Home » Boise Cascade to Focus on Office Products Distribution
Boise Cascade to Focus on Office Products Distribution
August 10, 2004
Boise Cascade is betting on its office products distribution business for growth. The company has reached a definitive agreement to sell its paper, forest products, and timberland assets in a leveraged buyout for $3.7 billion to affiliates of Boise Cascade, L.L.C., a new company formed by Madison Dearborn Partners LLC, a private equity investment firm located in Chicago, Illinois.
According to George J. Harad, chairman and CEO, this step marks the completion of the company's review of strategic alternatives, originally announced in July 2003. 'The transaction will complete Boise's transformation, begun in the mid-1990s, from a predominantly manufacturing-based company to a world-scale distribution company.
'By separating the company into two ongoing entities, we will successfully establish Boise Office Solutions, soon to be OfficeMax, as a strong independent company in the office products distribution business and place our paper and forest products assets in the hands of a management team that seeks to focus on those businesses. In the process, we will realize significant value for shareholders.
Following the transaction, Boise Cascade Corporation will change its company and trade name to OfficeMax, Inc. It will continue to operate its office products distribution business, which had first half 2004 sales of $4.35 billion, as its principal business.
Through debt retirement and repurchases, OfficeMax is expected to reduce its outstanding debt to between $250 million to $300 million. It will trade on the New York Stock Exchange under the ticker symbol OMX, and its corporate headquarters will be in Itasca, Illinois.
Boise will realize approximately $3.1 billion to $3.2 billion in cash proceeds after allowing for its $175 million reinvestment in Boise Cascade, L.L.C., and its affiliates, a retained interest in a timberland installment note, and certain transaction-related settlements. Boise currently expects to use approximately $2.2 billion to $2.3 billion of the net proceeds to pay down debt and other obligations and return the remaining $800 million to $1.0 billion of proceeds to shareholders through common and/or preferred stock buybacks, cash dividends, or a combination.
The transaction is expected to be completed by mid-November 2004. The acquiring company, Boise Cascade, L.L.C., will be privately held and headquartered in Boise, ID. Its chief executive officer will be W. Thomas Stephens, former president and chief executive officer of MacMillan Bloedel Ltd. and former chairman, chief executive officer, and president of Manville Corporation.
'In many respects, this transaction represents a return to Boise Cascade's traditional roots as a leader in the paper and forest products industry,' said Mr. Stephens. 'We will continue to operate under the Boise brand name, headquartered in Boise, Idaho, with a focus on operational excellence and delivering value to our customers.'
Madison Dearborn Partners is a private equity firm with $8 billion of equity capital under management and makes new investments through its most recent fund, Madison Dearborn Capital Partners IV, L.P., a $4 billion investment fund raised in 2001.
MDP focuses on management buyout transitions and other private equity investments across a broad spectrum of industries including basic industries, communications, consumer, financial services, and healthcare. Over the last decade, MDP has been one of the most active global investors in the paper, packaging, and forest products sectors, having consummated approximately $11.7 billion of management buyout transactions over that period, including Buckeye Technologies Inc., Graphic Packaging International Corp. (formerly Riverwood International Corp.), Packaging