Paper War Catching Fire
* Weyerhaeuser gained momentum when two of the leading proxy advisor firms, Proxy Monitor and Institutional Shareholder Services (ISS), recommended that Willamette shareholders vote for the Weyerhaeuser nominees. "One has to wonder whether the Willamette board would accept ANY offer from Weyerhaeuser, or any other suitor for that matter," Proxy Monitor said in its May 24 report.
The report also alluded to Willamette's agreement with its financial advisor, Goldman Sachs & Co. Weyerhaeuser, in a letter to Willamette shareholders dated May 25, said, "Ask yourself why Willamette is paying Goldman Sachs $30 million of your money to prevent a deal with Weyerhaeuser."
The companies exchanged letters to their respective boards. Weyerhaeuser wrote, "Despite the fact that the Willamette board appears to believe that Willamette is worth more than its shares have ever achieved in the market, they have never disclosed at what price, if any, they would consider a sale transaction."
In response, Willamette's Duane C. McDougall, CEO, and William Swindells, chairman, raised the following points: "We believe Weyerhaeuser's current offer would be at least 30 percent accretive to Weyerhaeuser's cash earnings on a conservative basis—value that, in our view, rightfully belongs to Willamette shareholders; while stock prices for the relevant Industry Composite of comparable companies are up 29 percent and Weyerhaeuser is up 34 percent since November, all you have shown our shareholders is a 4 percent increase to an offer which we made abundantly clear we believed was not even 'in the ballpark' ... we believe Willamette could be trading above $50 today in the absence of your hostile offer."
McDougall then issued a statement critical of Proxy Monitor's findings. "Proxy Monitor appears to have absorbed Weyerhaeuser's rhetoric, but ignores the hard economic facts behind our board's carefully considered actions. Our board has never believed that Weyerhaeuser is willing to pay what we believe is a fair value for Willamette. While saying publicly that they want to do a deal quickly and hinting that they may offer more, they tell us privately that nothing has changed and they have nothing new to say. That's why we have not been willing to sit down with them."