Georgia-Pacific Pays $1.5 Billion for Buckeye Technologies

By Bill Dries

Memphis-based Buckeye Technologies Inc. is being bought by Georgia-Pacific LLC, the two companies announced Wednesday, April 24.

The deal, valued at approximately $1.5 billion, including debt, still faces regulatory approval. But the boards of both companies have signed off on terms that include Buckeye stockholders getting $37.50 per share.

Still to come is a Georgia-Pacific cash tender offer for all outstanding Buckeye common stock.

Atlanta-based Georgia-Pacific makes building products as well as packaging paper, tissue and cellulose.

Buckeye is also in the cellulose business, making specialty fibers and nonwoven materials from wood and cotton. It began as a cottonseed oil company that was established as a division of Procter & Gamble in Ohio.

By 1914, Buckeye was making specialty cellulose for munitions used in World War I and the company opened its Memphis plant at Tillman Street and Jackson Avenue in the 1920s.

Buckeye’s location in a city where cotton was the dominant economic driver was among the cornerstones of the city’s manufacturing base in the early 20th century.

The Memphis facility, including the headquarters, a research and development section and a cotton cellulose mill today employs 250 people.

Neither company is saying how the Memphis facility will fare in the acquisition.

“At this time, it’s just too early to determine what will happen,” said Karen Cole, senior communications manager for Georgia-Pacific. “Right now we won’t have any solid plans on the facilities.”

Steve Dean, executive vice president and chief financial officer of Buckeye, said Buckeye’s value to Georgia-Pacific is that it represents an expansion into sectors Georgia-Pacific was not in.

“The Memphis plant produces cotton cellulose fibers – high-purity cellulose that goes into LED TV screens, high-strength paper, currency, pharmaceuticals and food products as thickeners,” he said. “GP really wasn’t in that product category at all. … It’s like a new market that GP is wanting to grow into. They see Buckeye as a growth platform.”

Georgia-Pacific has corrugated container plants in Lebanon and Cleveland, Tenn.

Details of who approached who first and future milestones for the acquisition are expected to be filed in the next 10 days with the Securities and Exchange Commission.

Both companies have a global presence. Georgia-Pacific is the larger of the two and is privately held. Buckeye is publicly traded.

Buckeye reported record sales and earnings for the fiscal year that ended June 30 with net sales of $895 million, a $14 million or 2 percent increase from the previous fiscal year.