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Willamette disappoints Weyerhaeuser
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January 4, 2002: 5:30 p.m. ET
But Weyerhaeuser said it's committed to a possible merger with its rival.
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NEW YORK (CNN/Money) - Spurned suitor Weyerhaeuser Co. on Friday pledged to try and wrest control of rival Willamette Industries Inc.'s board, saying it had no intention of raising its rejected $6 billion hostile takeover offer for its rival timber company.
Weyerhaeuser (WY: up $1.53 to $55.52, Research, Estimates) said it was disappointed with Willamette's decision to reject its sweetened $55 per share, all-cash bid, noting it continues to believe the offer represents a fair price for the Portland, Oregon-based company.
"We remain committed to this transaction," said Stephen Rogel, CEO of Weyerhaeuser. "Willamette's refusal to negotiate a definitive merger agreement now will only serve to impair the value to be received by Willamette shareholders."
As promised, Weyerhaeuser said it would not raise its bid any higher. Instead, the company vowed to take its case directly to Willamette's shareholders and duplicate its success of last year, when it got three dissident members elected to Willamette's nine-member board.
Willamette said that after evaluating its strategic alternatives, it has decided to continue talks with Georgia-Pacific Corp. about combining the building materials businesses.
Its board members also urged shareholders not to tender any shares to timber rival Weyerhaeuser, which has been trying for more than a year to take over Willamette.
Weyerhaeuser first offered to buy the smaller paper products maker in November 2000 for $48 per Willamette share.
Weyerhaeuser then raised its bid to $50 per share, or $5.5 billion, over the summer and then again in early December to $55 per share, only to see Willamette turn to a plan to buy the Georgia-Pacific unit.
"During our discussion with Weyerhaeuser and its advisors, we made a good faith effort at establishing a constructive dialogue and provided information regarding synergies, which we estimate to be in excess of $400 million," Willamette Chairman William Swindells said.
"However, it became clear to us that Weyerhaeuser would not consider our new information and were not willing to increase their offer, which we continue to believe is inadequate," Swindells added.
Investors dumped Willamette (WLL: down $4.21 to $45.75, Research, Estimates) shares after the company backed away from the Weyerhaeuser offer.
Willamette's rejection comes just two days after Weyerhaeuser said a more detailed review of Willamette's books provided no additional impetus for the Federal Way, Wash.-based company to raise its all-cash offer of $55 per Willamette share.
Specifically, Weyerhaeuser said, for various reasons the information provided by Willamette's advisers did not change its original assumption that a merger would generate cost and revenue synergies of more than $300 million.
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When it raised its offer to $55 a share in December, Weyerhaeuser said that was its "best and final" offer and it would withdraw any bid if Willamette entered an agreement to purchase the Georgia-Pacific unit.
Willamette has been in steady negotiations with Georgia-Pacific since first announcing it would explore buying the building products unit, which had sales of $7.9 billion in 2000, 68 percent higher than Willamette's revenue of $4.7 billion. 
-- from staff and wire reports
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