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Riverwood Holding and Graphic Packaging Agree to $3 Billion Merger

Thursday, March 27, 2003

Press release from the issuing company

ATLANTA and GOLDEN, Colo., March 26-- Riverwood Holding, Inc., parent company of Riverwood International Corporation, and Graphic Packaging International Corporation jointly announced today that they have signed a definitive merger agreement that will create a global paperboard packaging company with leading market positions serving the beverage, food and consumer products industries. Under the terms of the transaction, Graphic Packaging, the leader in folding carton consumer products packaging, and Riverwood, the leader in multi-pack beverage packaging, will merge in a stock transaction with an enterprise value of approximately $3 billion. The combined company will have 2002 pro forma revenues of approximately $2.3 billion and EBITDA in excess of $400 million. Management has identified broad-based operating synergies of $55 million per year, which are expected to be fully realized in the third year after closing. The transaction is expected to be accretive to earnings for both companies and the new entity is projected to generate substantial cash flow to reduce debt. The transaction has been approved by the Boards of Directors of both companies and by the shareholders of Riverwood. The new company will have the scale, technologies and rich product portfolio to enhance both companies' strong relationships with beverage, food and consumer products companies worldwide. Graphic Packaging and Riverwood, which have a successful track record of working together, will benefit from: - enhanced growth opportunities; - broader value-added product lines; - world-class technology, management expertise and workforce; - efficient operational practices; - broad-based synergy opportunities; - a global delivery network; and - substantial cash flow to reduce debt. The merger is expected to greatly expedite the growth of both companies' existing packaging businesses by combining Graphic Packaging's sophisticated front-end sales and marketing, converting operations and strong customer relationships with Riverwood's experience in providing an integrated, total packaging systems offering. According to the terms of the transaction, Graphic Packaging shareholders will receive one share of Riverwood for each share of Graphic Packaging they own, following a stock split by Riverwood. Before closing, all of Graphic Packaging's convertible preferred stock will be converted into Graphic Packaging common stock in return for a cash payment. This payment is expected to be approximately $19 million, based on the present fair value of future dividends. Riverwood shareholders will own 57.5% of the new public company, while Graphic Packaging shareholders will own 42.5%. Shares of the combined company are expected to trade on the New York Stock Exchange. Graphic Packaging Chairman and Chief Executive Officer, Jeffrey Coors, will serve as Executive Chairman of the combined company, and Riverwood President and Chief Executive Officer, Steve Humphrey, will serve as President and Chief Executive Officer. Graphic Packaging Chief Operating Officer, David Scheible, will serve as Executive Vice President of Commercial Operations for the new company. The Board of Directors will consist of nine members: Mr. Coors, Mr. Humphrey, five independent directors and two directors nominated by Riverwood's investors. The combined company will employ more than 8,000 people on four continents and will be headquartered in Atlanta. "We are uniting two strong companies that we believe will be the leading single source provider of innovative paperboard packaging solutions," said Mr. Coors. "Our objective is to achieve accelerated growth in the global consumer, food and beverage packaging industries by capitalizing on the best from each organization." "This is a merger of two companies that know each other very well and share similar operating values," said Mr. Humphrey. "We will have a global company with the scale and resources to become a stronger partner with our customers. We believe this is the best way to ensure future profitable growth and create long-term value." The transaction is expected to be completed in the third quarter of 2003, subject to customary shareholder and regulatory approvals. Riverwood's investors include funds managed by Clayton, Dubilier & Rice, Inc., Exor, Brown Brothers and other institutional investors. Several Coors family trusts, which own approximately 75% of the outstanding common shares of Graphic Packaging as converted, will own approximately 30% of the combined company.

 

 

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