
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, September 13, 1994                   TAG: 9409140106
SECTION: BUSINESS                    PAGE: C-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: COLUMBUS, OHIO                                LENGTH: Medium

BORDEN FINDS WILLING BUYER

Borden Inc., struggling for the past few years to rescue its finances, said Monday it had found a white knight to buy the food and consumer products maker - Kohlberg Kravis Roberts & Co., the buyout firm that took RJR Nabisco private in the biggest corporate buyout of all time.

KKR will swap $2 billion in RJR Nabisco Holdings Inc. stock for Borden.

The deal ends speculation about the future of Borden. The company, whose brands include its namesake dairy products, Wise snacks and a variety of pastas and sauces, has been selling parts of itself to try to boost sagging profits.

KKR, one of the most prominent takeover firms of the 1980s, is the largest stockholder in RJR Nabisco, maker of Nabisco brand foods and R.J. Reynolds tobacco brands including Winston, Salem and Camel cigarettes.

KKR engineered the $24.53 billion leveraged buyout of RJR Nabisco in 1989. The company returned to public ownership in 1991.

Under terms of the deal announced Monday, Borden would be privately owned by KKR investors. Borden shareholders would be given RJR Nabisco stock valued at $14.25 per share; Borden's closing price Friday was $11.621/2 per share.

RJR Nabisco would own at least 20 percent of Borden's stock.

Wall Street liked the deal. Borden shares rose $2 to $13.621/2 Monday on the New York Stock Exchange.

John Maxwell, an analyst with Wheat First, Butcher & Singer in Richmond, Va., suggested KKR wants to buy Borden so it could sell some of its divisions to RJR Nabisco.

The deal would help rescue Borden by making new investment cash available to turn its profits around.

Borden has been restructuring this year to cut costs and become more competitive. It announced in January its plans to sell businesses accounting for nearly 20 percent of its $5.5 billion in annual revenue.

However, thus far it has been unable to turn its finances around.

In its last quarterly report in July, Borden reported a 64 percent plunge in earnings to $11.1 million, blaming higher costs and increased competition in the company's food businesses.

``We believe that, after a full consideration of all the risks and opportunities confronting Borden today, this transaction is the best outcome for Borden shareholders,'' Frank J. Tasco, Borden's chairman, said in a written statement.

Lawrence Adelman, an analyst with Dean Witter Reynolds in New York, says the KKR's acquisition of Borden ``provided a better avenue of maintaining the continuity of the corporation. I think KKR will be able to bring financial resources to the picture to enable them to do things they [Borden] couldn't do otherwise.''

Adelman and Maxwell said KKR's moves after the acquisition is completed would help determine whether layoffs might occur. Borden employs about 40,000 people worldwide.

The sale to KKR has been approved by Borden's directors. Completion is subject to a completion of a definitive agreement, approval from some of Borden's lenders and regulatory approvals.

\ BORDEN IN WESTERN VIRGINIA

Borden owns Meadow Gold Dairy Inc., which has distribution branches in Roanoke, Radford and Galax.

Jim Sutton, general manager of the Meadow Gold manufacturing plant at Charleston, W.Va., said about 35 people work at the three Western Virginia locations.

Meadow Gold distributes food, milk, ice cream, cottage cheese and sour cream products to grocers in a large area of Western Virginia.

The company's plant and the branches will not be affected by the acquisition of Borden, Sutton said.

- MAG POFF

by CNB