Boise Cascade Corp. (BCC) plans to sell its paper and timber assets to a private investment group for about $3.2 billion in cash to focus on worldwide distribution of office products.

The Idaho-based company said Monday that the sale to a new company formed by Madison Dearborn Partners LLC (search), a Chicago investment firm, should be completed by November.

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

The spinoff 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."

"... In the process, we will realize significant value for shareholders," he said.

The deal requires approval from regulators in the United States and Brazil, where the company has timber interests, Harad said, adding that he did not expect problems.

Chris Milliken, who currently heads Boise Cascade's office products division, will serve as OfficeMax president. The combination of the OfficeMax and Boise Cascade office products operations created the third-largest office products retailer in the nation with combined annual sales of over $8 billion.

The remaining timber and paper manufacturing company will be privately held, headquartered in Boise and named Boise Cascade LLC. The company be headed by W. Thomas Stephens, former president of MacMillan Bloecdel Ltd. (search) , a Canadian forest products company acquired in 1999 by Weyerhaeuser Co. (WY).

"In many respects, the transaction represents a return to Boise Cascade's traditional roots as a leader in the paper and forest products industry," Stephens said in a statement.

In 1990, paper and wood products sales contributed $3.2 billion of $4.4 billion in total revenues. During the spring quarter this year, following the acquisition of OfficeMax, paper and wood products accounted for $1.5 billion of $3.5 billion in quarterly revenue.

Boise Cascade will sell off 22 wood products facilities in the United States, Canada and Brazil, 27 wholesale building distribution centers in the United States, ownership or control of more than 2.3 million acres of timber, five pulp and paper mills, two paper converting plants, six distribution centers and five corrugated container plants.

Madison Dearborn Partners has about $8 billion in equity capital under management and has been active in the paper, packaging and forest products sectors. Boise Cascade officials said the company has completed nearly $12 billion in management buyout transactions over the past 10 years.

OfficeMax is retaining an interest in the timberland to secure any additional return for shareholders. Harad said land sales in Idaho that had been put up for bid previously will be finalized. It will also continue being supplied with paper, about 700,000 tons this year, by the new Boise Cascade.

Boise said it will realize up to $3.2 billion in cash from the deal, after a $175 million reinvestment in Boise Cascade LLC and will use two-thirds of that to be used to pay down outstanding debt. He said the debt of the new OfficeMax will be reduced to between $250 million and $300 million.

"At the end of the day, we hope to have between $800 million and $1 billion to return to shareholders, either preferred or common shareholders," Harad said.

A limited number of jobs in Boise will likely be eliminated because of the deal, Harad said, but would not elaborate. The new OfficeMax company has no plans for further consolidation beyond those already planned, he said, mainly closing 26 to 31 of the remaining 56 office product warehouse distribution centers during the next two years.

Last year, Boise Cascade reported $31.2 million in earnings on sales of $8.2 billion.

Boise Cascade stock surged as much as 9 percent on the news, but later gave up its gains. In midday trading on the New York Stock Exchange, Boise shares were doan 18 cents to $32.87.