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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SONOCO PRODUCTS COMPANY
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
835495102
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(CUSIP Number)
with a copy to:
Alexander J. Roepers Allen B. Levithan
Atlantic Investment Management, Inc. LOWENSTEIN SANDLER PC
666 Fifth Avenue 65 Livingston Avenue
New York, New York 10103 Roseland, New Jersey 07068
(212) 484-5050 (973) 597-2500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 12, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule l3d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP NO. 835495102
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1) Names of Reporting Persons. I.R.S. Identification Nos. of Above Persons
(entities only):
Atlantic Investment Management, Inc.
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) (b)
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3) SEC Use Only
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4) Source of Funds (See Instructions): AF, OO
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e):
Not Applicable
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6) Citizenship or Place of Organization: Delaware
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Number of 7) Sole Voting Power: 5,540,200*
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Shares Beneficially 8) Shared Voting Power: 0
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Owned by
Each Reporting 9) Sole Dispositive Power: 5,540,200*
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Person With: 10) Shared Dispositive Power: 0
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11) Aggregate Amount Beneficially Owned by Each Reporting Person:
5,540,200*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions):
Not Applicable
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13) Percent of Class Represented by Amount in Row (11): 5.6%*
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14) Type of Reporting Person (See Instructions): IA
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* Includes: (i) 1,350,647 shares (1.4%) of the Issuer's common stock, no par
value ("Shares"), beneficially owned by AJR International Master Fund, Ltd., a
British Virgin Islands company, (ii) 682,412 Shares (0.7%) beneficially owned by
Quest Capital Partners, L.P., a Delaware limited partnership, (iii) 1,611,430
Shares (1.6%) beneficially owned by Cambrian Master Fund, Ltd., a British Virgin
Islands company, (iv) 653,420 Shares (0.7%) beneficially owned by Cambrian
Partners, L.P., a Delaware limited partnership, (v) 1,236,391 Shares (1.2%) held
in several Managed Accounts (the "Managed Accounts") and (vi) 3,000 Shares
(0.003%) beneficially owned by Atlantic Investment Management, Inc.'s
401k/Profit Sharing Plan. In addition, the sole shareholder of Atlantic
Investment Management, Inc. (the "Reporting Person"), Mr. Alexander J. Roepers,
may be deemed to beneficially own 2,900 Shares (0.003%). The Reporting Person,
serving as the investment advisor of the foregoing parties and the Managed
Accounts, has sole voting and dispositive power over all Shares beneficially
owned by such parties or held in the Managed Accounts. See Items 2 and 5 for
additional details.
Item 1. Security and Issuer
This statement relates to the common stock, no par value (the
"Shares"), of Sonoco Products Company (the "Issuer"). The Issuer has principal
executive offices located at 1 N. Second Street, Hartsville, South Carolina
29550.
Item 2. Identity and Background
-----------------------
(a) This statement is filed by Atlantic Investment Management, Inc., a
Delaware corporation (the "Reporting Person"), with respect to 5,540,200 Shares
over which the Reporting Person has sole dispositive and voting power by reason
of serving as the investment advisor to (i) AJR International Master Fund, Ltd.,
a British Virgin Islands company ("AJR"), (ii) Quest Capital Partners, L.P., a
Delaware limited partnership ("Quest"), (iii) Cambrian Master Fund, Ltd., a
British Virgin Islands company ("Cambrian Fund"), (iv) Cambrian Partners, L.P.,
a Delaware limited partnership ("Cambrian Partners"), (v) several managed
accounts (the "Managed Accounts"), (vi) the Reporting Person's 401k/Profit
Sharing Plan (the "Plan") and (vii) Alexander J. Roepers, the president and sole
shareholder of the Reporting Person. Mr. Roepers also serves as the general
partner of Quest and Cambrian Partners.
(b) The business address of the Reporting Person and Mr. Roepers is
666 Fifth Avenue, 34th Floor, New York, New York 10103.
(c) The principal business of the Reporting Person is that of an
investment advisor engaging in the purchase and sale of securities for
investment with the objective of capital appreciation on behalf of AJR, Quest,
Cambrian Fund, Cambrian Partners, the Managed Accounts, the Plan and Mr.
