Wichita – Koch Industries Inc. agreed Sunday to buy leading wood and paper processor Georgia-Pacific Corp. for $21 billion in cash and assumed debt. The deal, if approved, will make Wichita-based Koch the largest privately held company in the United States.
The offer is $48 cash per Georgia-Pacific share. The stock closed at $34.65 Friday.
The acquisition – kept secret until Sunday afternoon – is Koch’s biggest in a long string of acquisitions over the past few years.
Last year, Koch closed on its previous biggest deal, paying $4.2 billion to DuPont Co. for its Invista fibers business, the maker of Lycra and Stainmaster products.
Koch officials said Georgia-Pacific will continue to operate under its own name from its Atlanta headquarters.
Georgia-Pacific is one of the world’s leading makers of wood- based products, particularly paper. It expects revenue approaching $20 billion this year. Its familiar consumer products include Brawny and Mardi Gras paper towels, Quilted Northern and Angel Soft bathroom tissue, and the Dixie line of disposable tableware.
Beyond consumer paper products, the company is a leading supplier of office paper and building materials, such as plywood and gypsum wallboard.
Koch is already a small player in pulp and paper products, having last year bought two wood- pulp and fluff mills from Georgia-Pacific to form its Koch Cellulose division. Pulp and fluff are used to make absorbent paper products such as diapers and wipes, as well as certain fine papers, tissue products and coffee filters.
Koch Industries chairman and chief executive Charles Koch said Sunday the Georgia-Pacific deal will give his company revenue of “at least $80 billion” and a workforce of 80,000.
Forbes magazine, in its latest issue, estimates Koch’s current revenue at about $60 billion, putting the company second on the magazine’s annual list of the country’s largest private companies.
Agribusiness giant Cargill Inc. is No. 1, with revenue of $66 billion.
At $80 billion, Koch wold easily eclipse Cargill. If Koch were a public company, at that revenue level it would rank about 11th in the Fortune 500.
Among Georgia-Pacific’s debts are asbestos liability claims that remain to be resolved for several more years. The company manufactured gypsum-board products until 1977 and has had hundreds of thousands of claims filed against it over exposure to asbestos fibers, which are carcinogenic.
