Great Northern Nekoosa Corp. has agreed to hold a special meeting of its directors to discuss Sunday's offer by Georgia-Pacific Corp. to increase its unwanted bid to buy the paper company.
Georgia-Pacific raised its cash offer for Great Northern's outstanding shares from $58 a share, or a total of about $3.1 billion, to $63, or a total of $3.8 billion. Great Northern has consistently rejected the takeover attempt.
The new bid was contained in a letter from Georgia-Pacific Chairman T. Marshall Hahn Jr. that was delivered Sunday to Great Northern Chairman William R. Laidig. The offer represents a 63% premium above Great Northern's share price prior to Georgia-Pacific's original buyout offer of Oct. 31, Georgia-Pacific said.
Great Northern shares closed Friday at $61, down 12.5 cents in consolidated New York Stock Exchange trading.
Great Northern, a paper products company based in Norwalk, Conn., had said the original offer was too low, possibly illegal and could create a disastrous debt load on the combined company.
Hahn also demanded a special meeting of Great Northern shareholders and urged Laidig to meet with him personally to discuss the proposal.
"We are prepared to consider an additional increase in price if you come to the negotiating table early and demonstrate to our satisfaction that greater value exists," he wrote in the letter, which was disclosed by Georgia-Pacific.
Great Northern officials issued a statement later Sunday saying they would hold a special meeting of the company's directors Tuesday to "consider and review the terms of the revised Georgia-Pacific offer."
Georgia-Pacific spokeswoman Gail Smith, reading from a statement, said the giant, Atlanta-based forest products company was "pleased that they're acting so expeditiously. We are hopeful they will exercise their fiduciary responsibility and respond positively to our very attractive offer."
Also Sunday, Georgia-Pacific extended the Nov. 29 expiration deadline for its offer to midnight Dec. 4.
Hahn said in his letter that Great Northern's contention that the takeover would subject the company to excessive debt was groundless. He said the $3.8 billion in incremental debt required to finance the offer could be handled by the combined company without a restructuring or loss of jobs.
"In fact, the combined company will be stronger and better able to meet the challenges of our industry, provide jobs and compete in the global marketplace than our two companies continuing on a stand-alone basis," he wrote.
Georgia-Pacific had revenue of $9.5 billion last year from sales of paper, other forest products and building materials. Great Northern, with 1988 sales of $3.6 billion, makes paper, cardboard and envelopes.