Roepers. The principal occupation of Mr. Roepers is serving as the president and
managing officer of the Reporting Person.
(d) Neither the Reporting Person nor Mr. Roepers has, during the past
five (5) years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) Neither the Reporting Person nor Mr. Roepers has, during the past
five (5) years, been a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is now subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) Mr. Roepers is a citizen of The Netherlands.
Item 3. Source and Amount of Funds or Other Consideration
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The Shares purchased by the Reporting Person on behalf of AJR, Quest,
Cambrian Fund, Cambrian Partners, the Managed Accounts and the Plan were
purchased with the investment capital of such entities and accounts. The Shares
that may be deemed to be beneficially owned by Mr. Roepers individually were
purchased with the personal funds of Mr. Roepers or members of Mr. Roepers'
immediate family. The aggregate amount of funds used in making the purchases
reported on this Schedule 13D was $16,071,441.28.
Item 4. Purpose of Transaction
----------------------
The Reporting Person acquired, on behalf of AJR, Quest, Cambrian Fund,
Cambrian Partners, the Managed Accounts, the Plan and Mr. Roepers (including
immediate family members of Mr. Roepers), and continues to hold, the Shares
reported in this Schedule 13D for investment purposes. The Reporting Person
intends to evaluate the performance of the Shares as an investment in the
ordinary course of business. The Reporting Person pursues an investment
objective that seeks capital appreciation. In pursuing this investment
objective, the Reporting Person analyzes the operations, capital structure and
markets of companies in which the Reporting Person's clients invest, including
the Issuer, on a continuous basis through analysis of documentation and
discussions with knowledgeable industry and market observers and with
representatives of such companies.
The Reporting Person will continuously assess the Issuer's business,
financial condition, results of operations and prospects, general economic
conditions, the securities markets in general and those for the Shares in
particular, other developments and other investment opportunities. Depending on
such assessments, the Reporting Person may acquire additional Shares or may
determine to sell or otherwise dispose of all or some of the Shares presently
held by AJR, Quest, Cambrian Fund, Cambrian Partners, the Managed Accounts, the
Plan and Mr. Roepers (including immediate family members of Mr. Roepers) in the
open market or in private transactions. Such actions will depend upon a variety
of factors, including, without limitation, current and anticipated future
trading prices for the Shares, the financial condition, results of operations
and prospects of the Issuer, alternative investment opportunities, general
economic, financial market and industry conditions and other factors that the
Reporting Person may deem material to its investment decision.
The Reporting Person will continue its active discussions with the
Issuer's management with respect to (i) actions which might be taken by the
management of the Issuer to maximize shareholder value of the Issuer and (ii)
improving the Issuer's investor relations. Attached is a letter dated August 18,
2005 to the Chairman of the Board of Directors/Chief Executive Officer/President
of the Issuer, outlining the Reporting Person's proposal for a substantial share
repurchase plan. In addition, the Reporting Person may hold discussions with
other parties who might engage in shareholder value enhancing activities for the
benefit of all of the Issuer's shareholders. There can be no assurance that the
Reporting Person will take any of the actions described in the previous
sentence.
Except as set forth above, the Reporting Person has no present plans
or proposals which relate to or would result in any of the transactions required
to be described in Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
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(a) Based upon the information contained in the Issuer's Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission on July
28, 2005, there were issued and outstanding 98,977,135 Shares as of June 26,
2005.
(b) The Reporting Person does not directly own any Shares. The
Reporting Person has entered into an investment advisory agreement with each of
AJR, Quest, Cambrian Fund, Cambrian Partners, the Managed Accounts and the Plan
pursuant to which the Reporting Person has investment authority with respect to
the securities held by such entities or in such accounts. Such power includes
the power to dispose of and the power to vote the Shares. By reason of the
provisions of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, the
Reporting Person is deemed to be the beneficial owner of the Shares held by such
entities and accounts. In addition, the Reporting Person has sole dispositive
and voting power over the 2,900 Shares that may be deemed to be beneficially
owned by Mr. Roepers. Accordingly, the Reporting Person is deemed the beneficial
owner of 5,540,200 Shares, or 5.6% of the outstanding Shares.
