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*A Form 425 containing the written communication set forth below (the "Original
Filing") was originally filed on July 17, 2000. Due to technical issues with the
Original Filing, Fort James Corporation was not reflected on the SEC website as
the subject company. This Form 425 is a resubmission of the Original Filing,
corrected to reflect Fort James Corporation as the subject company on the SEC
website. The commission file number is being revised consistent with this
change. The Original Filing should be deemed superseded by this Form 425.
Filed by Georgia-Pacific Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Fort James Corp.
Commission File No. 1-7911
Contact Name: Richard A. Good
GEORGIA-PACIFIC TO ACQUIRE FORT JAMES, BECOME WORLD'S
LARGEST TISSUE MAKER; OTHER KEY PORTFOLIO ACTIONS
TO TRANSFORM GEORGIA-PACIFIC
ATLANTA - Georgia-Pacific Corp. and Fort James Corp. (NYSE: FJ)
announced today that the boards of directors of both companies have signed a
definitive merger agreement for Georgia-Pacific to acquire all outstanding
shares of Fort James in a transaction valued at approximately $11 billion.
Georgia-Pacific said the announcement continues a series of major
strategic actions aimed at strengthening its position as a high value-added
paper and building products company. Georgia-Pacific Group (NYSE: GP) will be
the world's leading manufacturer of tissue products when the transaction is
completed.
Under terms of its agreement with Fort James, Georgia-Pacific will
acquire all outstanding shares of Fort James for $29.60 per share in cash and
0.2644 shares of Georgia-Pacific Group stock. Based on the Georgia-Pacific
Group closing price of $28.625 on July 14, 2000, the per share consideration
totals $37.17 per Fort James share. The transaction includes the assumption of
approximately $3.5 billion of Fort James net debt.
In connection with the acquisition of Fort James, Georgia-Pacific is
preparing to divest approximately 250,000 tons of tissue manufacturing capacity
for away-from-home products as well as other selected commodity and non-
strategic businesses that have been identified. "The transformed Georgia-Pacific
will be able to focus on those paper and building products businesses that are
valued-added and fit our strategic direction," said A.D. "Pete" Correll,
chairman and chief executive officer of Georgia-Pacific.
"Today's actions and future divestitures are indicative of the major
transformation under way at our company," Correll said. "Our strategy is to
transform Georgia-Pacific by transforming our portfolio of assets. We will
create value by sharpening our focus on higher-margin businesses that are closer
to the customer. Georgia-Pacific's transformation will improve earnings
predictability, strengthen our market position, and drive the increased cash
flow needed to take our long-standing financial strategy to the next level."
"This transaction represents a fine opportunity for our shareholders
and should provide a great platform for Fort James' talented employees," said
Miles L. Marsh, chairman and chief executive officer of Fort James. "With the
enhancement provided by our brands, products and market positions, Georgia-
Pacific becomes an even stronger, more exciting company."
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The maximum value that can be received by Fort James shareholders is
$40 per share (comprised of $29.60 in cash and $10.40 in Georgia-Pacific Group
stock). Therefore, the 0.2644 shares of Georgia-Pacific Group included in the
offer is subject to downward adjustment in the event its average share price is
greater than $39.33. Georgia-Pacific expects the acquisition to be immediately
accretive to Georgia-Pacific Group on a cash earnings basis (reported earnings
excluding goodwill) and accretive on a reported earnings basis (after goodwill)
beginning in the second full year after the transaction.
After the merger, Fort James will be integrated with the existing
tissue business of Georgia-Pacific. The combination will greatly increase
Georgia-Pacific's tissue business, making it a leading producer and marketer of
consumer and away-from-home tissue in North America and providing a significant
presence in 11 other countries. Familiar North American consumer name brands
produced by the two companies include Angel Soft, Sparkle, Coronet, Quilted
Northern, Soft 'N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair and Dixie.
"Clearly, this transaction will bring stronger competition to the
retail and away-from-home tissue markets," Correll said. "Adding Georgia-
Pacific's low-cost manufacturing capabilities to Fort James' strong consumer
brands and nationwide marketing will result in greater efficiencies, more
vigorous competition in the retail market and broader distribution of commercial
products."
Combined revenues of the two companies exceeded $24.8 billion last
year.
"This acquisition moves us rapidly toward higher value-added segments
of our industry," Correll said. "Consistent with all of our prior actions, this
transaction is aimed at providing the increased cash flow needed to continue to
pursue our ongoing financial strategy of returning excess cash to our
shareholders."
Georgia-Pacific identified several key strategic rationales for its
Fort James acquisition, including significant business portfolio improvements
and direct synergies as a catalyst for improved future performance. Among them:
[_] Improvement of Georgia-Pacific's business mix. By moving closer to the
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customer and increasing the proportion of value-added product manufacturing
and distribution in its overall portfolio of businesses, the acquisition
will advance Georgia-Pacific's strategic direction. It also strengthens the
company's consumer focus through the addition of respected brand names well
known across North American and European markets.
[_] Increase in earnings predictability. The combined company's cash flows
-----------------------------------
will provide a more stable earnings platform and enable it to continue to
pursue its ongoing financial strategy to return excess capital to
shareholders.
