Paper Chase Ends Happily

PORTLAND, OR—January 28 officially ended a 14-month saga as Willamette Industries, based here, signed a definitive merger agreement with Weyerhaeuser, of Federal Way, WA.

The agreement calls for $6.1 billion in cash, or $55.50 per share, including the assumption of $1.7 billion of Willamette debt. At $19 billion in combined sales, the deal creates one of the largest companies in the paper industry.

The acquisition is being financed through commitments provided by Morgan Stanley and J.P. Morgan.

The winning bid in the long-running hostile takeover attempt, which at times was reminiscent of the Hatfields and the McCoys, sent Willamette shares skyrocketing from the $47 range to just under the $55.50 mark. Weyerhaeuser was trading at $57.86 as of January 31.

Steven R. Rogel, chairman, president and CEO of Weyerhaeuser and a former Willamette executive who, during the last year publicly clashed with Willamette CEO Duane McDougall over both the value of Willamette and its willingness to negotiate, believes the acquisition will create the premier forest products company.

“A combination of Willamette and Weyerhaeuser creates a company with high-quality management and assets focused in complementary products,” Rogel states. “We will benefit from sharing the best practices of two industry leaders.

“I have had the privilege of working with employees of both companies and I am confident that we will be able to successfully integrate and build a stronger, more efficient company,” he adds.

William Swindells, chairman of the Willamette board, adds that “after careful consideration of our strategic alternatives, our board has decided that accepting Weyerhaeuser’s revised offer is in the best interests of our shareholders. We believe Willamette’s track record of delivering shareholder value is second to none in the industry, largely due to the tremendous dedication of our employees. We expect that they will have much to contribute to Weyerhaeuser’s future success.”