(LONG) Weyerhaeuser offers $55/share for Willamette

Daniel B. Wheeler dwheeler at ipns.com
Sat Dec 15 14:58:47 EST 2001

>From The Oregonian, Dec. 14, 2001, p B1

Weyerhaeuser sweetens offer
The company in its takeover attempt says it would pay $55 a share for
Willamette's stock, up 10 percent from its previous price

By DYLAN RIVERA, The Oregonian
	Weyerhaeuser on Thursday plunked down another $550 million toward its
offer for Portland-based Willamette Industries, putting the offer
within a range that several pivotal Willamette shareholders said they
	Weyerhaeuser was moving to head off Willamette's attempt to acquire
the building products division of Georgia-Pacific, which had more than
twice Willamette's revenues in 2000. The boards of Willamette and
Georgia-Pacific announced Monday that they would start negotiating a
	Analysts said the offer, coupled with the G-P deal-making, was likely
to push the showdown between timber giants Willamette and Weyerhaeuser
into an endgame.
	Weyerhaeuser, based in Federal Way, Wash., said it would pay $55 a
share for Willamette's stock, up from its previous offer of $50 a
share, and assume about $1.65 billion in debt. The deal would be worth
about $7.6 billion.
	Steven R. Rogel, Weyerhaeuser's chairman and chief executive officer,
said a Georgia-Pacific deal would lower the value of Willamette and
prompt Weyerhaeuser to end its campaign to acquire the company.
	"Our offer is not a negotiating tactic; it represents the absolute
maximum price we are prepared to pay for Willamette," Rogel wrote in a
letter to Willamette's board. "We are a disciplined buyer and will not
overpay for Willamette nor acquire an entity created through the
combination of Willamette and the building products business of
	Willamette responded by saying its board would review the offer ad
make a recommendation to shareholders "in due course."
	The 10 percent increase puts enormous pressure on Willamette,
Oregon's second-largest company. Willamette has been fighting off the
hostile takeover, calling Weyerhaeuser's offers "low-ball" for
slightly more than a year.
	Thursday's offer reached a point that analysts had predicted would be
Weyerhaeuser's highest offer.
	Mark Wilde, a veteran forest products analyst, said the offer
probably will sway all but the most stalwart Willamette loyalists.
	"Eighty to 90 percent of the Willamette shareholders would probably
be perfectly happy right now to get $55 a share in cash and go home
and sit by the Christmas tree and sip some eggnog," said Wilde, with
Deutsche Banc Alex. Brown in New York.

Families warm to offer
	Weyerhaeuser's new offer met with significant support from
shareholders who are descendants of Willamette's founding families.
They are important because family members and employees are estimated
to own about 30 percent of the company's stock and have largely
supported the board.
	Richard M. "Mike" Clark, who controls the estate of his father,
Maurie D. Clark, said Thursday that he would commit the estate's about
2 percent of Willamette's share to Weyerhaeuser. He previously had
told both companies he would commit his shares if Weyerhaeuser offered
$55 a share.
	"I am not a person that changes course midstream, and that's the
position that I had in September," Clark said.
	Maurie D. Clark and his father, Wilson Clark, helped create
Willamette from the assets of several families' companies in 1967.
	Mike Clark said he would not comment on how he and other family
members would vote their individual shares, which total about 1
percent of the stock.
	The family of William Swindells Jr., chairman of Willamette's board,
is thought to vote its shares with the board.
	Sam Wheeler, whose father, Coleman Wheeler, also helped create
Willamette Industries, said he would "be inclined" to sell for $55 a
share. He owns "a substantial number," he said, though less than 5
percent of shares.
	"It's not a high price, but it's in the realm of possibility," he
	Regardless of whether shareholders like the price, the decision is up
to the Willamette board. The board can block any sale of the company
by invoking such maneuvers as its "poison pill" provision, which would
make a sale of all shares financially unfeasible.
	The board is not without sympathy for Weyerhaeuser. In June,
shareholders elected three candidates Weyerhaeuser proposed for the
nine-member Willamette board. Many expect Weyerhaeuser to put three
more on next summer.
	In high-volume trading Thursday, New York arbitrageurs and money
managers were guessing about Willamette's next move, hoping to make
millions of dollars on small stock-price fluctuations.
	The view was different in Albany, where Willamette is the top
employer and many residents worry that a Weyerhaeuser takeover would
result in layoffs.
	Beatrice "Bea" Decker, whose father, Ralph King, was an attorney for
Willamette for many years, said she wants the company to stay
independent. She never thought $50 was a good price for her shares,
and she's looking to the Swindells family for direction, she said.
	"I'm going to stick with the family on it; I'll do what they do,"
said Decker, 75. "It's very upsetting because they're paying cash, and
all I end up doing is paying a lot of taxes. It's the big boys back
East that are trying to make money on the stock."

