Cerberus buys distribution co for $810m

The New York distressed investor teams with management to acquire the building products distribution division of papermaker Georgia-Pacific.

New York-based distressed investment firm Cerberus Capital Management has agreed to team with company management and buy the building products distribution business from global paper manufacturer Georgia-Pacific in an $810 million (€661 million).


According to the press statement, the transaction, set to close in the second quarter, assumes $630 million of working capital at closing and includes the separate sale of the company’s real estate assets for $100 million. Georgia-Pacific also has entered into a five-year agreement for the distribution business to continue purchasing structural panels, lumber and other building products manufactured by Georgia-Pacific.


The building products distribution company distributes more than 10,000 products across 14 categories, including structural panels, hardwood plywood, roofing, insulation, metal products, lumber, paneling, vinyl siding and particleboard. The products ship via a fleet of 900 trucks. The distribution division – which had 2003 net sales of $4.3 billion – is separate from Georgia-Pacific’s manufacturing segment.


The sale of the company is another move by Georgia-Pacific, with sales of $23 billion, to pay off debt, which currently totals $11 billion. Earlier this year, Forbes reported the company already had plans to unload its struggling building products distribution division, which was estimated to be worth $750 million. Just this January, Georgia-Pacific announced plans to sell its Brunswick, Georgia-based pulp mill to KoCell as part of a deal worth $735 million.


Cerberus Capital Management has more than $12 billion in funds and accounts under management. Last month, the firm announced an agreement to buy Guilford Mills off the public market for a cash total of $107 million. The Greensboro, North Carolina maker of fabrics had emerged from Chapter 11 bankruptcy less than 18 months ago.