Madison Dearborn in $3.7bn timberland deal

The Chicago buyout behemoth has agreed to buy paper and forest product assets from Boise Cascade, the owner of office supply giant OfficeMax.

Chicago buyout giant Madison Dearborn Partners has agreed to buy paper, forest products and timberland assets from Boise Cascade for a total of $3.7 billion (€3 billion).

Boise Cascade, based in Boise, Idaho, is the owner of office supply retailer OfficeMax. The company will change its name to OfficeMax following the transaction.

Madison Dearborn is purchasing the assets through a holding company called Boise Cascade, LLC.

According to George Harad, the chairman and CEO of publicly traded Boise Cascade, the sale to Madison Dearborn completes a process, begun in the mid-1990s, by which the company transformed itself from a manufacturing company to a distribution company.

In the first half of 2004, the OfficeMax side of the company generated sales of $8.6 billion.

The CEO of the new paper and forest products platform will be W. Thomas Stephens, the former president and CEO of MacMillan Bloedel as well as the former chairman and CEO of Manville Corp.

Among the new company’s products are plywood, lumber, particleboard and engineered wood products; office papers, printing papers, and forms bond. The company owns roughly 2.3 million acres of timberland in the US and eucalyptus land in Brazil. In total, the new company had sales of roughly $3.9 billion in the first half of 2004.

Madison Dearborn is no stranger to forest products companies – in 2002 it acquired Irish packaging giant Jefferson Smurfit in a €3.8 billion ($3.7 billion) takeover.

Madison Dearborn raised $4 billion for its most recent fund, which closed in 2001.