Weyerhaeuser Gets Hostile With Willamette
PORTLAND—Two weeks after its board of directors rejected a $5.4 billion bid to sell all its 112.5 million shares to rival paper and wood products manufacturer Weyerhaeuser, Willamette Industries faced a hostile takeover attempt.
Weyerhaeuser Chairman Steven Rogel presented Willamette shareholders an unsolicited offer of $48 per share. Willamette shareholders had until January 4 to accept the offer.
"(The offer) provides substantial value to Willamette shareholders at a premium well beyond what Willamette could achieve alone, now or later," Rogel told The Associated Press.
Willamette is expected to urge stockholders not to accept the offer, which also includes Weyerhaeuser assuming roughly $1.7 billion in Willamette debt.
The two companies, longstanding rivals, have quite a history. Rogel, for instance, left Willamette at the end of 1997 to take over at Federal Way, WA-based Weyerhaeuser and has been attempting to purchase his former company ever since.
The Associated Press quoted a number of sources who believe Willamette's board of directors is holding out for a better offer.
Should Weyerhaeuser ultimately prevail in its attempt to acquire Willamette, it would create the second largest forest products company, behind only International Paper. The union would also allow the combined company to become more of a worldwide force, matching it against foreign counterparts already beefed up through consolidation.
A marriage of the companies may address some of the industry concerns related to excess capacity. Willamette offered an unpleasant surprise to rivals in early 2000 when it announced plans to build a machine that would add capacity.
"We all know we need to reduce this industry's capacity," Mark Connelly, analyst at CS First Boston, told Reuters. "Getting rid of companies like Willamette will start to eliminate that problem."
