Georgia-Pacific, a global business group with major packaging concerns, said on Thursday it has delayed the planned spinoff of its consumer products and packaging division, originally expected in the first half of next year, citing weakness in the financial markets and its building products segment.
The company planned to raise about €1 billion by separating the higher-margin consumer products and packaging business from its building products unit, in an initial public offering. They did not give a new timetable for the IPO.
Atlanta-based Georgia-Pacific said it was still convinced a spinoff was the right strategy.
"Although we are committed to our planned separation, we have reluctantly concluded that now is not the right time to execute the transactions," said chief executive A.D. Correll. He added that organisational changes in advance of the separation would continue.
Poor stock market conditions, the weak business environment for building products and the pending $850 million (€878m) sale of its Unisource Worldwide distribution unit to Bain Capital, a private equity and global buyout firm, were cited for the delay.
However, the company also said the Unisource sale, expected to close in the fourth quarter, was proceeding on schedule.
After the spinoff, the consumer products business, CP&P, will compete with Procter & Gamble and Kimberly-Clark in the tissue business and will take on most of Georgia-Pacific's hefty debt, which grew to $12 billion following its 2000 acquisition of Fort James Corp. The purchase made Georgia-Pacific the leading domestic tissue maker.