock option immediately prior to the conversion.
Prior to the merger, each outstanding option to purchase Fortune
Brands common stock granted pursuant to or governed by the
Fortune Brands 2003 Long-Term Incentive Plan or the Fortune
Brands 1999 Long-Term Incentive Plan that is outstanding and
unvested immediately prior to the spin-off and held by an
employee or former employee of ACCO World or one of its
subsidiaries will be converted into a right to purchase a number
of shares of ACCO Brands common stock equal to the number of
shares of Fortune Brands common stock subject to the
corresponding Fortune Brands option multiplied by the price of
Fortune Brands common stock on the day before the spin-off and
divided by the price of ACCO Brands common stock on the day
after the spin-off, provided that any fractional shares of ACCO
Brands common stock resulting from such calculation will be
rounded down to the nearest whole share. The exercise price per
share of the converted option will be equal to the exercise
price per share of Fortune Brands common stock under the
corresponding Fortune Brands option multiplied by the price of
ACCO Brands common stock on the day after the spin-off divided
by the price of Fortune Brands common stock on the day before
the spin-off, provided that such exercise price will be rounded
up to the nearest whole cent.
As of
July 11, 2005, options to purchase 2,148,954 GBC
shares were outstanding and would be converted into options to
purchase 2,148,954 ACCO Brands shares if the merger were
completed on such date. Based on Fortune Brands’ and
GBC’s stock price as of
July 11, 2005, outstanding
options to purchase Fortune Brands shares would be converted
into options to purchase 2,755,502 ACCO Brands shares if the
merger was completed as of such date.
Treatment of Restricted Stock Units
Each GBC restricted stock unit that pursuant to the applicable
GBC stock plan under which the unit was granted would have its
restrictions lapse and become vested in full upon completion of
the merger will, upon completion of the merger, be automatically
converted into one share of ACCO Brands common stock. Each GBC
restricted stock unit which would not have its restrictions
lapse and become vested in full upon completion of the merger
will be treated in accordance with the terms of the employee
matters agreement. See “Additional Agreements Related to
the Spin-Off and the Merger — Employee Matters
Agreement” beginning on page 77.
60
Exchange of Shares in the Merger; Treatment of Fractional
Shares
In connection with the merger, ACCO Brands will deposit, or
cause to be deposited, with the exchange agent, the shares of
ACCO Brands common stock to be issued in the merger and
delivered in exchange for shares of GBC common stock and
Class B common stock.
Unless a physical certificate is requested, GBC stockholders
will receive shares of ACCO Brands common stock in book-entry
form. Upon surrender of the shares of GBC common stock or
Class B common stock, such shares will be cancelled. As
soon as reasonably practicable after the cancellation, the
exchange agent will mail to GBC stockholders:
