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Riverwood International Corporation

Riverwood International Corporation

3350 Riverwood Parkway
Suite 1400
Atlanta, Georgia 30339
U.S.A.
Telephone: (770) 644-3000
Fax: (770) 644-2962
Web site: http:///www.riverwood.com

Private Company
Incorporated:
1989
Employees: 4,100
Sales: $1.24 billion
NAIC: 322121 Paper (Except Newsprint) Mills; 322130 Paperboard Mills; 322212 Folding Paperboard Box Manufacturing; 333993 Packaging Machinery Manufacturing

Riverwood International Corporation is a global paperboard, packaging, and packaging machinery firm that produces coated unbleached kraft (CUK) paperboard, packaging products (including beverage carriers and folding cartons), and packaging machinery systems. Riverwood is a leading supplier of CUK paperboardthe thick, glossy paperboard used in secondary packagingwith an annual capacity of over one million tons. In 2001, nearly 93 percent of sales stemmed from the firms coated board business. Riverwood serves both the beverage and the consumer packaging markets and its major customers include Anheuser-Busch Companies Inc., Campbells, Coca-Cola Enterprises Inc., Dr. Pepper/7-Up, M&M Mars, Miller Brewing Co., Pepsi-Cola Bottling Group, Proctor& Gamble, and Sara Lee Corp. Formerly owned by Manville Corporation, Riverwood was privatized in 1995 by a group of investment firms and was preparing to go public once again in mid-2002.

Origins

The foundation for Riverwoods integrated paper and packaging operations was laid in 1952, when Olin Mathieson Chemical Corporation acquired Frost Industries, Inc. Frost had begun in 1884 as an Arkansas sawmill company and owned five sawmills and timberlands in Louisiana, Arkansas, and Texas, which Olin used to form a forest products division. Three years later, Olin Corporation acquired the Brown Paper Mill Company. Established in 1923, the Brown Paper Mill was the first American company to produce sheet brown kraft paper and Southern Pine kraft linerboard. During World War II, the mill also developed Victory Board, used in corrugated supply boxes that were dropped from Allied airplanes.

Olin consolidated Brown Paper Mill into its forest products division and moved the divisions headquarters to West Monroe, Louisiana. Between 1956 and 1958, Olin acquired a Louisiana sawmill and a Brazil pulp and paper mill, while developing and producing the worlds first on-machine, clay-coated beverage carrierboard. During the 1960s, Olin developed the trademarked Marksman Packaging System for cans and bottles, installed the worlds first paper machine specifically designed to produce the trademarked beverage carrierboard Aqua-Kote, and entered the plywood business. In 1967, Olinkraft, Inc. was established as a wholly owned subsidiary of Olin Corporation and that same year introduced the worlds first solid unbleached sulfate (SUS) natural kraft folding cartonboard. In 1971, Olinkraft entered the particle board business, and, by the time Olinkraft was spun off as a separate public entity in 1974, the company had a diversified and integrated paper and wood products business that, in addition to particle board, was producing kraft paper, paperboard, packaging products, and building materials.

Johns-Manville Purchases Olinkraft: 1979

In September 1978, the Johns-Manville Corporation initiated a bidding war for Olinkraft, despite the fact that Olinkraft had recently signed a merger agreement with Texas Eastern Corporation. By October, Olinkraft had agreed to accept a higher offer from Johns-Manville. The following year, Olinkraft was merged into a Johns-Manville subsidiary, which was renamed Manville Forest Products Corporation shortly thereafter.

During this time, however, several lawsuits threatened to put Johns-Manville out of business. Specifically, the suits charged that asbestos building materials used in insulating fiber made by Manville had caused several serious illnesses, including lung disease, among employees and those who used the product. By 1981, around 400 lawsuits per month were being filed. That year, Johns-Manville was reorganized as a holding company, Manville Corporation, with Manville Forest Products serving as one of five wholly separate operating subsidiaries. The following year, Manville and its subsidiarieseven though still profitable at the timefiled petitions for reorganization under the Chapter 11 Federal Bankruptcy Code in a move to shield the company against losses it faced as a result of the lawsuits. By 1985, Manville had exited the asbestos-based product business entirely.

While the Manville Corporation was withdrawing from the asbestos business, it was also plunging money into equipment updates and capital improvements for other operations, including forest products, while absorbing and expanding upon former Olinkraft operations. Between 1983 and 1986, Manville Forest Products acquired a plywood and sawmill plant in Louisiana, a folding carton plant in Mississippi, and Eastex Packaging Inc., which brought three additional folding carton plants in Memphis.

In 1988, Manville emerged from bankruptcy under a landmark reorganization plan that established an independent trust, the Manville Personal Injury Settlement Trust, to which Manville would funnel as much as $3 billion to asbestos-injury victims over a 30-year period and which gave its victims majority control of Manville. In return for a shield against future asbestos-related litigation, Manville gave trust stockholders $2.5 billion in assets, mostly in the form of stock, and promised to pay its victims $75 million annually beginning in August 1991, plus 20 percent of Manvilles annual income until all claims were settled.

Forestry Products Expansion: Late 1980s-Early 1990s

In 1989, a holding company (later renamed Riverwood International Corporation) was created for Manvilles forest products operations. The company then embarked on a plan to double its size over the next five to seven years. In September 1989, the company acquired Papelok S.A., a paper mill and corrugated container plant in Brazil. In November, Thomas H. Johnson, who had served as president of both the coated board and paperboard divisions of rival Mead Corp.now called MeadWestvacobecame president of Manville Forest Products.

In the early 1990s, Manville Forest Products relocated its headquarters from West Monroe, Louisiana, to Atlanta and began plans to embark on an international expansion program. At the time, Manville Forest Products was still largely a domestic concern, with foreign operations limited to Brazil, where a new anti-inflation program was tightening profit margins. In 1990, Manville Forest Products began developing its international folding carton converting base by acquiring DRG Cartons Ltd. (renamed Riverwood International Cartons), Britains third-largest folding carton concern serving the frozen food, confectionery, and detergent markets and reporting $60 million in annual sales. Manville Forest Products also acquired the assets of the Australian concern Visypack Pty. (renamed Riverwood Cartons Pty. Ltd.), a maker of lithographic folding cartons for the food, consumer products, and beverage industries, with five carton plants and annual sales of $140 million. Manville Forest Products also expanded its base of paperboard production operations with the purchase of Fiskeby Board AB of Sweden, a European producer/converter of recycled cartonboard.

In June 1991, the companys name was changed to Riverwood International Corporation after Manville became the holding company for two subsidiaries: Riverwood, which had grown into one of two major players in the beer and soft-drink cardboard packaging industry, and Manville Sales Corp. (renamed Schuller International, Inc. in 1992), an insulation, reinforcement, filtration, and building products concern.

In a move to strengthen the companys focus on the development of packaging machinery systems, Riverwood created a packaging machinery division in 1991. Around the same time, the company began signing customers to leases for high-speed proprietary packaging machinery and, in the process, became those customers sole supplier of paperboard used to produce beverage cartons and cases. To further develop its machinery business, Riverwood made several acquisitions, including Minnesota Automation Inc., a global supplier of packaging machinery; the JAK-ET-PAK machinery system, which included machinery, technology, patents, trademarks, and trade names; the paperboard packaging and machinery systems manufacturing operations of Jorba, S.A. and Syspack, S.A. (Syspack was later merged into Jorba), two privately held corporations located in Barcelona, Spain, with annual sales of more than $300 million; and M.E.A.D. Ltd., a Brazil company specializing in beverage packaging machinery. The company also entered a joint venture agreement with Rengo Company, Japans leading producer of corrugated products, to market machinery-based packaging systems in Japan.

Company Perspectives:

As a member company of the American Forest and Paper Association, Riverwood International is committed to the principals of the Sustainable Forestry Initiative (SFI) Program. Riverwood International has adopted the following policy in support of these principals: all wood procurement professionals will complete the Master Loggers Program; suppliers of gatewood will complete the Master Loggers Program; chip suppliers are expected to support the principles of the SFI; we will support regional landowner meetings coordinated by such groups as the Forestry Association; and we will develop and implement a winter inventory plan for wood and chips to reduce any impacts to the forest during the wet season.

Between 1989 and 1991, a period of consolidation in the paper and packaging industry, Riverwood spent $250 million in acquisitions, as sales climbed from $774 million to $993 million, while earnings inched upward from $75 million to $89 million. By 1991, Riverwood controlled 25 percent of the overseas beverage packaging market and 45 percent of the American beverage market. Moreover, the company was the leading supplier of printed paperboard packaging to the domestic brewing industry and was second only to Mead Corp. in supplying packaging to the U.S. soft-drink industry.

After expanding its international and machinery-lease operations, the company turned its attention to increasing its production of coated unbleached kraft (CUK) paperboard, used increasingly in the packaging industry by food and drink companies. By this time, Riverwood had successfully whittled out a profitable niche in CUK paperboard sales and was serving such customers as Anheuser-Busch, Miller Brewing Company, Coca-Cola, PepsiCo, Procter& Gamble, and Unilever.

Riverwood Goes Public: 1992

In the spring of 1992, Riverwood announced it would offer about 20 percent of its common stock in an initial public offering designed to help finance the acquisition of Macon Kraft, Inc., a 525,000-ton linerboard mill in Macon, Georgia. As recent government allowances had granted certain banking companies reentry to the stock underwriting business, for the first time since the Depression, a bankJ.P. Morgan Securitiestook the lead position in a stock offering, heading a Wall Street underwriters team that took Riverwood public.

In June 1992, Riverwood completed an initial public offering of 19.5 percent of its common stock for $172 million and raised an additional $400 million through its public debt offering. In July, Riverwood acquired Macon Kraft (renamed Riverwood International Georgia, Inc.) for $219 million, including the assumption of $169 million of debt, and began a two-year program to convert one of the two Macon plants linerboard machines to produce Riverwoods proprietary CUK paperboard.

During 1992, 69 percent of Riverwoods revenues and 76 percent of its profits were generated from sales of specialized paperboard and leases of packaging machinery to beverage and consumer goods companies in more than a dozen countries.

Although Riverwoods earnings rose to a record $1.18 billion, costs associated with the Macon Kraft acquisition and conversion, as well as the sluggish economy, led to an earnings decline, and Riverwoods profits fell to just $43.7 million. Before closing out the year Riverwood secured a $50 million line of back-up credit from Morgan Guaranty Trust Company.

During this time, Riverwood established a product development center in Atlanta for machinery-based packaging systems. The company also debuted its Twin-Stack packaging system, becoming the first company to offer a packaging innovation that could accommodate two-tiered can multiples of 12, 18, 24, 30, and 36. Riverwoods Twin-Stack system had numerous advantages over traditional slab packaging, offering beverage manufacturers better package graphics and expanded promotional and merchandising opportunities via paperboard pads separating two layers of cans. The new system also provided retailers improved utilization of shelf space and offered consumers a more compact and portable beverage container with handles and improved weight distribution. Working with PepsiCo, Riverwood began test marketing its Twin-Stack packaging. Four months after the first Twin-Stack pack appeared on store shelves, Mead joined the race for two-tiered packaging sales with its DuoStack system.

Riverwood continued its international expansion drive in 1993, forming a joint venture with Danapak Holding Ltd., the leader in Scandinavian carton converting, to serve the Scandinavian beverage market with packing machinery systems for beverage and foods. The venture was designed to provide beverage customersin Denmark, Finland, Norway, Sweden, Iceland, Greenland, and the Faroe Islandswith multiple packaging beverage systems that used Riverwoods proprietary CUK paperboard, converted by Danapak into paperboard beverage cartons through Riverwoods packaging machinery.

In 1993, Riverwood also made several moves to improve its short-term financial condition, which was strained by the Macon conversion project and weak containerboard prices and international demand. Those moves included rescheduling debt payments and selling 60,000 acres of U.S. timberland for about $17 million. With earnings continuing to slide in late-1993, Riverwood undertook a series of capital-generating steps: it sold Manville additional stock, which increased the parent companys stake in Riverwood from 80.5 to 81.5 percent and gave Riverwood a much-needed infusion of $50 million; it sold another $125 million in bonds in a public debt offering; it brought a former General Electric executive George F. Varga on board to assume the new position of chief financial officer; and it initiated a restructuring program aimed at cutting costs and streamlining and consolidating operations which had doubled in size since 1989. Nonetheless, a linerboard glut in the paper and pulp industry, coupled with conversion costs, squeezed Riverwoods profits; in 1993, profits plunged to $1.1 million on sales that remained essentially flat at $1.12 billion.

Key Dates:

1952:
Olin Mathieson Chemical Corp. acquires Frost Industries Inc.
1955:
Olin purchases Brown Paper Mill Company.
1967:
Olinkraft Inc. is established as a subsidiary of Olin Corp.
1971:
Olinkraft enters the particle board business.
1979:
Olinkraft is merged into a Johns-Manville Corp. subsidiary and is renamed Manville Forest Products Corp.
1981:
Manville and its subsidiaries file for bankruptcy to protect themselves against asbestos-related lawsuits.
1991:
Manville Forest Products adopts the name River-wood International Corp.
1992:
Riverwood goes public.
1995:
A group of investors take Riverwood private.
1996:
The companys Perry, Georgia, converting plant opens.
2000:
Riverwood sells Brazilian subsidiary Igaras Papeis e Embalagens S.A.

Riverwood completed its Macon conversion in the mid-1990s. The new concern promised reduced exposure to commodity price fluctuations and would expanded the companys ability to serve the growing and increasingly competitive beverage packaging industry. In 1994, the companys leases of proprietary machines and sales of twin-pack beverage-can packages were exceeding expectations, and the companys stock prices were climbing.

Moreover, five years of expansion efforts had left River-wood well positioned to take advantage of three trends which began in the United States and began to develop in Europe in the 1990s: the increase in popularity of cans as the preferred form of primary beverage container packaging, the growth in popularity of CUK paperboard as a form of secondary packaging due to an increase in the size of container multipacks, and the rising popularity of CUK paperboard as a marketing and promotional tool. With packaging never before so important an element in beverage promotions, Riverwood expected to capitalize on the industry trend of using packaging as a marketing tool; industry insiders predicted that the soft drink industry would launch a promotion a week by 1995, up from six promotions a year in the late 1980s.

Riverwoods future proved to be increasingly dependent on dominating the niche market for beer and soft-drink packaging, both through machine leases and CUK paperboard production and sales. Future sales to the beverage industry were expected to be paced by growth of two-tiered packaging. Riverwoods Twin-Stack, which had become better known as Pepsis Cube, 7-Ups Double Dozun, and Dr. Peppers Double Decker, had so far realized the greatest profits. Future company earnings related to CUK paperboard also increased after the Macon plant conversion was completed.

Riverwood moved into the mid-1990s as one of a few companies in the world that had operations in all three coated paperboard packaging segments: coated paperboard production, conversion systems, and machinery systems. Internationally, the company had a strong presence in North America and Europe and a growing presence in Latin America and Asia that was expected to help international sales eventually outpace domestic sales.

Domestically, by 1994 the company was producing 50 to 60 percent of all paperboard beer containers used in the United States and 20 to 30 percent of soft-drink containers. MeadWestvaco produced most of the remaining containers and remained Riverwoods principal competitor, particularly in sales of two-tiered packaging, though another competitor, C.W. Zumbiel Company, began producing its version of double-tiered packaging in 1993. Riverwood, like others in the industry, expected two-tiered packaging systems to become the standard for packaging as beverage producers move away from slab packaging, giving the company reason to believe that its Twin Stack machines, which could also manufacture slab packaging, would be vital to the industry.

Riverwood Is Privatized: 1995

Riverwoods future as a Manville unit remained uncertain in 1994. By this time, Manvilles two subsidiaries had grown into highly marketable, autonomous operations, with potential for a profitable sale or breakup in the event that the Manville Personal Injury Settlement Trust needed to liquidate its holdings in order to pay $2 billion or more in asbestos victim claims. Indeed, in 1995, Manville sold its 81.5 percent interest in Riverwood to a group of investment firms who took the company privatein 2002, Clayton, Dubilier,& Rice and EXOR Group each owned nearly 30 percent of Riverwood.

Out from under its troubled parent, Riverwood spent the remainder of the 1990s with a continued focus on serving the beverage industry. In March 1996, the firm opened a converting plant in Perry, Georgia, just 30 miles from its Macon facility. The new plant had a reel-to-reel offset pressthe only such press in the U.S. beverage marketthat enabled the firm to handle the ever-changing packaging and promotional requirements of the soft drink industry. By now, the company had six converting plants in the United States, several in the United Kingdom and Spain, four in France, and five in Australia. Riverwood executive G. Phillips Jones commented on the beverage packaging industry in a 1997 Pulp& Paper magazine article, claiming that there is very little regular printing copy on soft drink packaging these days. Its pretty much one promo after another from all of our customers. As such, Riverwoods new reel-to-reel press, which could handle extensive, custom graphics, as well as frequent graphic changes, was expected to give it a competitive edge over its competitors.

During 1997, Stephen M. Humphrey was named president and CEO of Riverwood. Under his leadership, the firm continued to develop its multipackaging systems. The company launched new systems related to its Quikflex machines, new technology that packed bottles or cans in fully enclosed cartons, a new model that packaged glass bottles in wrap cartons, and various new enhancements related to its Twin-Stack system. By the new millennium, Riverwood was producing over one million tons of CUK paperboard per year while sales topped $1 billion.

New Growth Opportunities for the New Century

During the early years of the new century, Riverwood continued to launch new products catering to the beverage industry but also began to look beyond this market for new growth opportunities.

In 2000, Riverwood began to expand its consumer products packaging segment and eyed this market as a lucrative avenue for future gains. By this time, nearly 40 percent of the firms production was coated board sold to non-beverage clients. The companys strategy was also centered on new demandsespecially in the food industryfor multipackaging. As part of the firms focus on coated board, it sold its interest in Brazil-based Igaras Papeis e Embalagens S.A., a containerboard manufacturer, in late 2000.

Being heavily dependent upon natural resources, the firm also was also involved in the Sustainable Forestry Initiative (SFI) Program. In response to environmentalists concerns about the destruction and depletion of the worlds forests, the company complied with SFI standards by purchasing its wood from private landowners that were recognized for their natural resource management plans. These landowners typically made sure that trees were managed, harvested, and replantedfor every tree harvested, six to eight seedlings were planted.

In late 2001, Riverwood launched the Fridge Vendor, a new packaging design for 12-packs that was longer, thinner, and fit into refrigerators easier than traditional 12-packs. Coca-Cola, the companys first Fridge Vendor client, claimed the newly designed packaging was responsible for double-digit sales increases in Coca-Cola 12-packs. As launching new products and expanding into new consumer product areas remained at the forefront of Riverwoods business strategy, the company filed to go public once again in 2002 in order to raise funds for expansion. As Riverwood prepared for listing on the New York Stock Exchange, the firm stood well positioned for future growth in both domestic and international markets.

Principal Subsidiaries

Danapak Riverwood Multipack A/S (Denmark); Fiskeby Board AB (Sweden); Fiskeby Board A/S (Denmark); Fiskeby Board Ltd. (U.K.); Fiskeby Board SARL (France); IL Returpapper AB (Sweden); Industrikompetens i Ostergotland AB (Sweden); New Materials Ltd. (U.K.); Recywrap Recycling GmbH (Germany); Rengo Riverwood Packaging, Ltd. (Japan); RIC Holding, Inc.; Riverwood Argentina S.A.; Riverwood do Brasil Ltda. (Brazil); Riverwood Espana, S.A. (Spain); Riverwood International Asia Pacific, Ltd. (Hong Kong); Riverwood International Asia Pte. Ltd. (Singapore); Riverwood International Australia Pty. Ltd.; Riverwood International B.V. (Netherlands); Riverwood International Corporation Philanthropic Fund; Riverwood International (Cyprus) Limited; Riverwood International Enterprises, Inc.; Riverwood International (Europe) S.A. (Belgium); Riverwood International France S.A.; Riverwood International Japan, Ltd.; Riverwood International Limited (U.K.); Riverwood International Machinery, Inc.; Riverwood International Mexicana, S. de R.L. de C.V. (Mexico); Riverwood International Pension Trustee Company Ltd. (U.K.); Riverwood International, S.A. (France); Riverwood International S.p.A. (Italy); Riverwood Mehrstuckverpackung GmbH (Germany); Slevin South Company; Svensk Kartongatervinning A.B. (Sweden).

Principal Competitors

MeadWestvaco Corporation; Smurfit-Stone Container Corporation; Sonoco Products Company.

Further Reading

Billips, Mike, Co-Managers Work to Renovate Mill, Rebuild Labor Relations, Macon Telegraph, September 28, 1992.

Bleakley, Fred R., and Howard Hoffman, A Long Hiatus: Morgan, a Bank, to Handle IPO, Wall Street Journal, April 23, 1992, pp. C1, C17.

Charlier, Marj, For Manville, a Sale or Breakup Appears Imminent, Wall Street Journal, March 23, 1992, p. B4.

, Life After Asbestos: Manville Tries to Build New Identity as a Firm Keen on Environment, Wall Street Journal, May 31, 1990, pp. 1, A16.

Demarco, Edward, Riverwood International Hopes to Box Up Greater Profits, Denver Business Journal, March 18, 1994, p. A13.

Jabbonsky, Larry, Doubled Up, Beverage World, March 1994, pp. 948.

Johns-Manville, Olinkraft Agree On Merger Plan, Wall Street Journal, November 10, 1978.

Johns-Manville Seeks 49% Stake in Olinkraft Inc., Wall Street Journal, September 26, 1978, p. 8.

Kick Back and Chill with the Fridge Vendor, Paperboard Packaging, November 2001, p. 12.

Lee, Peter, US Capital Markets: No Run-Of-The-Mill Deal, Euro-money, July 1992, pp. 910.

Leib, Jeffrey, Manville: A New Identity, Denver Post, November 3, 1991, p. Gl.

McNaughton, David, Riverwood International Corp.Making a Case for Growth, Atlanta Constitution, February 3, 1993, p. D1.

Riverwood to Ride the Wave, Packaging Week, September 11, 1997, p. 12.

Riverwood Sells Igaras Papeis, Paperboard Packaging, November 2000, p. 24.

Shaw, Monica, Riverwood International Integrates Supply for Better Customer Service, Pulp& Paper, September 1997, p. 81.

Torres, Craig, Riverwoods Fans Say Investors Should Look Beyond the Trees to See Paper Firms Potential, Wall Street Journal, May 28, 1993, p. B5C.

Zipser, Andy, The Asbestos Curse: After Many Painful Years, Manville Is Exorcising It, Barrons, October 14, 1991, p. 12.

Roger W. Rouland
update: Christina M. Stansell

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Riverwood International Corporation

Riverwood International Corporation

3350 Cumberland Circle
Suite 1400
Atlanta, Georgia 30339
U.S.A.
(404) 644-3000
Fax: (404) 644-2921

Public Company
Incorporated:
1989
Employees: 8,500
Sales: $1.12 billion
Stock Exchanges: New York Boston Cincinnati Chicago San
Francisco Philadelphia
SICs: 2621 Paper Mills; 2631 Paperboard Mills; 2657
Folding Paperboard Boxes; 3565 Packaging Machinery;
6719 Holding Companies, Not Elsewhere Classified

Riverwood International Corporation is an international paper-board, packaging, and packaging machinery holding company, whose subsidiaries produce coated unbleached kraft (CUK) paperboard, packaging products (including beverage carriers and folding cartons), packaging machinery, containerboard, lin-erboard, corrugated boxes, and lumber and plywood. River-wood is a leading supplier of CUK paperboardthe thick, glossy paperboard used in secondary packagingto the beverage industry. The company has a strong overseas presence, operating on four continents in more than a dozen countries, with a vertically integrated strategy that links its timberlands, papermills, packaging plants, and packaging machinery operations. Riverwood owns or manages timberland in the United States and Brazil, which supply a portion of its energy and pulp requirements for its paper and wood operations. The company also leases proprietary packaging machinery, which is designed by the company and which uses the companys CUK paper-board. In June 1992, Riverwood International completed an initial public offering of about 20 percent of its common stock, with the remainder of the companys stock held by Manville Corporation.

The foundation for Riverwoods integrated paper and packaging operations was laid in 1952, when Olin Mathieson Chemical Corp. acquired Frost Industries, Inc. Frost, which had begun in 1884 as an Arkansas sawmill company, owned five sawmills and timberlands in Louisiana, Arkansas, and Texas, which Olin used to form a forest products division. Three years later, Olin Corp. acquired the Brown Paper Mill Company. Established in 1923, the Brown Paper Mill was the first American company to produce sheet brown kraft paper and Southern Pine kraft liner-board. During World War II, the mill also developed Victory Board, used in corrugated supply boxes that were dropped from Allied airplanes.

Olin consolidated Brown Paper Mill into its forest products division and moved the divisions headquarters to West Monroe, Louisiana. Between 1956 and 1958, Olin Corp. acquired a Louisiana sawmill and a Brazil pulp and paper mill, while developing and producing the worlds first on-machine clay-coated beverage carrierboard. During the 1960s, Olin Corp. developed the trademarked Marksman Packaging System for cans and bottles, installed the worlds first paper machine specifically designed to produce the trademarked beverage carrierboard Aqua-Kote, and entered the plywood business. In 1967, Olinkraft, Inc. was established as a wholly owned subsidiary of Olin Corp. and that same year introduced the worlds first solid unbleached sulfate (SUS) natural kraft folding carton-board. In 1971, Olinkraft entered the particle board business, and, by the time Olinkraft was spun off as a separate public entity in 1974, the company had a diversified and integrated paper and wood products business that, in addition to particle board, was producing kraftpaper, paperboard, packaging products, and building materials.

In September 1978, the Johns-Manville Corp. initiated a bidding war for Olinkraft, despite the fact that Olinkraft had recently signed a merger agreement with Texas Eastern Corp. By October, Olinkraft had agreed to accept a higher offer from Johns-Manville. The following year, Olinkraft was merged into a Johns-Manville subsidiary, which was renamed Manville Forest Products Corporation shortly thereafter.

During this time, however, several lawsuits threatened to put Johns-Manville out of business. Specifically, the suits charged that asbestos building materials used in insulating fiber made by Manville had caused several serious illnesses, including lung disease, among employees and those who used the product. By 1981, around 400 lawsuits per month were being filed. That year, Johns-Manville was reorganized as a holding company, Manville Corporation, with Manville Forest Products serving as one of five wholly separate operating subsidiaries. The following year, Manville and its subsidiarieseven though still profitable at the timefiled petitions for reorganization under the Chapter 11 Federal Bankruptcy Code in a move to shield the company against losses it faced as a result of the lawsuits. By 1985, Manville had exited the asbestos-based product business entirely.

While the Manville Corporation was withdrawing from the asbestos business, it was also plunging money into equipment updates and capital improvements for other operations, including forest products, while absorbing and expanding upon former Olinkraft operations. Between 1983 and 1986, Manville Forest Products acquired a plywood and sawmill plant in Louisiana, a folding carton plant in Mississippi, and Eastex Packaging Inc., which brought three additional folding carton plants in Memphis.

In 1988, Manville emerged from bankruptcy under a landmark reorganization plan that established an independent trust, the Manville Personal Injury Settlement Trust, to which Manville would funnel as much as $3 billion to asbestos-injury victims over a 30-year period and which gave its victims majority control of Manville. In return for a shield against future asbestos-related litigation, Manville gave trust stockholders $2.5 billion in assets, mostly in the form of stock, and promised to pay its victims $75 million annually beginning in August 1991, plus 20 percent of Manvilles annual income until all claims were settled.

In 1989, a holding company (later renamed Riverwood International Corporation) was created for Manvilles forest products operations. The company then embarked on a plan to double its size over the next five to seven years. In September 1989, the company acquired Papelok S.A., a paper mill and corrugated container plant in Brazil. In November, Thomas H. Johnsonwho had served as president of both the coated board and paperboard divisions of rival Mead Corp.became president of Manville Forest Products.

In the early 1990s, Manville Forest Products relocated its headquarters from West Monroe, Louisiana, to Atlanta, and began plans to embark on an international expansion program. At the time, Manville Forest Products was still largely a domestic concern, with foreign operations limited to Brazil, where a new anti-inflation program was tightening profit margins. In 1990, Manville Forest Products began developing its international folding carton converting base by acquiring DRG Cartons Ltd. (renamed Riverwood International Cartons), Britains third-largest folding carton concern serving the frozen food, confectionery, and detergent markets and reporting $60 million in annual sales. Manville Forest Products also acquired the assets of the Australian concern Visypack Pty. (renamed Riverwood Cartons Pty. Ltd.), a maker of lithographic folding cartons for the food, consumer products, and beverage industries, with five carton plants and annual sales of $140 million. Manville Forest Products also expanded its base of paperboard production operations with the purchase of Fiskeby Board AB of Sweden, a European producer/converter of recycled cartonboard.

In June 1991, the companys name was changed to Riverwood International Corporation after Manville became the holding company for two subsidiaries: Riverwood, which had grown into one of two major players in the beer and soft-drink cardboard packaging industry, and Manville Sales Corp. (renamed Schuller International, Inc. in 1992), an insulation, reinforcement, filtration, and building products concern.

In a move to strengthen the companys focus on the development of packaging machinery systems, Riverwood created a packaging machinery division in 1991. Around the same time, the company began signing customers to leases for high-speed proprietary packaging machinery and, in the process, became those customers, sole supplier of paperboard used to produce beverage cartons and cases. To further develop its machinery business, Riverwood made several acquisitions, including Minnesota Automation Inc., a global supplier of packaging machinery; the JAK-ET-PAK machinery system, which included machinery, technology, patents, trademarks, and trade names; the paperboard packaging and machinery systems manufacturing operations of Jorba, S.A. and Syspack, S.A. (Syspack was later merged into Jorba), two privately held corporations located in Barcelona, Spain, with annual sales of more than $300 million; and M.E.A.D. Ltd., a Brazil company specializing in beverage packaging machinery. The company also entered a joint venture agreement with Rengo Company, Japans leading producer of corrugated products, to market machinery-based packaging systems in Japan.

