Koch Industries Acquires Georgia-Pacific

The acquisition of Georgia-Pacific, Atlanta, by Koch Industries, Wichita, Kan., stands out as one of the industry’s largest in the recent past.

On November 16, the companies announced that Koch had purchased Georgia-Pacific for a total of $21 billion, an amount that includes all of Georgia-Pacific’s assets and debt.

In mid-October, 2005, Georgia-Pacific’s stock traded at $30 per share; Koch will pay $48 per share. Debt financing was obtained by Koch through Citigroup.

The board of directors for both Koch and Georgia-Pacific voted unanimously in favor of the acquisition, the assets of which include the North America and international consumer products segments, and the packaging, building products, paper and bleached board segments.

In 2004, Koch acquired Georgia-Pacific’s non-integrated market and fluff pulp operations in New Augusta, Miss., and Brunswick, Ga. These operations will be reintegrated with Georgia-Pacific businesses.

Georgia-Pacific will become a wholly owned subsidiary of Koch Industries and it will continue to operate as Georgia-Pacific from its headquarters in Atlanta.

Katie Stavinoha, spokesman for Koch, said discussions about the acquisition began shortly before the deal was announced.

Currently, there are no plans for realignment or closure of facilities, nor are personnel changes or product line alterations expected.

“At this point in the transaction there are no specific intentions regarding facilities, departments or individual businesses,” said Stavinoha.

In the past 40 years, Koch Industries has grown 1,600-fold through reinvestment, growth, and application of market-based management, which rewards forward-thinking ideas and employees. This is the largest acquisition for the company to date.

Stavinoha said there are important synergies between the two companies. “[We share] many of the same values,” she said. “We also see a lot of similarities in the culture of the people and there’s a strong manufacturing base.”

One of the biggest benefits for Koch, which has revenues of more than $60 billion and more than 30,000 employees, is the platform for growth.

“Certainly we see the opportunities for long-term value and creation of value for customers,” said Stavinoha. “By combining those capabilities, we will be in the position to be successful in the future.”

NEWS MAKERS

The European Union Parliament, in November, approved 407-155 a law called Registration, Evaluation and Authorization of Chemicals (Reach) that will require chemical producers worldwide to test and register their products to prove they are safe. It will also shift the responsibility of proving chemicals are safe from the government to the companies.

Reach is being criticized by various interest groups in Europe and around the world. Environmentalists argue industry lobbying resulted in the removal of key provisions — namely, the removal of testing for about 17,500 chemicals produced in smaller amounts — while industrialists feel it will have a negative effect on business.

The law is expected to take effect in 2007. The European Commission has estimated an initial cost of somewhere between $2.8 billion and 5.2 billion, but supporters contend health benefits could save $54 billion over 30 years.

The Greenguard Environmental Institute (GEI), Atlanta, recently announced the development of the Greenguard Standard for Children & Schools. The standard was developed to more effectively protect children from high levels of potentially dangerous chemicals. It has set criteria for manufacturers of building materials, furnishings, finishes and cleaning products.

ISSA Members Make Changes To Bylaws
Voting members of the ISSA recently made some alterations to the bylaws governing the organization.

The first change was enacted in the spring when members voted to allow facility service providers as members. The vote stipulates that they do not have the right to vote or hold office, however.

The major changes to the bylaws that were announced at the ISSA/INTERCLEAN® trade show in Las Vegas include:

• The reorganization of the board of directors from 17 members to 15, consisting of five officers and 10 directors.

• Changing the director positions from current districts to regional representation between distributors and manufacturers.

• Though the open candidacy policy will be maintained, the membership voted to expand the nominating committee roles so that they can verify and present the qualifications of candidates for open board positions to the membership.

• The nominations committee will now consist of the ISSA president, vice president, past president, immediately previous past president and the executive director.

• Members voted to officially change the name of the Young Executives Society to YES and to allow corporate YES memberships.