Koch Industries jumps into the packaged goods arena with its $21 billion purchase of paper-goods giant Georgia-Pacific.
Georgia-Pacific will become a wholly owned subsidiary of Wichita, KS-based Koch, as part of its Koch Forest Products division. Georgia-Pacific keeps its name and Atlanta headquarters.
The purchase includes a slate of high-profile brands including Dixie, Angel Soft, Quilted Northern, Brawny, Sparkle, Mardi Gras and Vanity Fair.
Georgia-Pacific reported sales were flat at $4.7 billion for the third quarter ended Sept. 30. Sales for the first nine months were down nearly 7% to $14 billion.
“Georgia-Pacific is an outstanding company with highly talented employees, a heritage of leadership in the marketplace and strong branded products,” said Koch Chairman-CEO Charles G. Koch in a statement. “By joining our group of privately held companies, Georgia-Pacific will be able to maintain a long-term focus on growth. … [and] will benefit from our historical practice of reinvesting up to 90% of earnings in our businesses. We have extensive experience with cyclical, highly competitive businesses and the ability to commit appropriate resources to enhance the company’s assets and pursue a growth agenda.”
Koch will pay $13.2 billion and assume $7.8 billion of Georgia-Pacific’s debt. The deal is expected to close by yearend.
Koch bought some Georgia-Pacific assets, including its fluff pulp operations, in May 2004. That business, operating as Koch Cellulose, will be reintegrated with Georgia-Pacific when the new purchase is completed.
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