GP To Be Acquired by Private Firm

Georgia-Pacific Corp. (GP), Atlanta, has reportedly reached an agreement to be acquired by Koch Industries Inc., Wichita, Kan. If the $13 billion deal were completed, it would reportedly make Koch Industries the nation’s largest privately held company.

Koch Industries is a conglomerate with roots in the oil business that still operates refineries and pipelines. The company’s current holdings in the forest products business include two GP cellulose pulp mills Koch acquired in a 2004 deal. Koch Industries also has holdings in agri-business, fertilizer, plastic fibers and asphalt.

According to an Associated Press report, if the proposed deal is completed, GP will become a wholly owned subsidiary of Koch. Currently, the Koch Forest Products business unit will be used to make a $13 billion cash offer for Georgia-Pacific’s outstanding stock shares during mid-November. Koch will also reportedly assume nearly $8 billion in GP debt obligations.

Georgia-Pacific is active in a broad range of forest products segments, including consumer products such as Dixie cups and Brawny paper towels, lumber and other building products, and the production of many grades of paper. GP’s Harmon Associates subsidiary, based in Jericho, N.Y., trades some 5.5 million tons of secondary fiber each year.

According to the AP report, Koch’s acquisition of GP will make it the largest privately held company in the United States, bypassing Minneapolis-based Cargill Inc.

Georgia Pacific CEO A.D. “Pete” Correll has told the Associated Press that he will likely join the board of directors of Koch Industries, and that he is optimistic the company can grow as part of the conglomerate. He specifically indicated that GP may be able to grow within the packaging and building products segments.