Wesley hails Acco/GBC merger

Fortune Brands has announced that it is spinning off its Acco World OP unit to shareholders and that Acco will merge with General Binding Corporation (GBC) to create the world’s largest supplier of branded office products.

The new company, to be called Acco Brands Corporation, will be headed up by Acco World president/CEO David Campbell as chairman/CEO. Acco World’s CFO Neal Fenwick will take the CFO role. The board will comprise nine members, including Fortune Brands’ chairman/ CEO Norm Wesley, and three additional members of the Fortune board. Three members of GBC’s board will also join the Acco Brands board.

Commenting on the deal, Wesley said: "We believe this is a win-win-win for Fortune Brands, Acco and GBC that will better position each company for long-term growth and deliver greater value to our respective shareholders."

Campbell commented: "Acco and GBC are an excellent strategic fit, and we’re excited about our growth opportunities as a combined independent, publicly traded company. Notably, the combined company will benefit from significant operating synergies. We expect annual cost savings to reach $40 million over the next three years, a portion of which we plan to reinvest in the business."

And GBC’s chairman and president/CEO Dennis Martin added: "We’re very excited about the prospects of being a significant part of Acco, and we’re confident that combining these two complementary companies to make a larger, stronger one makes perfect strategic sense."

Fortune Brands originally looked to sell its Acco unit five years ago, but performed a u-turn in the face of a weakening US economy.

Upon completion of the simultaneous spin-off and merger, which is expected in the summer, shareholders of both Fortune Brands and GBC will receive shares in the new company. It is expected that the new company will float on the NYSE.

News of the merger caused GBC’s share price to shoot up by 38 per cent in early morning trading on Nasdaq, gaining $4.97 to reach a year-high of $18.05.

In February, GBC announced that it bounced back into the black in Q4, posting net income of $6.6 million opposed to a loss of $3.1 million in last year’s Q4. Sales lifted 4.9 per cent to $191.2 million.

For the full year, sales rose 2.1 per cent to $712.3 million, while net earnings totalled $14.8 million compared to a loss of $3.3 million in 2003.

GBC also managed to reduce its net debt by $9.8 million to $282.6 million in 2004.