Battle could go on
	Analysts who have watched the two companies spar for nearly 13 months
have come to expect Willamette to be reluctant.
	"Willamette has indeed surprised rational investors with their
response to a very attractive opening offer," said Mark Connelly, an
analyst with Credit Suisse First Boston in New York.
	"They surprised us again by suggesting a highly risky combination
with G-P assets. Can they surprise us again? Yes, but (Weyerhaeuser
CEO) Rogel should be taken seriously when he says, 'This is it.'"
	Lise Shonfield, an analyst with J.P. Morgan in New York, said
Willamette's board might hurry to consummate the deal with
Georgia-Pacific, extending the Willamette-Weyerhaeuser battle.
	"I think it's got further to run, and the key is if Willamette
doesn't want this, 'How soon can they get a deal done with
Georgia-Pacific?'" Shonfield said.
	New York Stock Exchange officials halted trading of shares of all
three companies for the offer announcement about 9 a.m., Pacific
Standard Time.
	The news led traders to buy and sell about 14.48 million shares of
Willamette, more than 16 times average trading of 884,818 shares.
	Willamette shares went up to $50, closing at $48.75, up $3.25. Such a
modest response shows that investors think there's a great risk that
Willamette won't take the offer, Shonfield said.
	"It's definitely not a done deal," she says, "though it's a very
difficult offer to refuse."
	Georgia-Pacific shares closed at $28.30, up 45 cents, and
Weyerhaeuser shares closed at $52.50, down 36 cents.

	Aug. 11, 1998: Weyerhaeuser makes a confidential stock-for-stock
offer for Willamette, offering 0.94 Weyerhaeuser shares for each
Willamette share. The offer also allowed for joint management teams
and seats on the Weyerhaeuser board for Willamette members.
	Aug. 28, 2000: Weyerhaeuser makes a confidential stock and cash
offer. Under this offer, Weyerhaeuser would pay $43.24 a share in cash
for half of Willamette's shares and offer 0.94 Weyerhaeuser shares for
the remaining Willamette shares. Willamette chief executive Duane C.
McDougall would join the senior management team, but no board seats
would be reserved for Willamette.
	Nov. 6, 2000: Weyerhaeuser makes a confidential $48-a-share offer,
with no combined management team or board, but leaves the door open to
retaining some Willamette managers.
	Nov. 13, 2000: Weyerhaeuser goes public with its offer of $48 a share
- $5.3 billion - for Willamette Industries, plus assumption of $1.7
billion in its debt. Willamette says it is not for sale.
	Nov. 29, 2000: Weyerhaeuser takes its offer directly to Willamette
shareholders, launching a hostile takeover.
	May 7, 2001: Weyerhaeuser raises its offer by $218 million, to $50 a
share. Willamette calls it a "low-ball."
	Oct. 11, 2001: Willamette's board offers to start discussions about a
merger if Weyerhaeuser makes a written offer within five days "in the
high $50s" per share. Willamette officials said the company was worth
at least $60 a share. Weyerhaeuser rejected the offer within a few
hours of the announcement.
	Dec. 13, 2001: Weyerhaeuser raises its offer to $55 a share.

Posted as a courtesy by
Daniel B. Wheeler

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