Weyerhaeuser may go shopping again after digesting Willamette, CEO says

Associated Press

SEATTLE — Fresh from a multibillion-dollar acquisition of rival Willamette Industries, Weyerhaeuser chief executive Steve Rogel said his timber giant isn’t shopping for any other companies — for now.

But when the company pays back some of the nearly $7 billion it borrowed to buy Willamette, the hunt for more acquisitions may begin again.

"We have to get the debt down. Then we can think about growing," he said Wednesday during an address at his alma mater, the University of Washington business school.

Likely targets: international operations that are involved in Weyerhaeuser’s core timber businesses.

The combined company is already among the nation’s largest timber operations, with nearly 63,000 workers and almost 40 million acres of forestland.

Consolidation is a fact of life in the timber industry, Rogel said — a theory echoed by analysts and competitors as the industry struggles with soft demand, increased environmental regulation and the general economic downturn.

Making sure those consolidations are handled smoothly is one of the few ways to keep from being gobbled up yourself, Rogel added.

"The best defense is to manage your company extremely well and see to it that shareholders get rewarded," he said. "If not, you’re toast."

That was Rogel’s plan when he left Portland, Ore.-based Willamette in 1997 to join rival Weyerhaeuser.

Then, he said, Federal Way-based Weyerhaeuser had gone from being a straight timber company to more of a holding company with units selling everything from pet supplies to hand lotion. It was "an elegant, if somewhat out of time, grandfather clock," he said.

Willamette, by contrast, was running like a Swiss watch. he said.

Rogel set out to transform Weyerhaeuser into a lean, efficient company focused mostly on its timber industry roots — a plan he said has saved the company $100 million a year.

He was coy about whether he always wanted to acquire his former employer — he said Wednesday each company had considered buying the other at some point — but it’s clear the acquisition soon became key to his long-term plan.

Willamette resisted the takeover bid for months, forcing Weyerhaeuser to "bid against itself" until Willamette’s board finally agreed to the offer in a surprising turnaround last month.

"You have to have patience," Rogel said of the hostile takeover effort.

With the acquisition formally approved, he said the companies are already seeing some ways to save money and work together, and insisted they had put the acrimony of the takeover battle behind them.

Rogel has said the two companies could save as much as $300 million through the acquisition, though he conceded some of those savings will come from layoffs and closing certain operations. But he said Willamette employees will work with Weyerhaeuser to decide how best to consolidate.

"We can learn from Willamette," he said. "Willamette can learn from us."