Deerfield, Illinois The Fort James Corp. has agreed to sell its packaging business for a reported $830 million to ACX Technologies, based in Golden, Colorado. According to Fort James, it is selling the packaging operations in order to focus on tissue, paper towels and other consumer products it sells under the names Northern, Brawny, Dixie and Vanity Fair, among others.

The Packaging Business consists of 12 folding carton converting plants and a 330,000-ton-per-year recycled paperboard mill in Kalamazoo, Michigan. The folding carton plants are located in: Charlotte, North Carolina; Garden Grove, California; Gordonsville, Tennessee; Kalamazoo, Michigan; Kendalville, Indiana; Menasha, Wisconsin; Mississauga, Ontario, Canada; Newnan, Georgia; North Portland, Oregon; Perrysburg, Ohio; Portland, Oregon; and Wausau, Wisconsin. The plants have 2,600 employees and reported sales of $590 million last year.

The transaction is expected to be completed by mid-year. Closing is subject to customary conditions, including antitrust reviews.

"Our Packaging Business has been a solid contributor," said Fort James' Chairman and CEO Miles Marsh. "However, it is very much in our shareholders' interest to continue to build Fort James as a consumer products company. We view this transaction as a major step in focusing Fort James in the consumer products arena. At the same time, our valued employees and customers should benefit from being part of an organization strategically concentrated on packaging."

The facilities involved in the sale manufacture folding cartons as well as healthcare and microwave packaging for many of the nation's leading consumer packaged goods companies. The affected facilities had 1998 sales of approximately $590 million and a workforce of approximately 2,600 employees. Fort James is the third-largest producer of folding cartons in the United States.

Not included in the transaction are Fort James' two bleached paperboard machines that are an integral part of the company's Pennington, Alabama, towel and tissue mill, and which provide base paperboard for the company's Dixie cup and plate business.

Fort James and ACX Technologies have also entered into a 10-year supply agreement, under which Fort James will supply certain ACX Technologies' bleached paperboard needs. This supply contract, together with the Dixie business' requirements for paperboard, provide a secure outlet for the majority of the company's bleached paperboard production.

ACX Technologies has two primary businesses, Graphic Packaging Corp. and Coors Ceramics Co. With 1998 sales of $988 million, ACX Technologies has 38 manufacturing plants and 5,600 employees and is currently the fifth-largest folding carton company in the United States. Following the acquisition of Fort James' Packaging Business, ACX Technologies will reportedly become the largest folding carton producer in the country.

In a related action, Fort James' Board of Directors has authorized the repurchase of up to $500 million-worth of the company's common stock, planned for consummation over 18 months. The company will repurchase its common shares from time to time on the open market or in negotiated transactions, depending upon market conditions, applicable securities regulations and other factors. Fort James currently has 220.8 million shares of common stock outstanding. "We believe our continued efforts to promote long-term growth and internal improvements, in combination with the repurchase of shares, should significantly enhance shareholder value," said Marsh.