$3.19-Billion Georgia-Pacific Offer Rejected by Nekoosa

Great Northern Nekoosa Corp. on Monday rejected a $3.19-billion buyout offer from rival forest products giant Georgia-Pacific Corp., calling the proposal a “junk deal” for stockholders, employees and affected communities.

Nekoosa said the $4.5 billion of debt that would be imposed on it and Georgia-Pacific if the deal were completed would turn the combined firms into a highly leveraged “junk company.”

It said its board unanimously rejected the unsolicited $58-per-share tender offer, which would create the country’s largest forest-products company.

The company also said its board was advised by its lawyers that consummation of the deal would violate antitrust laws, although Georgia-Pacific said last week that the Interstate Commerce Commission would allow the company to proceed with the proposed acquisition.

Norwalk-based Nekoosa said it filed suit in U.S. District Court in Bridgeport, Conn., seeking to block the offer in connection with the antitrust issues.

Nekoosa Chairman William Laidig said in a telephone interview that the company has no intention of meeting with Georgia-Pacific or any “white knight.”

Calling the offer “a very opportunistic move on Georgia-Pacific’s part,” Laidig said he admired “their astuteness in coming after a super company like us.”

Laidig also said his company may need to take steps to “generate some additional short-term returns for share owners,” but declined to answer questions on whether these could include a restructuring.

Wall Street traders said the rejection was expected. One said it appeared that Nekoosa was trying to stall for time until it got a higher offer, and others predicted a prolonged battle.

Atlanta-based Georgia-Pacific said it was disappointed but remains committed to the takeover.

Georgia-Pacific also said it believes that the financing plan worked out with BankAmerica Corp. “is sound and stable even during a downturn. To service the resulting debt requires no asset sales or layoffs.”

The offer is subject to receipt of financing, a Maine anti-takeover law being declared invalid, and other conditions. Nekoosa is incorporated in Maine.

Separately, Nekoosa set up a “golden parachute” plan for its executives when it rejected Georgia-Pacific’s bid at a board meeting Sunday, the company said. A golden parachute awards top executives a large bonus in case a company changes hands.

Nekoosa said Chairman Laidig would be given a $306,000 performance bonus effective in January or sooner if the company changes hands. It also awarded a group of top executive officers another $887,700 in bonuses.

Nekoosa’s share fell 75 cents to $61.375 and Georgia-Pacific slipped 25 cents to $46.375 Monday.