M&A: Koch buys Georgia-Pacific


Denise Bedell
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Citigroup to take on $11 billion of risk in a single package.

Koch Industries will use one of the largest-ever single bank loans to buy forest products and paper firm Georgia-Pacific. The $13.2 billion takeover offer involves an $11 billion bridge loan from Citigroup that is believed to be not conditional upon financing – meaning Citi must take up the slack if it is unable to pass on any of the loan. No further details have been released. Under the terms of the deal, Koch will offer $48 a share for Georgia-Pacific, 39% above the closing share price on the day of the announcement, November 11. Koch will also assume $7.8 billion of outstanding debt as part of the transaction. It is believed that Koch will raise debt via Georgia-Pacific to fund the buyout and then tender for the paper products group’s debt. Biggest by salesKoch will become the largest privately held company by sales in the US with the Georgia-Pacific acquisition, with combined revenues of almost $80 billion. This surpasses the current leader by sales for privately held firms, Cargill, which had total revenues of just over $70 billion last year. Koch has made several acquisitions during the past few years, picking up an interest in the Trans Alaska Pipeline and a refinery from Williams Companies, fibre and polymers assets from DuPont, and chemicals assets from BP. It now has a broad portfolio of assets in oil and natural gas, chemicals and fertilizers, engineering and ranching, as well as pulp, paper and lumber.

Koch was advised by Citigroup on the transaction, and Georgia-Pacific was advised by Goldman Sachs.