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Weyerhaeuser Wins Round One of Battle

September 2001
PORTLAND, OR—The barbarians may be at the gate, but integrated forest products giant Willamette doesn't appear ready to throw in the towel.

Still, Federal Way, WA-based Weyerhaeuser, repeatedly rebuffed by Willamette during this captivating hostile takeover attempt, made significant inroads toward its goal when the results of the June 7 board of directors election became official.

Weyerhaeuser's slate of three—Thomas Luthy, Robert Lane and Evelyn Cruz Sroufe—nudged out the Willamette slate of Kenneth Hergenhan, Duane McDougall (president and CEO) and Robert Smelick for the three positions on the nine-member board.

The Weyerhaeuser slate collected 49.16 million shares, or 44.85 percent of the total shares outstanding, compared to 46.91 million shares, or 42.80 of the total shares outstanding. Willamette has approximately 109.6 million shares outstanding.

While McDougall admits to being disappointed that the company's slate of nominees was not elected, he chose to look forward and concentrate on the business at hand.

"Our recent solid financial performance, in a market where many of our competitors are losing money, once again demonstrates our ability to deliver superior value on behalf of our shareholders," McDougall said in a statement. "We will continue to focus on growing our business, and we look forward to building upon our track record as a leading franchise in the industry."

Steven Rogel, chairman, president and CEO of Weyerhaeuser, believes the election outcome sends a strong message to Willamette. "Willamette's shareholders, the owners of the company, have elected the Weyerhaeuser nominees to encourage Willamette to enter into negotiations with Weyerhaeuser immediately in order to maximize the value of their investment," Rogel said in a release.

"We remain focused on creating the premier forest products company headquartered in the Pacific Northwest while generating value for both Weyerhaeuser and Willamette shareholders," he added.

In garnering the positions on the board, Weyerhaeuser is hopeful of coercing its longtime industry rival to the negotiating table.

Willamette's new board was scheduled to meet in August, which coincides with the deadline of the $5.5 billion hostile takeover attempt, although the offer is likely to be extended, which has been the case several times previously. While the topic is likely to be brought up at the first meeting, many analysts believe Willamette is waiting for Weyerhaeuser to improve upon its $50 a share offer. Some observers have suggested that the final price will likely fall in the $55 to $60 range.
 

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