Georgia-Pacific to be bought out by Koch Industries

Atlanta based paper products maker Georgia-Pacific has agreed to be bought over by Koch Industries, Inc. at a price of $49 per share, at a total value of $21 billion.

Koch has confirmed that Georgia-Pacific will be operated as a privately held, wholly owned subsidiary of Koch Industries. Georgia-Pacific will continue to do business worldwide under the Georgia-Pacific name and continue to operate its businesses from its Atlanta headquarters as an independently managed company.

Georgia-Pacific is one of the world’s largest manufacturers and marketers of branded paper goods, with about $20 billion in sales in 2004. The company’s products include Brawny paper towels, Angel Soft bathroom tissue, and Dixie paper cups.

Koch Industries is based in Wichita, Kan. It owns a diverse group of companies offering products ranging from petroleum, chemicals, energy, fibers, fertilizers, pulp and paper, ranching, securities and finance.

"This transaction is the most dramatic step yet in Georgia-Pacific’s history and its transformation. We are pleased it offers very significant, incremental value to our shareholders, as is warranted by our company’s tremendous assets and talented employees," said A.D. "Pete" Correll, Georgia-Pacific chairman and chief executive officer, in a statement.

Joe W. Moeller, Koch’s president and chief operating officer, said that the company typically put 90 percent of its earnings back into the company every year. "That’s something that would be very difficult to do for a public company," he said. "We don’t worry about this month, this quarter or this year."

Among Georgia-Pacific’s debts are asbestos liability claims that remain to be resolved for several more years. The company manufactured gypsum products with asbestos until 1977, and has had hundreds of thousands of claims filed against it over exposure to asbestos fibers, which are carcinogenic.

The statement from Koch Industries added that a Koch unit, Koch Forest Products Inc., expects to launch a cash tender offer for all outstanding shares of Georgia-Pacific common stock by Friday.