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T-I May Buy Weyco Board Operation

Georgia-Pacific (GP) may seek to purchase Temple-Inland (T-I), which itself is a leading contender to buy Federal Way, Wash.-based Weyerhaeuser Co.’s containerboard business, reports The Financial Times, London, which learned of these developments from dealReporter. T-I entered the Weyco board business bidding process at a late stage. It has about 30 to 40 days to conduct due diligence.

Third and final-round bids for Weyerhaeuser’s containerboard business are expected within the next two weeks. The deal is expected to yield anywhere between $4.5 billion and $5.5 billion.

“With well-invested assets but some of the lowest margins in the industry, Weyerhaeuser’s corrugated and containerboard operations fit many of Temple-Inland’s acquisition criteria,” writes Deutsche Bank paper industry analyst Mark Wilde in a report last week. “Weyerhaeuser is also a commodity-oriented box business with an emphasis on food and beverage markets, the type of business that Temple-Inland wants to grow.”

Although T-I, based in Austin, Texas, is a leading contender, dealReporter says International Paper, Memphis, Tenn., is the likely frontrunner.

And now Atlanta-based GP has come into the picture. It could seek to purchase T-I independent of whether T-I succeeds in buying the Weyerhaeuser business. According to dealReporter’s sources, GP is a patient, disciplined buyer. It could be waiting to see how the Weyerhaeuser sale plays out. It is well known that GP wants to buy large in the sector, the same sources say. GP is a subsidiary of Koch industries Inc., Wichita, Kan. Koch acquired GP in late 2005.

Although at least three dealReporter sources familiar with the process say they understood that a deal could be done by the end of this month, a separate source says it is possible that Weyerhaeuser could postpone making a decision.OBM

Callout: Third and final-round bids for Weyerhaeuser’s containerboard business are expected within the next two weeks.