James River Corp. to Sell Former Zellerbach Unit

James River Corp., a Richmond, Va., paper company that acquired Crown Zellerbach’s pulp and paper operations last December, said Tuesday that it has agreed to sell Zellerbach Distribution Group to New York-based Mead Corp. for $250 million in cash.

Included in the sale are paper distribution outlets--essentially warehouses--in 42 cities, including 11 in California. Zellerbach Distribution Group employs 2,100 people, including 1,000 in California, and had 1985 sales of $820 million.

Under the sale agreement, James River would continue to use the Zellerbach distribution system for the paper products produced by its Crown Zellerbach subsidiary. The sale would more than double the size of Mead’s distribution system, which is concentrated in the Midwest and had sales of $500 million last year.

After a prolonged takeover contest last year, James River Corp. and Sir James Goldsmith, an Anglo-French financier, each acquired half of San Francisco-based Crown Zellerbach in a deal valued at $1.5 billion. When James River got the pulp and paper operations, Goldsmith acquired Crown Zellerbach’s timberlands.