representatives from Agrium sat down on the opposite side of the table, facing Packebush. The teams from Agrium and Koch were joined by Farmland’s lawyers and bankers, who led the auction.
Agrium was the largest publicly traded nitrogen fertilizer producer in the United States, with about $2.1 billion in annual sales. Agrium was worth billions, so it had the money to spend on Farmland’s plants. But more importantly, buying the plants would have been a good strategic fit for Agrium—it was already the industry leader. Koch was a nobody in the nitrogen business, having been forced to close down its plant in Louisiana when gas prices spiked.
But Agrium had reason to be a hesitant bidder that day. The glossy photos couldn’t hide the fact that Farmland’s fertilizer plants were losing about $50 million a year. It seemed possible that Agrium was at the table only because Koch Industries had arrived. Koch and Farmland had already announced a preemptive agreement for Koch to buy the facilities. Agrium might very well have showed up just to nip a competitor in the bud.
Koch had a key advantage over Agrium. Koch’s shareholders could fit around a small kitchen table. The Agrium team had to answer to a multitudinous crowd of shareholders on Wall Street. If they made the wrong decision, Agrium’s stock price could fall within minutes. Farmland’s plants would likely drag down Agrium’s profits for years to come. Charles Koch had come to peace with this fact. Agrium’s shareholders had not.
Before the auction, Koch had offered Farmland around $270 million. Agrium forced Koch to sweeten its bid to just more than $290 million. But Agrium wouldn’t go further than that. After a relatively short and desultory auction, Packebush and his team stood up from the table as victors. The glossy photos of the fertilizer plants were taken down and tossed in a dumpster. Eventually the mural in Farmland’s lobby was disassembled and shipped off to the National Agricultural Center and Hall of Fame, a tourist attraction in Bonner Springs, Kansas. The mural sat behind a velvet rope and was scrutinized as a relic of the long-forgotten past.
* * *
After it acquired Farmland’s fertilizer plants, Koch Nitrogen was renamed Koch Fertilizer and moved to a huge office on the fourth floor of Koch’s headquarters tower, just above Charles Koch’s office. Koch instantly started pouring money into the plants. Over the next ten years, it spent roughly $500 million to outfit the plants with new technology while streamlining production. Koch Fertilizer abandoned the co-op sales model and began trading supplies to the highest bidder (rather than giving preference to the farmer-owners) throughout the Corn Belt.
Koch installed a team of fertilizer traders in the office, including Melissa Beckett, the star trader who’d once specialized in trading megawatt-hours. The traders bought and sold supplies around the globe, learning more about fertilizer markets each day. Within a few years, Koch Fertilizer built a global distribution network. Koch founded a new company, called Koch Energy Services, which bought and sold natural gas supplies to keep the fertilizer plants stocked. The energy traders sat on the fourth floor, just next to their counterparts trading fertilizer.
Steve Packebush was named CEO of Koch Fertilizer in 2003. Being part of the Koch Nitrogen team had paid off nicely. He lived in a very large house, by Wichita standards, and ran a division that would become one of Koch’s largest and most profitable. It wasn’t bad for a Kansas farm kid with a degree from K-State.
Shortly after the bankruptcy auction, a former Farmland employee approached Packebush. He said he had something that Packebush might want. It was one of the glossy poster boards that Farmland printed up for the auction. The Farmland employee had fished it out of the dumpster.
Many years later, that poster hung on the wall in Packebush’s office. He could gaze at it while the traders outside his door haggled for natural gas supplies and bargained over the price of nitrogen in China. As it turned out, the poster, and the fertilizer plants, would be one of the smaller trophies Koch Industries acquired.
CHAPTER 15
* * *
Seizing Georgia-Pacific
(2003–2006)
This time the delegation from Koch Industries was dispatched to Atlanta. They arrived at Georgia-Pacific headquarters, one of the largest, most opulent buildings downtown. The Georgia-Pacific tower, at 133 Peachtree Street, rises knifelike into the sky, its sides encased in gleaming red granite that shines in the morning sun. The building projects an image of authority, ego, and power. It would have seemed preposterous, at that