Two More Acquisitions Rock the Paper Industry
DEERFIELD, IL—Just as the paper and forest products industry was beginning to settle down, another pair of acquisition announcements have roiled the waters yet again. The biggest news came from Atlanta-based Georgia-Pacific, which signed an agreement to acquire Fort James Corp., based here, in a transaction valued at approximately $11 billion.
The move will make Georgia-Pacific the world's leading manufacturer of tissue products, and while previous industry acquisitions have gone through without much notice from federal regulators, industry watchers have noted that anti-trust officials may look long and hard at this proposal.
After the merger, Fort James will be integrated with the existing tissue business of Georgia-Pacific. Combined revenues of the two companies exceeded $24.8 billion last year.
Fort James, though it dominated the North American tissue market, had nonetheless been struggling financially since it was created by the 1997 merger of Green Bay, WI-based Fort Howard Corp. and Richmond, VA-based James River Corp.
Industry observers note that Georgia-Pacific, which also produces lumber for the housing market and is therefore subject to the rise and and fall of housing sales, may have been looking for a less-cyclical market at a time when U.S. new home sales are down as mortgage rates rise.
In separate news, Montreal-based Domtar Inc. has reached an agreement to acquire Florence, KY-based Ris Paper, one of the largest independent merchants of commercial printing and business papers in the United States. With its 680 employees, Ris operates 19 distribution branches in the United States. Ris reported that its sales in fiscal year 1999 were approximately US$600 million.
Raymond Royer, president and CEO of Domtar, notes that the move increases Domtar's access to U.S. markets. "By strengthening our access, it highlights our commitment to the U.S. market. In addition, it will contribute to increasing our sales to more than C$4 billion," he notes.