AEP Industries/Borden Packaging Combination Announced; Transaction More Than Triples AEP Industries' Annual Sales to $900 Million; Borden to Have Major Ownership Position in Larger, Stronger Packaging Business.

SOUTH HACKENSACK, N.J. and COLUMBUS, Ohio--(BUSINESS WIRE)-- --June 20, 1996--AEP Industries Inc. (NASDAQ: AEPI) and Borden, Inc. today announced a definitive agreement for AEP Industries to acquire the Borden Global Packaging business for a total of approximately $360 million. The transaction provides Borden with $280 million in cash, along with an aggregate value of at least $80 million in newly issued common shares of AEP Industries.

No fewer than 2,412,818 AEP shares would be issued to Borden. If the average closing price over a 50 trading day period prior to the stockholders' meeting to be called to approve the issuance of shares to Borden falls below $33.15625 per share, the number of shares would be increased to maintain $80 million in aggregate value, but in no event would AEP issue more than 4.0 million shares to Borden. Assuming issuance of 2,412,818 shares, Borden would own about 34% of AEP Industries based on a new total of approximately 7.08 million shares outstanding.

"This acquisition transforms AEP into a global packaging powerhouse," said J. Brendan Barba, Chairman, President and Chief Executive Officer of AEP. "We already have a strong North American business in stretch pallet wrap and custom industrial films. Borden complements this, first, with its strong North American and European positions in both the supermarket and institutional food wrap businesses. Second, we believe that the combination of our pallet wrap businesses will realize substantial efficiencies in North America. Third, Borden brings AEP a major U.S. position in polypropylene films, which are used to package snacks and other food products. And, finally, Borden's Far Eastern operations provide a solid base for product expansion in this high-growth region.

"We believe that this combination will enhance the individual product strengths of AEP, enabling us to deliver a wider range of products to new and existing customers globally," Mr. Barba continued. "Borden has broad geographic presence through 12 facilities across Europe, seven in the Far East, and two each in South Africa and Canada. Borden's four plants in the United States are excellent synergistic complements to AEP's five U.S. facilities.

"We expect significant synergies in all areas, especially in manufacturing," Mr. Barba said. "AEP's plants are modern and highly efficient. The combination provides ample capacity to support significant volume growth throughout North America, while actually reducing our combined North American capital spending over the next few years. We'll also evaluate several consolidation opportunities that could significantly lower production costs. We expect at this point that total operating improvements could be running at an annual rate of more than $25 million by the end of 1998," Mr. Barba said.

"The record performance our people achieved in 1995 was an outstanding cap to our first 25 years of profitable growth," Mr. Barba concluded. "This acquisition -- which more than triples our annual sales -- provides an opportunity for immediate growth and a base for further expansion as we enter our next quarter century."

C. Robert Kidder, Chairman and CEO of Borden, Inc., said, "We're delighted to retain a sizeable investment in packaging through this investment in AEP Industries, which has a proven record of financial performance, a sound strategic plan and an outstanding management team.

"Borden Global Packaging posted an operating profit of about $30 million in 1995," he noted. "It's a good business, with strong competitive positions and well-known brand names. Through this combination, AEP will benefit from worldwide scale and presence, with premier products in virtually every line of its business. Borden Global Packaging will benefit from an owner sharply focused on packaging and committed to investing resources to grow the value of the business."

Mr. Kidder said that Borden intends to use its cash proceeds for general corporate purposes.

Mr. Barba indicated that AEP intends to fund this cash payment primarily through bank borrowings. "Our balance sheet continues to be strong," he said, "and we expect that strong cash flows going forward will provide ample cash to meet our financial commitments as well as to support the continuing growth of the company."

Transaction Details

Borden had announced an intent to divest its global packaging business in January 1996. Morgan Stanley & Co., an investment banking firm, assisted Borden in reaching today's agreement for the business combination, while J. P. Morgan & Co. has advised AEP.

The definitive agreement calls for Borden to designate four of 10 total members of the AEP Board of Directors, with the fifth of those Directors jointly designated by Borden and AEP management. Borden has generally agreed not to increase for three years its common stock ownership beyond the percent held at the time of closing of the transaction.

The agreement has been unanimously approved by the Boards of Directors of both companies. The combination is subject to customary regulatory review. While the issuance of AEP stock in connection with the transaction is subject to approval by the holders of a majority of AEP shares, the holders of approximately 49% of the shares, including AEP management, have already committed to vote in favor. Completion of the transaction is expected in September 1996.

Business Descriptions

Headquartered in South Hackensack, NJ, and employing about 1,100 people, AEP Industries manufactures, markets and distributes nationally an extensive range of polyethylene film products for stretch pallet wrap, industrial packaging, agricultural and can/box liner applications. It achieved record sales and net income of $242.9 million and $13.5 million, respectively, in its fiscal year ended October 31, 1995, double its annual sales just five years earlier in 1990 and 3-1/2 times that year's net income.

AEP markets its specialty and standard polyethylene film products to the packaging, beverage, food, pharmaceuticals, agricultural and textile industries. It operates five highly efficient manufacturing plants in the United States. A now complete capacity expansion and manufacturing efficiency program included new facilities started up in Wright Township, PA, in early 1996 and Alsip, IL, in mid 1995. Other facilities are located at Waxahachie, TX, Matthews, NC, and Chino, CA.

Borden Global Packaging had calendar 1995 sales of approximately $625 million, primarily flexible film for stretch wrap and other packaging uses, and rigid plastic packaging. Nearly $250 million of the total is in North America, slightly over $300 million in Europe and $75 million in the Asia/Pacific region.

The Borden packaging business employs about 3,500 people and operates 27 plants in 12 countries. Its film products are made from polyvinyl chloride, polypropylene and polyethylene resins and marketed under several brand names including Resinite, Sealwrap, Loadmaster, Proponite and OPPtimum. Not included in the sale are Borden packaging businesses in South America, which continue to be integrated within the Borden Chemical, Inc. operating unit.

Borden, Inc., with sales of approximately $5.9 billion in 1995, is a diversified producer of dairy, pasta, snacks and other packaged grocery products; consumer adhesives and wallcoverings; and adhesives, resins and plastic products for packaging and industrial uses. Headquartered in Columbus, OH, and privately owned since March 1995 by partnerships affiliated with the investment firm Kohlberg Kravis Roberts & Co. (KKR), Borden employs about 27,500 people and operates 180 plants worldwide.

CONTACT: AEP Industries Inc. Borden, Inc.

Joan Lange Nicholas R. Iammartino

201-807-2301 614-225-4485

or

Lynn S. Anderson

614-225-7199