Acco Brands Corporation (NYSE:ACCO)

LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Nov. 17, 2011-- ACCO Brands Corporation (NYSE: ABD), a world leader in branded office products, and MeadWestvaco Corporation (NYSE: MWV), a world leader in packaging, today announced the signing of a definitive agreement to merge MeadWestvaco Corporation’s Consumer & Office Products business into ACCO Brands in a transaction valued at approximately $860 million. Upon completion of the transaction, MeadWestvaco shareholders will own 50.5% of the combined company.

MeadWestvaco’s Consumer & Office Products business is a leading manufacturer and marketer of school supplies, office products, and planning and organizing tools – including the Mead®, Five Star®, Trapper Keeper®, AT-A-GLANCE®, Cambridge®, Day Runner®, Hilroy, Tilibra and Grafons brands in the United States, Canada and Brazil. With the addition of this business, ACCO Brands increases its scale and strengthens its position as an industry leader in school and office products.

“This is a transforming event for ACCO Brands,” said Robert J. Keller, chairman and chief executive officer of ACCO Brands Corporation. “The merger supports our brand leadership strategy and will greatly expand our presence in important consumer channels and faster-growing geographies. We believe that the merger will provide investors with a compelling financial benefit and further enhance ACCO Brands’ ability to deliver shareholder value for years to come. We expect this combination to be immediately accretive and to significantly strengthen our balance sheet.

“ACCO Brands is positioned as a worldwide leader in the office products industry, and the addition of MWV’s profitable Consumer & Office Products business – and its outstanding employees – should enable significant growth for the new company around the world,” Keller concluded.

The combination, when completed, will increase ACCO Brands’ annual revenues by more than 50% and is expected to:

• Immediately be accretive to ACCO Brands’ earnings per share; for the adjusted combined trailing twelve month period ended September 30, 2011, the combination is accretive by 70%, excluding synergies and transaction-related costs;
  

Fourth Quarter 2011 Results

• Net sales decreased 2% to $350.7 million, compared to $359.5 million in the prior-year quarter.
• Fourth quarter income from continuing operations was $9.4 million, or $0.16 per diluted share, compared to income of $4.3 million, or $0.07 per diluted share, in the prior-year quarter.

While consumer and business spending continued to be constrained in the fourth quarter in both the U.S. and Europe, we managed the business well and are pleased with our bottom-line performance for the quarter and the year," said Robert J. Keller, chairman and chief executive officer. "We've set the stage for a transformation of ACCO Brands. Our pending merger with MeadWestvaco's Consumer and Office Products business marks an important first step in that transformation.

Business Outlook

The company expects to incur $5-7 million of restructuring charges in the first quarter of 2012 for severance and related expenses, as it streamlines its sales and operations functions in the U.S. and Europe. Savings associated with these actions are expected to be between $5-7 million in 2012, growing to $8 million on a full-year annualized basis thereafter. The company expects the pre-tax net cash outflow from these actions to be approximately $5 million, with an expected payback in the current year.

The company's 2012 outlook is for the current business only and does not include business restructuring or refinancing costs, or any impact from the pending acquisition of MeadWestvaco's Consumer and Office Products business. The company is planning for sales to be flat in 2012, with modest growth at constant currency offset by negative impacts of foreign currency translation. Based on continued productivity improvements, the company expects to grow diluted earnings per share by approximately 30% on a normalized 30% tax rate basis.

Targeted free cash flow, after interest, taxes and capital expenditures, is expected to be approximately $50-60 million.