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Willamette battle looms
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May 31, 2001: 5:53 p.m. ET
Weyerhaeuser's $5.5B unsolicited offer for Willamette becomes war of words
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NEW YORK (CNNfn) - The war of words between Willamette Industries and Weyerhaeuser Co., which is trying to buy Willamette, raged on Thursday with the paper products company making additional accusations.
Portland, Ore.-based Willamette maintained that it is open to considering "serious" offers for the company.
However, Weyerhaeuser's continued hostile attempts to buy Willamette are doing significant damage to Weyerhaeuser's reputation among customers, suppliers and employees, Willamette CEO Duane McDougall and Chairman William Swindells said in a letter to Weyerhaeuser's board.
"Your refusal to offer what we regard as adequate value for Willamette continues to suggest to us that you have no intention of ever paying a full and fair price," McDougall and Swindells said.
Federal Way, Wash.-based Weyerhaeuser (WY: up $0.19 to $57.21, Research, Estimates) has been trying to buy Willamette since last year but has been rejected each time.
Timber company Weyerhaeuser first made a $48 a share bid, or $5.24 billion for Portland, Ore.-based Willamette last November and then raised the offer earlier this month, to $50 a share, or $5.5 billion. Weyerhaeuser has even indicated that it would be open to raising its already sweetened $5.5 billion offer.
Acquiring Willamette (WLL: up $0.38 to $50.23, Research, Estimates) would rank Weyerhauser as the world's third-largest paper and forestry products producer behind International Paper and Georgia-Pacific with annual revenues in excess of $16 billion. Willamette has 105 plants located in the U.S., France, Ireland and Mexico and owns 1.7 million acres of forestland in the U.S.
The Standoff
The continued verbal volleys are in preparation for Willamette's June 7 annual meeting where Weyerhaeuser will attempt to secure three board seats. The timber company has urged Willamette shareholders to vote for their slate but if it fails to get the seats, Weyerhaeuser will pull out of the running for Willamette.
Weyerhaeuser on Wednesday accused Willamette of making "false and outrageous" statements about its offer. Willamette responded Thursday by saying Weyerhaeuser's offer was not compelling to its shareholders.
Weyerhaeuser's current $5.5 billion offer would be 30 percent accretive to Weyerhaeuser cash earnings which Willamette thinks should go to its shareholders.
Willamette's shares have gained nearly 40 percent since Weyerhaeuser announced its initial offer last November. Weyerhaeuser's shares have also surged 34 percent since November and comparable companies have risen nearly 29 percent. However, Weyerhaeuser's sweetened $5.5 billion offer is only a 4 percent increase from the original bid, which Willamette made abundantly clear "was not even in the ballpark."
"We believe Willamette could be trading above $50 today in the absence of your hostile offer," Willamette's McDougall said.
Weyerhaeuser was unavailable for comment. 
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