Assuming the Federal Trade Commission approves the merger of
Memphis-based Buckeye Technologies Inc. with Atlanta-based Georgia-Pacific LLC,
the company could see an infusion of capital on its manufacturing side. The
future of certain employees may not be as bright.
On Aug. 15, more than 84 percent of Buckeye’s shareholders
voted in favor of the deal, which was valued at about $1.5 billion, and will
pay shareholders around $37.50 per share. The original deal was announced as a
potential acquisition in April, but changed to a merger in late June.
Even though the vote was favorable, Georgia-Pacific still
has to wait on the FTC to review it through the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
David Braun, CEO of Capstone Strategic, an industry analyst,
said the deal probably will be finalized, but Georgia-Pacific will most likely
have to divest some existing facilities, similar to what Memphis-based
International Paper Co. did when it finalized its acquisition of Temple-Inland
in early 2012.
“(The federal government) will want to make sure they’ve got
local competition in some of those areas to keep everything honest in terms of
supply and local manufacturing,” Braun said.
The review process could be done in the next 60 days, but
there’s no set timetable.
When, and if, the merger is finalized, Georgia-Pacific will
have a foothold in the specialty fibers industry. And the company’s history is
to invest and improve its manufacturing operations. However, as the integration
of Buckeye into Georgia-Pacific begins, there will inevitably be some
elimination of office positions. When it released its fiscal fourth quarter and
2013 earnings last week before the vote, Buckeye reported a 4 percent decline
in sales for the fourth quarter and a 17 percent decline in income to $92
million. “The corporate folks have a right to be nervous,” Braun said. “The
financials for Buckeye haven’t been good for the last few years. Who is the
best owner? A parent company like Georgia-Pacific is favorable.”
