EU clears Koch's $13 billion takeover of paper company Georgia-Pacific

Tuesday, December 20th 2005, 10:40 am
By: News On 6

BRUSSELS, Belgium (AP) _ EU regulators cleared Koch Industries Inc.'s $13.2 billion takeover of paper-products giant Georgia-Pacific Corp. on Tuesday, a deal that would create the United States' largest private company.

The European Commission said its investigation showed the tie-up would not cause competition problems in Europe.

Regulators looked at the business both companies did as rivals and in the supply chain. As pulp producers, they have a small combined market share on the global market and do not compete directly in Europe, it said.

Koch supplies pulp to Georgia-Pacific to make tissue paper, but the Commission ruled out problems because Koch had a small market share and plenty of rivals offering customers a choice of other suppliers.

The cash deal agreed to in November also calls for Koch to assume $7.8 billion in Georgia-Pacific debt and will result in the Atlanta-based company becoming a wholly owned subsidiary of Koch.

Koch, based in Wichita, Kan., is a commodities conglomerate that operates refineries and pipelines, trades commodities and manufactures pulp, paper and fibers. With combined annual revenue of about $80 billion after the Georgia-Pacific acquisition, Koch would surpass food and farm products maker Cargill Inc. as the largest privately held company in the U.S. Koch employs more than 30,000 people.

Georgia-Pacific's brands include Brawny paper towels, Angel Soft tissue, Dixie paper cups and Quilted Northern bath tissue. The company also makes building products such as plywood, lumber and gypsum wallboard.

The deal marks the first major push into consumer products for Koch, which traces its history to 1927 when Fred C. Koch developed a new method to refine crude oil. Today it operates in fields from ranching to fertilizer to petroleum processing and asphalt. Chairman and CEO Charles G. Koch and his brother, David, a company board member and executive vice president, are both worth $4 billion, according to the Forbes ranking of the world's wealthiest people.