Georgia-Pacific Weighs Sale of Distribution Divisi
Georgia-Pacific said Monday it is considering a sale of its $3.8 billion building products distribution division, according to the Atlanta Journal-Constitution.
The division, which employs 3,390 people, distributes more than 10,000 products in 14 categories, including structural panels, hardwood plywood, roofing, lumber, vinyl siding and particleboard. The distribution division is distinct from Georgia-Pacific's building products manufacturing division.
Georgia-Pacific has hired Goldman Sachs as its financial adviser.
The potential sale of the distribution division comes as Georgia-Pacific concentrates more on consumer products such as paper towels and toilet tissue. The company is moving away from commodity-based businesses.
Last year, Georgia-Pacific sold a 60 percent interest in its Unisource paper distribution subsidiary.
"Consistent with our strategic direction for the past several years to create shareholder value by sharpening focus on Georgia-Pacific's more stable, consumer-oriented businesses and our goals of reducing debt and strengthening our balance sheet, it is natural that we fully review the strategic alternatives for the building products distribution business," said A.D. "Pete" Correll, Georgia-Pacific chairman and chief executive officer. "The interests of our customers, employees and suppliers also will be a major consideration for Georgia-Pacific as we move forward with this process."
The consumer products business accounted for some 60 percent of Georgia-Pacific's cash flow during the past 12 months, Correll said last week.
Georgia-Pacific would like to separate its consumer products business from its building products business. The company had planned to spin off the consumer products business, but early this year it postponed an initial public offering tied to a separation of the division.
Correll said the company still would like to split the businesses.
"We are committed that there's no rational reason for G-P to be in both businesses -- no fit between them," he told UBS analysts and investors last week. "[But] we've not been able to come up with a scenario outright sale would add value to our shareholders."
