(Long) Willamette/Weyerhaeuser hostile takeover bid

Daniel B. Wheeler dwheeler at ipns.com
Fri Oct 19 01:05:55 EST 2001

>From Portland Tribune, Oct. 16, 2001, p D2 (Business)

Timber comapnies' impasse could end

Harry Lenhart, On Finance
	While everyone's attention has understandably been focused elsewhere,
the war of nerves over Weyerhaeuser Co.'s hostile bid to take control
of Willamette Industries, Portland's only Fortune 500 headquarters
company, has intensified.
	Which is why midnight Wednesday, Eastern time, when Weyerhaeuser's
$50 per share tender offer expires, looms as a more critical deadline
than anyone anticipated six weeks ago.
	After all, the Federal Way, Wash.-based forest products giant has
extneded its deadline at least six times since its $48-per-share
opening bid last November.
	But this time may be different.
	Wall Street analysts, who once thought this high-stakes corporate
face-off would drag on well into next year, say it has suddenly
lurched into the end game.
	One forest products industry analyst, Mark Connelly of Credit Suisse
First Boston, even goes so far as to say, "It's over!" He put out a
report to instutitional investors last week titled "Capitulation, sort
	By Wall Street's lights, Willamette's management - in a telling
exchange of letters last week with Weyerhaeuser - blinked.
	That was probably inevitable after the early Setpember break in the
united front put up against the Weyerhaeuser takeover by the company's
founding fmailies - who own about one-third of the company's voting
shares between them.
	On Sept. 7, Richard Clark, scion of one of Willamette's founding
families who controls more than 3 percent of the company's shares,
dispatched a letter ot the heads of the two warring wood products
	In it, he said he would tender the 3.4 million Willamette shares he
controls to Weyerhaeuser for $55 a share - not that far from what
Weyerhaeuser is likely to settle on. Clark's sister, who did not sign
the letter, controls another 4.7 million shares, or 4.3 percent.
	William Swindells, Willamette's chairman , and Duane McDougall, its
CEO, have adamantly insisted that their company was not for sale. But
last Thursday they sent off a letter to Steve Rogel, Weyerhaeuser's
chairman, president and CEO, saying they wanted to "put an end to the
unproductive an costly stalemate."
	They said that despite the conomic downtown and the events of Sept.
11, Willamette was worth around $60 per share and concluded that "if
you make a written offers in the high $50s, we will agree to sit down
for discussions..."
	They gave Rogel three business days to take it or leave it. His
response came within hours. He said testily that "we are not going to
increase our price merely to begin discussions that, based on your
letter, would not be productive."

Is it over?
	"They're grasping," Connelly said of the Wilalmette duo's letter.
"They're got egg on their face because of the Clark letter, and
they're clearly trying to keep the (founding) families from fraturing
by convincing them they're working for them. We know they're not
working for us, the institiontal investors.
	"If they're so convinced Willamette is worth $60 a share, then bid;
take the company private," Connelly said. Some anaysts believe that
Willamette is seriously considering such an option if it can line up
the financing.
	If more than half of Willamette's shareholders say in Wednesday's
tally that they're willing to accept $50, Connelly said, "Then it's
pretty clear this company is going away."
	Not becuase of the tally itself - which amounts to little more than a
straw poll on shareholder sentiments since Weyerhaeuser can't accept
the tenders as long as Willamette's poison pill defense is in place -
but because Willamette's board would be under more pressure to
eliminate the poison pill and settle.
	"A lot of Wall Street arbitrage houses have said Rogel should just
let (the $50 offer) expire, tell 'em to go to hell and come back in
another month with a lower offer," Connelly said.
	Willamette's stock, which closed Friday at $45.65 per share, would
drop like a rock if Rogel played that kind of hardball, perhaps by $10
a share, some analysts suggested.
	Connelly doubts that Rogel would do that because Weyerhaeuser's CEO
has one eye cocked on employee morale at Willamette - and the
attitudes the company's workers would bring with them when and if they
become a part of the Weyerhaeuser fold.
	"There are a lot of employees whose names are not Swindells and
McDougall who own stock in this company, and those employees are very
important to Steve Rogel. He needs them to help make this deal a
success." Connelly said.

Posted as a courtesy by
Daniel B. Wheeler

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