Willamette Rejects Weyerhaeuser Offer, Says They are Low Balling
Press release from the issuing company
PORTLAND, ORE. – May 9, 2001 – Willamette Industries (NYSE:WLL) today announced that its Board of Directors has unanimously voted to reject Weyerhaeuser Company’s (NYSE:WY) revised $50 per share offer as inadequate and not in the best interests of Willamette shareholders. The Board is strongly recommending that shareholders not tender their shares and withdraw any shares that they may have previously tendered.
Willamette also announced that its Board sent the following letter to Weyerhaeuser’s Board informing them of its unanimous recommendation:
May 9, 2001
Dear Weyerhaeuser Board Member:
After careful consideration, the Board of Willamette Industries has unanimously rejected your amended offer to acquire Willamette for $50 per share, and has recommended that shareholders not tender their shares and withdraw any shares they may have previously tendered.
As we have said many times, we will not negotiate at what we regard as bargain basement prices and it is not our strategy to sell the company. Put simply, we have concluded that your latest offer does not come close to accurately reflecting the significant value inherent in what we believe is the premier franchise in the forest products industry.
Our amended 14D-9, filed today with the Securities and Exchange Commission, details the factors the Board considered in rejecting your offer, but we feel we must address directly some of the rhetoric contained in your recent letters.
* Your comparison of your latest offer with our share price in November 2000 is disingenuous. Since November 10, the composite of paper and forest products company stocks (the "Industry Composite"), which we believe most accurately reflects our business mix, has appreciated by 28% and Weyerhaeuser has risen 33%. Since that time, Willamette has outperformed both the Industry Composite and Weyerhaeuser on most key financial metrics. The strong performance of industry stock prices since November vindicates our decision to reject your unsolicited offer at that time and again today.
If Willamette were to have simply tracked Weyerhaeuser’s stock price increase since November, we believe Willamette could now be trading at about $45 on an unaffected basis. This would mean that Weyerhaeuser’s purported "premium", even after your paltry $2 increase, would be just 10%.
* Based on 2002 IBES estimates, your $50 per share offer values Willamette at a P/E ratio of 13.7x, a discount to the Industry Composite median (16.3x) and slightly above Weyerhaeuser’s (13.4x). This suggests an unaffected Willamette trading price that might be higher than your revised offer, thereby implying that your amended offer represents a discount or "negative premium."
The fact is your $50 proposal would be highly accretive to Weyerhaeuser. While your offer might be "compelling" for your shareholders, it denies our shareholders value that is rightfully theirs.
Finally, in your letter, you reference what you believe to be "in the interests of all of Willamette’s constituencies." It is difficult for us to imagine how you could have missed the very negative reaction our employees, communities and customers have expressed to Weyerhaeuser’s actions. Indeed, significant customers have demanded contracts that could terminate in the event of a hostile takeover. By alienating all of these constituencies you have underscored just how difficult it would be to successfully integrate our businesses.
Willamette is as committed as ever to opposing your proposed hostile takeover for as long as we determine that it is not in the best interests of our shareholders, even if that requires a multi-year fight.
Our sole responsibility is to do what’s right for Willamette’s shareholders and other constituencies and we are determined to fulfill this mission
Winslow H. Buxton
Stuart J. Shelk, Jr.
Gerard K. Drummond
Robert M. Smelick
Kenneth W. Hergenhan
Michael G. Thorne
G. Joseph Prendergast
Benjamin R. Whiteley
Willamette Industries is an integrated forest products company with 105 plants, located in the U.S., France, Ireland and Mexico. The company owns 1.7 million acres of forestland in the U.S. and manages it sustainably to produce building materials, composite wood panels, fine paper, office paper products, corrugated packaging and grocery bags.
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