Between 1989 and 1991, a period of consolidation in the paper and packaging industry, Riverwood spent $250 million in acquisitions, as sales climbed from $774 million to $993 million, while earnings inched upward from $75 million to $89 million. By 1991, Riverwood controlled 25 percent of the overseas beverage packaging market and 45 percent of the American beverage market. Moreover, the company was the leading supplier of printed paperboard packaging to the domestic brewing industry and was second only to Mead Corp. in supplying packaging to the American soft-drink industry.

After expanding its international and machinery-lease operations, the company turned its attention to increasing its production of coated unbleached kraft (CUK) paperboard, used increasingly in the packaging industry by food and drink companies. By this time, Riverwood had successfully whittled out a profitable niche in CUK paperboard sales and was serving such customers as Anheuser-Busch, Miller Brewing Company, Coca-Cola, PepsiCo, Procter & Gamble, and Unilever.

In the spring of 1992, Riverwood announced it would offer about 20 percent of its common stock in an initial public offering designed to help finance the acquisition of Macon Kraft, Inc., a 525,000-ton linerboard mill in Macon, Georgia. As recent government allowances had granted certain banking companies reentry to the stock underwriting business, for the first time since the Depression, a bankJ. P. Morgan Securitiestook the lead position in a stock offering, heading a Wall Street underwriters team that took Riverwood public.

In June 1992, Riverwood completed an initial public offering of 19.5 percent of its common stock for $172 million and raised an additional $400 million through its public debt offering. In July, Riverwood acquired Macon Kraft (renamed Riverwood International Georgia, Inc.) for $219 million, including the assumption of $169 million of debt, and began a two-year program to convert one of the two Macon plants linerboard machines to produce Riverwoods proprietary CUK paperboard.

That year, 69 percent of Riverwoods revenues and 76 percent of its profits were generated from sales of specialized paper-board and leases of packaging machinery to beverage and consumer goods companies in more than a dozen countries. Although Riverwoods earnings rose to a record $1.18 billion, costs associated with the Macon Kraft acquisition and conversion, as well as the sluggish economy, led to an earnings decline, and Riverwoods profits fell to just $43.7 million. Before closing out the year Riverwood secured a $50 million line of back-up credit from Morgan Guaranty Trust Company.

During this time, Riverwood established a product development center in Atlanta for machinery-based packaging systems. The company also debuted its Twin-Stack packaging system, becoming the first company to offer a packaging innovation that could accommodate two-tiered can multiples of 12, 18, 24, 30, and 36. Riverwoods Twin-Stack system had numerous advantages over traditional slab packaging, offering beverage manufacturers better package graphics and expanded promotional and merchandising opportunities via paperboard pads separating two layers of cans. The new system also provided retailers improved utilization of shelf space and offered consumers a more compact and portable beverage container with handles and improved weight distribution. Working with PepsiCo, Riv-erwood began test marketing its Twin-Stack packaging. Four months after the first Twin-Stack pack appeared on store shelves, Mead joined the race for two-tiered packaging sales with its DuoStack system.

Riverwood continued its international expansion drive in 1993, forming a joint venture with Danapak Holding Ltd., the leader in Scandinavian carton converting, to serve the Scandinavian beverage market with packing machinery systems for beverage and foods. The venture was designed to provide beverage customersin Denmark, Finland, Norway, Sweden, Iceland, Greenland, and the Faroe Islandswith multiple packaging beverage systems that used Riverwoods proprietary CUK paperboard, converted by Danapak into paperboard beverage cartons through Riverwoods packaging machinery.

In 1993, Riverwood also made several moves to improve its short-term financial condition, which was strained by the Macon conversion project and weak containerboard prices and international demand. Those moves included rescheduling debt payments and selling 60,000 acres of U.S. timberland for about $17 million. With earnings continuing to slide in late-1993, Riverwood undertook a series of capital-generating steps: it sold Manville additional stock which increased the parent companys stake in Riverwood from 80.5 to 81.5 percent and gave Riverwood a much-needed infusion of $50 million; it sold another $125 million in bonds in a public debt offering; it brought a former General Electric executive, George F. Varga, on board to assume the new position of chief financial officer; and it initiated a restructuring program aimed at cutting costs and streamlining and consolidating operations which had doubled in size since 1989. Nonetheless, a linerboard glut in the paper and pulp industry, coupled with conversion costs, squeezed River-woods profits; in 1993, profits plunged to $1.1 million on sales that remained essentially flat at $1.12 billion.

Riverwood expected its Macon conversion to be completed by late 1994. The new concern promised reduced exposure to commodity price fluctuations and would expand the companys ability to serve the growing and increasingly competitive beverage packaging industry. That year, the companys leases of proprietary machines and sales of twin-pack beverage-can packages were exceeding expectations, and the companys stock prices were climbing.

Moreover, five years of expansion efforts had left Riverwood well positioned to take advantage of three trends which began in the United States and began to develop in Europe in the 1990s: the increase in popularity of cans as the preferred form of primary beverage container packaging, the growth in popularity of CUK paperboard as a form of secondary packaging due to an increase in the size of container multipacks, and the rising popularity of CUK paperboard as a marketing and promotional tool. With packaging never before so important an element in beverage promotions, Riverwood expected to capitalize on the industry trend of using packaging as a marketing tool; industry insiders predicted that the soft drink industry would launch a promotion a week by 1995, up from six promotions a year in the late-1980s.

