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The Deal: Georgia-Pacific's $1.5B Buckeye Deal Clears DOJ

Tickers in this article: BKI

NEW YORK (TheStreet) --Georgia-Pacific LLC plans on closing its $1.5 billion acquisition of Memphis, Tenn.-based Buckeye Technologies Friday, Aug. 23, after winning antitrust approval from the Department of Justice.

The unconditional DOJ approval was announced Thursday. The approval was won a relatively short four months after the deal was announced, despite receiving a second request for information from the DOJ in June.

Georgia-Pacific subsidiary GP Cellulose Group will acquire all of the outstanding common stock of Buckeye for $37.50 per share. Georgia-Pacific is itself a subsidiary of Koch Industries.

The merger agreement anticipated possible antitrust issues and called for the divestiture of Buckeye's manufacturing facility in Gaston County, N.C., if the DOJ insisted. The plant makes advanced absorbent products used in feminine hygiene pads, disposable diapers, adult incontinence products, baby wipes, moist towelettes and household cleaning products.

The facility's airlaid nonwovens machine was the world's largest when it was built in 2001. The facility is capable of producing about 50,000 tons of airlaid nonwoven product annually. Georgia-Pacific competes with Buckeye with five airlaid wovens manufacturing lines it has in the U.S., France and Italy that can produce a total of 60,000 tons of product annually.

Dechert partner Mike Cowie, who represented Buckeye before the DOJ, said the contingency for the Gaston facility was included in the merger agreement to give Buckeye some more assurance that the deal would get done rather than an admission of an antitrust issue.

"There are companies making similar fabrics and materials that can be substituted effectively," Cowie said.

Cowie partially attributed the short approval time -- the companies originally called for a February 2014 close -- to antitrust regulators' efforts to streamline the second request process.

"In the bad old days a second request meant an 8-to-10 month review but over the years the agencies worked to streamline process. So when you're working well with agency staff there are situations when you can get through in 4 to 5 months."

In the Buckeye deal he also attributed the quick resolution to the efforts of both companies' inside counsel and the outside counsel for Georgia-Pacific, John Herfort, partner at Gibson, Dunn & Crutcher.