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 HARTSVILLE, S.C., and ATLANTA, Sept. 13 /PRNewswire/ -- Sonoco Products Co. (NASDAQ National: SONO) and Engraph, Inc. (NASDAQ National: ENGH) today announced they have signed a definitive merger agreement providing for Sonoco to acquire Engraph for $15.63 per share in a transaction valued at approximately $300 million. The boards of both companies have unanimously approved the acquisition.
 Sonoco will offer to purchase all of Engraph's outstanding shares for $15.63 per share in a tender offer. The tender offer, expected to begin later this week, is expected to extend for 20 business days from commencement. Following the completed tender offer and merger, Engraph will become a wholly owned subsidiary of Sonoco. Shares not purchased by Sonoco in its tender offer will be cashed out in the subsequent merger at the tender offer price. J.P. Morgan Securities will manage the tender offer.
 "We're excited about Engraph joining with us because this is an important strategic move that should provide Sonoco with new opportunities for expanding our consumer packaging business, both here and overseas. Engraph's markets are among the faster growing in the packaging industry," said Charles W. Coker, Sonoco's chairman of the board and chief executive officer.
 "Our board believes Sonoco is offering a fair cash price and unanimously recommends that our shareholders tender their shares," said Leo Benatar, chairman of the board and chief executive officer of Engraph.
 Sonoco is an international supplier of industrial and consumer packaging, headquartered in Hartsville, S.C., with 1992 sales of $1.8 billion and earnings of $109 million before non-recurring charges. Sonoco has 16,000 employees at more than 250 locations in 22 countries. With 1992 sales of $235.4 million, Engraph, headquartered in Atlanta, has markets in labels and package inserts, flexible packaging, screen process printing and paperboard cartons and specialties. The company has approximately 1,600 employees in 17 plants around the country.
 Sonoco has an agreement for bridge financing sufficient to consummate the tender offer and merger, which it intends to re- finance after completion of the tender offer. Permanent financing of $350 million, which is expected to be in place later this year, will include about half convertible preferred stock, half long-term debt and a $50-million increase in Sonoco's commercial paper program. Registration statements for the convertible preferred stock and long- term debt are expected to be filed with the Securities and Exchange Commission in a few weeks. These offerings will be made only by prospectus filed with the Securities and Exchange Commission.
 "Use of convertible preferred stock is a very important part of Sonoco's strategic plan, because it will give us additional flexibility and a stronger balance sheet," Mr. Coker pointed out.
 In a joint statement, Mr. Coker and Mr. Benatar said, "This strategic move should benefit the customers of both companies in the increasingly competitive
global packaging market. Both companies market in niches where they can offer high-value-added, cost- effective packaging. The combination of our companies should allow us to build on each other's strengths.
 "Since Sonoco and Engraph serve different sectors of the packaging industry, we anticipate no objection to our combination from federal government regulatory agencies," they added.
 Sonoco has said that it wants to change the balance of its product portfolio over time to 50 percent in consumer packaging, from the present 35 percent. "Adding Engraph increases our consumer packaging sales to over 40 percent. That's an important step in our long-range plans," Mr. Coker said.
 Mr. Benatar noted, "We expect the consolidation trend in the packaging market to continue and even to accelerate. To maintain a leadership position in our industry, Engraph must continue to grow. This would require substantial capital resources and expansion into international markets. Joining a larger company such as Sonoco will enable Engraph to better serve our customers in an increasingly global market. After careful analysis of what it would require to maintain our industry position, while attempting to sustain our growth rate, and the alternative of accepting Sonoco's offer, our board concluded that it is in the best interests of our shareholders to accept the Sonoco offer, which the board viewed as very fair," he added.
 Mr. Coker acknowledged that Sonoco is paying full price for Engraph. "But," he said, "we think the opportunities being acquired are quite significant to us. Despite the roughly $250 million increase in goodwill, we expect to have less than 4 percent earnings dilution in 1994, declining in 1995. By our estimate, there is no dilution in 1996," he added.
 Sonoco's long-term debt to total capital ratio is expected to be approximately 40 percent immediately and decline to 36 percent by the end of 1994. Mr. Coker said, "It is our objective, and we expect, to maintain strong credit ratings."
 Russell C. King Jr., president and chief operating officer of Sonoco, who will be responsible for integrating the Sonoco and Engraph businesses, commented that "a joint Sonoco and Engraph management team will plan for the most effective utilization of the combined resources of the companies."
 Mr. Benatar, who will report to Mr. King, will continue as chairman and chief executive officer of Engraph. He will become an officer of Sonoco, and he will become a member of Sonoco's board of directors after the merger.
 Maurice M. Richardson, Engraph's executive vice president, will continue as its chief operating officer. No change in Engraph's management structure is anticipated.
 -0- 9/13/93
 /CONTACT: Dick Puffer of Sonoco Products, 803-383-7425; or Basil Ford of Engraph, 404-329-0332/

CO: Sonoco Products Co.; Engraph, Inc. ST: South Carolina, Georgia IN: SU: TNM PER

SW -- NYON1 -- 1100 09/13/93 08:11 EDT
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Publication:PR Newswire
Date:Sep 13, 1993

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