Willamette Industries - Buyout

Buyout

Beginning in 1998 Washington-based competitor Weyerhaeuser contacted Willamette Industries about combining the companies. At that time Willamette management did not entertain any of these proposals. On November 13, 2000, Weyerhaeuser began an unsolicited bid to purchase Willamette through a tender offer, for $5.3 billion in cash, plus the assumption of $1.7 billion in debt, or $48.00 a share, a 38% premium to Willamette's Friday, November 11, closing stock price. The shares in Willamette went up 32.7% on Monday, November 13.

Willamette fought this hostile take-over bid. On November 29 Weyerhaeuser upped the price to $48 a share, or $5.4 billion. Willamette rejected this offer also. On December 22, 2000, Weyerhaeuser announced that it had launched a proxy fight to oust four directors of Willamette Industries, in order to get the board to vote in its favor. The offer was extended on January 5, 2001 to February 1, and on February 1, 2001, Weyerhaeuser learned that a majority of the shareholders favored the merger, with 51% of shares outstanding tendered. Weyerhaeuser secured three of the four board seats in the proxy fight in June 2001. In October 2001, Willamette said that it was worth more: "value is in the $60-a-share range, but that they would consider an offer in the high-$50 range." Willamette sought out merger talks with another forest products company, Georgia-Pacific, the largest in the world to avoid the Weyerhaeuser takeover. Willamette even talked with Georgia-Pacific about Willamette buying the GP building materials businesses and greatly increasing Willamette's debt level. The combination with the G-P that was larger than all of Willamette's operations would have created a company with annual sales of around $12.5 billion. On December 13, 2001, Weyerhaeuser increased its offer to $55.00 per share, or $6.5 billion, in cash.

Finally, in January 2002, Willamette Industries agreed to be bought by Weyerhaeuser for $55.50 per share, for a total cash equity value of approximately $6.08 billion. The deal also included Weyerhaeuser's assumption of approximately $1.53 billion of Willamette debt, making the total value of the deal approximately $7.61 billion. The deal closed in March of that year, ending a four-year process.