[_] Building on Georgia-Pacific's proven track record and operational success
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in the tissue segment over the past decade. Georgia-Pacific's consumer
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tissue products business has grown by an average of 8 percent every year
since 1993 through operational excellence in manufacturing and logistics
and outstanding sales and marketing execution. Its commercial tissue
business grew significantly last year with a joint venture that
consolidated
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Georgia-Pacific's business with Chesapeake's Wisconsin Tissue assets. That
integration has proceeded smoothly and is ahead of schedule.
[_] Leveraging Georgia-Pacific's world-class operational capability to unlock
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in excess of $500 million in annual pre-tax synergies. Enhanced product
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and market coverage coupled with reduced expenses and increased
efficiencies and productivity are expected from the acquisition.
"The acquisition of Fort James will combine with additional steps that
are reshaping Georgia-Pacific, a process we began in late 1997 with the
separation of our timber assets and carried forward last year with the
acquisitions of Wisconsin Tissue and Unisource," Correll said. "Across four
acquisitions in the last five years, Georgia-Pacific has an outstanding track
record of successfully integrating acquired businesses and achieving synergies
rapidly. We are looking forward to bringing these capabilities to this
transformation for the benefit of our shareholders."
Under the terms of the agreement, Georgia-Pacific will begin an
exchange offer for the Fort James shares upon the effectiveness of a
registration statement to be filed with the Securities and Exchange Commission.
The company expects to close the transaction, subject to regulatory approvals,
in the fourth quarter of this year. Required financing will be provided by a
syndicate of lending institutions led by Banc of America, Merrill Lynch and
Morgan Stanley.
Georgia-Pacific's present 12-member board of directors will be
supplemented with three new directors to be designated from Fort James' existing
board of directors. Georgia-Pacific said it does not anticipate any regulatory
obstacles that would prevent completion of the transaction. Fort James' board of
directors has approved the transaction and will recommend that its shareholders
accept the Georgia-Pacific offer.
Merrill Lynch & Co. and Banc of America are acting as financial
advisors to Georgia-Pacific. Shearman & Sterling is providing outside legal
counsel. Morgan Stanley is acting as financial advisor to Fort James, and
Wachtell, Lipton, Rosen & Katz is its outside counsel.
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NOTE: Georgia-Pacific will conduct a telephone conference call at 11
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a.m. Eastern today (Monday, July 17) for financial analysts to review this
morning's announcement of the Georgia-Pacific-Fort James merger agreement. The
conference call will feature A.D. "Pete" Correll, chairman and chief executive
officer of Georgia-Pacific; and include Danny Huff, executive vice president -
finance and chief financial officer for Georgia-Pacific; and Lee Thomas,
executive vice president - paper and chemicals for Georgia-Pacific.
To participate in this call, dial (888) 467-8159 (domestic United
States) or (630) 395-0437 (international). Password to participate is "gapac."
Replay of the conference call will be available beginning at 2:30 p.m. by
dialing (888) 568-0691 (domestic United States) or (402) 998-1464
(international). Replay will also be available on the company website by
following the links at www.gp.com.
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Headquartered at Atlanta, Georgia-Pacific is one of the world's
leading manufacturers and distributors of paper and building products. Its
familiar consumer brands include Angel Soft, Sparkle,
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Coronet and MD tissue products and Pacific Garden antibacterial hand soap. The
company also sells tissue products for the away-from-home market. Georgia-
Pacific's building products distribution segment has long been among the
nation's leading wholesale suppliers of building products to professional
builders and contractors, hardware stores and large do-it-yourself warehouse
retailers. In addition, Georgia-Pacific is the nation's largest producer of
structural wood panels and second largest producer of lumber and gypsum
wallboard. The company employs approximately 55,000 people at more than 500
locations in North America.
Fort James is a leading international consumer products company,
serving consumers both at home and away-from-home with bathroom and
facial tissue, paper towels, napkins, cups, plates, cutlery and food
wrap products. The company's popular brands include Quilted Northern,
Soft 'N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair, and Dixie in
North America, and Lotus, Okay, Embo, Colhogar, Tenderly, KittenSoft
and Delica in Europe. With 1999 sales of $6.8 billion, the company has
approximately 25,000 employees and 50 manufacturing facilities
principally located in the U.S., Canada and Europe.
Certain statements contained in this release, including, without
limitation, the existence and achievement of synergies of the combined
businesses of Georgia-Pacific and Fort James, plans for future transformation
and divestitures, increases in earnings predictability and future financial
performance are forward-looking statements (as such term is defined under the
Private Securities Litigation Reform Act of 1995) based on current expectations.
The accuracy of such statements is subject to a number of risks, uncertainties
and assumptions including, but not limited to, the effect of general global and
domestic economic conditions on the demand for tissue products; realization of
cost savings and synergies in integrating the two businesses; the existence of
financially capable buyers for businesses to be divested, changes in the
production of and demand for tissue and other products manufactured by Georgia-
Pacific, and other factors listed in Securities and Exchange Commission filings
of Georgia-Pacific and Fort James.
Media Contacts:
Ken Haldin / Georgia-Pacific
(404) 652-6098
Greg Guest/Georgia-Pacific
(404) 652-4739
Mark Lindley / Fort James
(847) 317-5280
Analyst
Contacts: Richard Good / Georgia-Pacific
(404) 652-4720
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Celeste Gunter / Fort James
(847) 317-5355
