Paper Product Firms in $5.8-Billion Merger

James River Corp. and Fort Howard Corp. said Monday they agreed to a $5.8-billion merger that would create one of the nation’s largest makers of tissues, napkins and other paper products.

The merged company, to be called Fort James Corp., would have annual sales of about $7 billion with brands such as Quilted Northern bathroom tissue.

Under the deal, Fort Howard shareholders would get 1.375 shares of Fort James stock for each Fort Howard share, equal to $42.45 a share based on Friday’s closing prices. Including assumption of Fort Howard debt, the deal would be worth $5.8 billion.

James River shares rose $1.75 to close at $32.625 on the New York Stock Exchange, and Fort Howard rose $6 to close at $42.50 on Nasdaq.

James River, based in Richmond, Va., had net earnings of $157.3 million, or $1.15 a share, in 1996. Fort Howard, based in Green Bay, Wis., earned $162.6 million, or $2.32 a share.