PORTLAND, Ore. – After spending more than a year fending off a hostile takeover by rival Weyerhaeuser Co., Willamette Industries has rejected what Weyerhaeuser Chairman Steve Rogel said was the absolutely, positively, no-question-about-it final offer of $55 a share.
The rejection of the $6.1 billion deal came directly from Willamette Chairman William Swindells Jr., heir to the founders of the Oregon timber company and former mentor to Rogel, who left as CEO of Willamette in 1997 to take over Weyerhaeuser.
"We are disappointed that the Willamette board of directors has rejected our fully financed $55 offer — $55 per share is the highest price we are prepared to pay," the Federal Way, Wash.-based company said Friday.
Weyerhaeuser spokesman Bruce Amundson declined further comment on Willamette's announcement, which was issued late Thursday.
By the end of trading Friday on the New York Stock Exchange, Willamette stock had fallen 8.4 percent to close the week at $45.75 per share while Weyerhaeuser ended with a slight uptick of 2.8 percent, closing at $55.52.
The battle has been viewed as a grudge match between Swindells and Rogel, who spent 25 years at Willamette under Swindells' leadership.
"I think you have to look at it like a Red Sox versus Yankees kind of situation," said Steve Chercover, a timber industry analyst for D.A. Davidson in Portland.
"This is just a rivalry," Chercover said. "You have two major leaguers in the same market, and they just hate each other."
Swindells is the grandson of Willamette founder George Gerlinger, and succeeded his father, William Swindells Sr., as CEO before handing off the job to Rogel in 1995. Swindells briefly resumed the post in 1997 after Rogel's departure before turning it over to Duane McDougall.
Swindells has said little publicly about the takeover attempt, but made clear last June at the annual shareholders meeting that he believed in maintaining the independence of the company his family built from a horse-logging operation in 1897. Family members still own large blocks of Willamette stock, and many employees and shareholders followed his lead in resisting Rogel's repeated offers since taking over Weyerhaeuser — finally triggering the hostile takeover effort in November 2000.
Rogel has been just as stubborn, waiting a year before boosting the offer to $55 a share after starting out at $48 and then moving to $50.
The problem, Chercover said, is that Swindells believes the deal adds about $400 million in value to the companies, while Weyerhaeuser pegs it at about $300 million.
The Willamette board has used usual defensive tactics to prevent a takeover, including pumping up golden parachutes, withholding shareholder mailing lists from Weyerhaeuser and threatening to trigger a "poison pill" to dilute the shares.
The latest has been talks with Georgia-Pacific Corp. about buying its building products division, which Swindells says Willamette is going to pursue.
"I can tell you that building products is already a key segment for Willamette and we see that as a good fit for us," said Willamette spokeswoman Jackie Lang.
Chercover said Georgia-Pacific has been trying to reposition itself as a consumer products company rather than a timber company, and selling off its building products division could end up a good fit — even though analysts see some dangers, including the potential for asbestos lawsuits involving discontinued Georgia-Pacific products.
Meanwhile, Weyerhaeuser can leave its tender offer on the table until Willamette reaches a deal with Georgia-Pacific, Chercover said.
But the clock is ticking toward another annual shareholder meeting this summer, when another three of Willamette's nine board of directors seats will be up for election. Weyerhaeuser won three of the nine seats at the last meeting.
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