(c) The following table details the transactions by the Reporting
Person, on behalf of AJR, Quest, Cambrian Fund, Cambrian Partners, the Managed
Accounts and the Plan, in Shares, as well as transactions in Shares that may be
deemed to be beneficially owned by Mr. Roepers, during the past sixty (60) days:
Date Quantity Price Type of Transaction
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8/12/2005 94,100 $27.8491 Open Market Purchase
8/15/2005 90,300 $27.8401 Open Market Purchase
8/16/2005 157,000 $27.8821 Open Market Purchase
8/17/2005 239,200 $27.4222 Open Market Purchase
Except for the transactions listed above, neither the Reporting
Person, any entity for which the Reporting Person serves as investment advisor,
nor any person or entity controlled by the Reporting Person, nor Mr. Roepers
(including Mr. Roepers' immediate family members) has traded Shares during the
past sixty (60) days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
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Not Applicable
Item 7. Material to be filed as exhibits
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See Exhibit A attached hereto.
SIGNATURE
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After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
August 18, 2005
ATLANTIC INVESTMENT MANAGEMENT, INC.
By: /s/ Alexander J. Roepers
-----------------------------------
Alexander J. Roepers, President
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
EXHIBIT A
ATLANTIC INVESTMENT MANAGEMENT
INCORPORATED
By Fax and FedEx
August 18, 2005
Mr. Harris E. DeLoach Jr.
Chairman, Chief Executive Officer and President
Sonoco Products Co.
One North Second Street
Hartsville, South Carolina 29551-0160
Dear Harris:
As Sonoco Products Co.'s ("SON") second largest shareholder with over 5.5
million shares (representing 5.6% of the shares outstanding, per our 13D-filing
of today to which a copy of this letter is attached), we share with you and the
Board of Directors a keen interest in ensuring that SON achieves sustainable
growth of shareholder value for all SON shareholders.
While we are generally pleased with recent corporate development actions and
your team's operating performance, I am writing you to underscore our contention
that one immediately available avenue of shareholder value enhancement has been
largely ignored: a substantial share repurchase.
We strongly urge you and the Board of Directors to consider a one-time 10
million share repurchase, using your existing 5.3 million share buy back
authorization (dating from February 2001 and virtually unused) plus an
additional authorization to repurchase 4.7 million shares. The transaction would
preferably take place as soon as possible and all at once, through a Dutch
tender offer or an accelerated share repurchase plan.
The effect of the 10 million share repurchase would be to add more than 5% to
SON's earnings per share growth in the coming year, with negligible after-tax
cash cost. Please see the attached for details. In addition to increasing
earnings per share, this action is likely to result in a higher P/E multiple for
SON shares as management will be seen as more pro-active in enhancing
shareholder value along all possible avenues. Importantly, SON would maintain a
solid balance sheet with ample flexibility to pursue its capital spending and
acquisition plans.
I appreciate your and the Board of Directors' time and attention to this matter.
Sincerely,
Alexander J. Roepers
President
Attachment
EPS and Cashflow Impact of a 10 Million Share Repurchase
by Sonoco Products Co.
EPS Impact
Average Repurchase Cost per Share $27.50
Number of Shares Repurchased 10.0 mln.
Percentage of Shares Repurchased (1) 9.9%
Estimated 2006 Net Income $201.3 mln.
Less: After-tax Cost of Added Interest Expense (2) $10.1 mln.
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Pro forma 2006 Net Income $191.2 mln.
Pro forma Shares Outstanding 90.6 mln.
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Pro Forma EPS $2.11
Pro Forma EPS Accretion (3) $0.11
Percentage Increase in EPS 5.5%
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Cashflow Impact
After-tax Cost of Added Interest $10.1 mln.
Less: Dividend Payment Saved (4) $9.2 mln.
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Pro Forma Annual Cash Outlay of Share Repurchase $0.9 mln.
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Incremental Debt $275.0 mln.
(1) Assumes 100.58 million diluted shares outstanding
(2) Assumes tax rate of 35.0%, interest rate of 5.625%
(3) Pre-buyback 2006 EPS estimate of $2.00
(4) Assumes $0.92 per share annual dividend
Atlantic Investment Management, Inc.
8/18/2005