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Weyerhaeuser sweetens bid
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May 7, 2001: 5:13 p.m. ET
Timber firm raises takeover offer to $5.5B, or $50 a share, push negotiations
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NEW YORK (CNNfn) - Timber company Weyerhaeuser Co. on Monday raised its hostile takeover offer for Willamette Industries Inc. to about $5.5 billion, or $50 a share, in an attempt to force the reluctant paper products maker to negotiate.
Tacoma, Wash.-based Weyerhaeuser (WY: down $0.75 to $56.35, Research, Estimates) sweetened its offer by $2 a share and urged Willamette to negotiate a deal. Weyerhaeuser Chairman Steven Rogel made the offer in a letter sent to Willamette Chairman William Swindells.
The modified deal represents a 44 percent premium to Willamette's share price before Weyerhaeuser's bid was announced last November.
"Weyerhaeuser is as committed as ever to the proposed transaction, even if that means replacing a majority of your board with directors who respect the wishes of Willamette shareholders," Rogel said in the letter.
Weyerhaeuser vowed a proxy fight at Willamette's June 7 annual meeting where it will seek to place three directors on the firm's board.
"If these nominees are elected to your board at this annual meeting and Willamette continues to refuse to negotiate, we intend, if necessary, to nominate a slate of directors for election at Willamette's 2002 annual meeting," the letter said.
A sweeter bid
Weyerhaeuser's increased offer is just another step in its hostile takeover bid for Willamette, said analyst Steven Chercover, of D.A. Davidson.
"I wasn't surprised by this," Chercover said. "This keeps Willamette's fist to the fire."
Weyerhaeuser first made a $5.24 billion bid for Willamette last November but has consistently been rebuffed. On Apr. 12, Willamette reiterated its intent to remain independent, maintaining that it had not heard anything from Weyerhaeuser to prompt the start of friendly negotiations.
At that time, Willamette President and CEO Duane McDougall said his company was "adamantly opposed" to Weyerhaeuser's offer. Weyerhaeuser's cash tender bid for Portland, Ore.-based Willamette (WLL: down $0.18 to $48.47, Research, Estimates) is due to expire May 18.
The reluctant paper company said Monday it would review the modified offer but urged shareholders not to tender any shares to Weyerhaeuser pending its review. "We are increasing our offer today because we want to negotiate a definite agreement promptly," Rogel said.
Weyerhaeuser's sweetened bid will compel Willamette to meet it at the negotiation table, Chercover said. No white knight has emerged to trump Weyerhaeuser's offer since its bid was first announced last November.
"I think Willamette hates Weyerhaeuser," Chercover said. "But that doesn't fit into their fiduciary duty to shareholders. There is nothing stopping Willamette from soliciting another bid." 
- from staff and wire reports
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