Boise Cascade is selling off timber

BOISE — Boise Cascade Corp. announced Monday it has agreed to sell its paper and timber assets for $3.7 billion to focus on worldwide distribution of office products.

The Idaho-based company said the sale to a new company formed by Madison Dearborn Partners LLC, a Chicago investment firm, should be completed by mid-November. The new company will be privately held and named Boise Cascade LLC. It will be headquartered in Boise.

Boise Cascade will change its name to OfficeMax, acquiring the name of the Cleveland-based office products seller it bought last year for $1.2 billion in cash and stock. It will be headquartered in Itasca, Ill., outside Chicago.

The spin-off and name change marks the completion of the review of the company's future launched with the OfficeMax purchase, Boise Cascade chairman George Harad said Monday.

Harad, who will be the chairman of the board of OfficeMax, said the separation of the businesses "complete Boise's transformation, begun in the mid-1990s, from a predominantly manufacturing-based company to a world-scale distribution company."

Regulatory approval in the United States and Brazil, where the company has timber interests, will be required, Harad said, but he did not expect problems.

The deal was praised by analysts, who questioned Harad and others during a morning conference call, and Boise Cascade stock jumped more than $3 a share initially before investors began eating away at the gain. It finally closed down six cents at $32.99 a share on the New York Stock Exchange in trading that hit a record 10.9 million shares.

Harad was unfazed by the fluctuations, citing some speculation in the stock.

"I don't think you should read too much into the first few days of trading," Harad said. "There was quite a bit of transitory stock ownership moving in and out of shares as they try to understand the transaction."

Analyst John Tumazos of Prudential Equity Group LLC called the sale of the timber and paper divisions a big accomplishment because of its size and composition. But in his analysis of the deal, Tumazos also said the new OfficeMax company might face competitive responses from industry leaders Staples and Office Depot and continued skepticism that the market expressed last year when the company acquired OfficeMax.

"Many retailing growth investors scoff that Boise Cascade never will achieve Staples' level of excellence," Tumazos wrote.