Riverwoods future seemed increasingly dependant on dominating the niche market for beer and soft-drink packaging, both through machine leases and CUK paperboard production and sales. Future sales to the beverage industry were expected to be paced by growth of two-tiered packaging. Riverwoods Twin-Stack, which had become better known as Pepsis Cube, 7-Ups Double Dozun, and Dr. Peppers Double Decker, was expected to realize the greatest profits. Future company earnings related to CUK paperboard were expected to increase substantially after the Macon plant conversion was completed.

Riverwood moved into the mid-1990s as one of a few companies in the world that had operations in all three coated paper-board packaging segments: coated paperboard production, conversion systems, and machinery systems. Internationally, the company had a strong presence in North America and Europe and a growing presence in Latin America and Asia that was expected to help international sales eventually outpace domestic sales.

Domestically, by 1994 the company was producing 50 to 60 percent of all paperboard beer containers used in the United States and 20 to 30 percent of soft-drink containers. Mead produced most of the remaining containers and was expected to remain Riverwoods principal competitor, particularly in sales of two-tiered packaging, though another competitor, C. W. Zumbiel Company, began producing its version of double-tiered packaging in 1993. Riverwood, like others in the industry, expected two-tiered packaging systems to become the standard for packaging as beverage producers move away from slab packaging, giving the company reason to believe that its Twin Stack machines, which could also manufacture slab packaging, would be vital to the industry.

Riverwoods future as a Manville unit remained uncertain in 1994. Manvilles two subsidiaries had grown into highly marketable, autonomous operations, with potential for a profitable sale or breakup in the event that the Manville Personal Injury Settlement Trust needed to liquidate its holdings in order to pay $2 billion or more in asbestos victim claims. Regardless of whether Riverwood remained part of Manville, was spun off, or was sold, the company appeared poised to cart away a substantial portion of domestic and international beverage packaging sales for years to come.

Principal Subsidiaries

Agrok Agro-Florestal Ltda. (Brazil); Fiskeby Board AB (Sweden); Fiskeby Board A/S (Denmark); Fiskeby Board Ltd. (U.K.); Fiskeby Board S.a.r.l. (France); Igaras Agro-Florestais Ltda. (Brazil); Jorba, S.A. (Spain); Riverwood Cartons Pty. Ltd. (Australia); New Materials, Ltd. (U.K.); P.C. Empreendimentos, Participacoes E Comercia Ltda. (Brazil); Papelok S.A. Industria E Comercia (Brazil); Pine Pipeline, Inc.; Riverwood International B.V. (Netherlands); River-wood International Canada, Inc.; Riverwood International Corporation; Riverwood International Georgia, Inc.; Riverwood International Japan KK; Riverwood International Limited (U.K.); Riverwood International Packaging, Asia Pacific, Limited (Hong Kong); Riverwood International S.A. (France); Riverwood International USA, Inc.; Riverwood Mehrstuckver-packungs GmbH (Germany); Riverwood Packaging Systems Pty. Ltd. (Australia); Riverwood Rengo Machinery Ltd. (Japan; 60%); Slevin South Company.

Further Reading

Billips, Mike, Co-Managers Work to Renovate Mill, Rebuild Labor Relations, Macon Telegraph, September 28, 1992.

Bleakley, Fred R., and Howard Hoffman, A Long Hiatus: Morgan, a Bank, To Handle IPO, The Wall Street Journal, April 23, 1992, pp. Cl, C17.

Charlier, Marj, For Manville, a Sale or Breakup Appears Imminent, The Wall Street Journal, March 23, 1992, p. B4.

Charlier, Marj, Life After Asbestos: Manville Tries to Build New Identity as a Firm Keen on Environment, The Wall Street Journal, May 31, 1990, pp. 1, A16.

Demarco, Edward, Riverwood International Hopes to Box Up Greater Profits, Denver Business Journal, March 18, 1994, p. A13.

Jabbonsky, Larry, Doubled Up, Beverage World, March 1994, pp. 94-98.

Johns-Manville, Olinkraft Agree On Merger Plan, The Wall Street Journal, November 10, 1978.

Johns-Manville Seeks 49% Stake in Olinkraft Inc., The Wall Street Journal, September 26, 1978, p. 8.

Lee, Peter, US Capital Markets: No Run-Of-The-Mill Deal, Euro-money, July 1992, pp. 9-10.

Leib, Jeffrey, Manville: A New Identity, The Denver Post, November 3, 1991, p. Gl.

McNaughton, David, Riverwood International Corp.Making a Case for Growth, Atlanta Constitution, February 3, 1993, p. Dl.

Torres, Craig, Riverwoods Fans Say Investors Should Look Beyond the Trees to See Paper Firms Potential, The Wall Street Journal, May 28, 1993, p. B5C.

Zipser, Andy, The Asbestos Curse: After Many Painful Years, Manville Is Exorcising It, Barrens, October 14, 1991, p. 12.

Roger W. Rouland

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"Riverwood International Corporation." International Directory of Company Histories. 1995. Encyclopedia.com. 28 Jul. 2016 <http://www.encyclopedia.com>.

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