Weyerhaeuser claims support is strong for its takeover bid

Associated Press

PORTLAND, Ore. — Shares of Willamette Industries Inc. rose nearly 7 percent Thursday after timber industry rival Weyerhaeuser Co. reported strong support for its $6 billion hostile takeover bid.

Weyerhaeuser, based in Federal Way, said Thursday 70 million shares of Willamette — about 64 percent of its stock — remained tendered and had not been withdrawn by the deadline that expired Thursday.

Weyerhaeuser also extended its $55 a share offer until Feb. 27.

Willamette spokeswoman Jackie Lang said there was no change in the decision last week to reject the latest Weyerhaeuser offer, and the company still is pursuing talks with Georgia-Pacific to buy its building products division.

"Our focus is still on Georgia-Pacific," Lang said. "Negotiations have been positive and productive, and they’re all day every day for the immediate future."

But Weyerhaeuser and analysts said the tender offer by Willamette shareholders showed solid interest in a deal that would end a century-old rivalry with a merger.

"We are gratified to receive this level of support from the Willamette shareholders," said Weyerhaeuser chairman Steven Rogel, who has been trying to buy Willamette ever since he left the Portland-based wood products company to take over Weyerhaeuser late in 1997.

"I think it was a very strong endorsement," added Steve Chercover, an analyst for D.A. Davidson in Portland. "I’m sure that Willamette management is disappointed that the tender offer was so high."

Willamette chairman William Swindells Jr., grandson of a Willamette co-founder, last Thursday declined what Rogel had termed the final offer of $55 a share for Willamette, again labeling it "inadequate."

Rogel and Swindells have been haggling over the price since Weyerhaeuser announced the takeover bid in November 2000, occasionally trading letters accusing the other of refusing to bargain and each claiming they have the best interests of shareholders in mind.

Swindells, meanwhile, has been courting Georgia-Pacific with talk of buying its troubled building products division — a deal that Weyerhaeuser says would end its takeover bid.

Analysts have questioned the move, saying Willamette lacks retail experience and the Georgia-Pacific division may face asbestos lawsuits involving discontinued products.

Chercover said Willamette’s board remains convinced the company would benefit from a deal with Atlanta-based Georgia-Pacific, and that it can insulate itself from any asbestos liability.

"In my last conversation with Willamette management, they seemed extremely confident," Chercover said.

Rogel said the fact that two-thirds of Willamette shares are still tendered shows that "Willamette shareholders have demonstrated their clear preference to complete a transaction with Weyerhaeuser and not to enter into a transaction with Georgia-Pacific."

The deal also has been questioned by Richard Clark, the first member of Willamette’s founding families to support the Weyerhaeuser deal.

"The only folks I’ve talked to who think the Georgia-Pacific deal is a good deal are Willamette officers," Clark said.

Despite the strong show of Willamette shareholder support, analysts say Weyerhaeuser is unlikely to make a move until it can remove any poison pill defenses that would make a takeover prohibitively expensive.

Weyerhaeuser likely will have its chance at the next Willamette annual shareholder meeting, expected in June, when Weyerhaeuser plans to nominate three supporters to take control of the Willamette board of directors and remove any poison pill.

Weyerhaeuser won three of the nine board seats last June at the annual meeting, when Swindells promised to do everything in his power to keep Willamette independent.