PORTLAND, Ore., May 31 /PRNewswire/ -- Willamette Industries (NYSE: WLL)
today sent the following letter to Weyerhaeuser's Board of Directors:
May 31, 2001
The Board of Directors
Weyerhaeuser Company
33663 Weyerhaeuser Way
Federal Way, Washington 98063
Ladies and Gentlemen:
We are in receipt of your 11th letter to our Directors or shareholders
since January. Thank you.
As we have said all along, we are open to considering serious offers for
Willamette. Your refusal to offer what we regard as adequate value for
Willamette continues to suggest to us that you have no intention of ever
paying a full and fair price.
With regard to the specifics of your recent letter, we strongly object to
several of your mischaracterizations regarding events. First and foremost, as
to Mr. Rogel's claim that he did not tell Willamette that the timing of your
November bid was motivated by concern that Willamette's share price was going
to continue to increase, your CEO is fully aware of what he said. We stand by
our statement.
We find your claim, "The Weyerhaeuser nominees have no preconceptions
about what the right price for a negotiated sale of Willamette might be ..."
to be completely disingenuous. Please refer to your own proxy materials
relating to your $48 offer, in which you say that your three nominees would
be:
"expected ..., subject to their fiduciary duties, [to] seek to cause the
Company's Board of Directors to take all such actions as may be necessary to
facilitate the [Weyerhaeuser $48] Offer and the Proposed Merger."
With regard to your assertion that our value-enhancing initiatives were
widely known in the marketplace before your November offer, with the exception
of the Kingsport project, we had not publicly disclosed specific details of
our plans. We had not disclosed our belief that these investments could
increase Willamette's annual operating cash flow by up to $400 million
(representing a 40% increase over 2000)(1). Thus, it is impossible for the
market to have known the full impact these investments could have on our
earnings. Claims to know the unknown make us particularly wary of your other
statements and rhetoric, and further make us believe that you are not
approaching this situation in a manner consistent with Weyerhaeuser's record
of integrity.
In addition, we are perplexed that your CEO's most recent letter to our
Board fails to address any of the substantive financial issues raised in our
May 28th letter to Willamette shareholders. Your offer is simply not
compelling to our shareholders:
-- We believe Weyerhaeuser's current offer would be at least 30% 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(2) of comparable
companies are up 29% and Weyerhaeuser is up 34% since November, all you
have shown our shareholders is a 4% increase to an offer which we made
abundantly clear we believed was not even "in the ballpark"; and
-- Based on current valuation multiples (both Price to Earnings and
Enterprise Value to EBITDA)(3) for the industry, we believe Willamette
could be trading above $50 today in the absence of your hostile offer.
Lastly, we want to express our extreme disappointment over your continued
hostile attempt to acquire Willamette, an effort which we believe is doing
significant damage to Weyerhaeuser's reputation among customers, suppliers and
your own employees.
Sincerely,
Duane C. McDougall William Swindells
Chief Executive Officer Chairman of the Board
Willamette Industries is an integrated forest products company with
105 plants, located in the U.S., France, Ireland and Mexico. The company owns
1.7 million acres of forestland in the U.S. and manages it sustainably to
produce building materials, composite wood panels, fine paper, office paper
products, corrugated packaging and grocery bags.
Forward-looking statements in this release are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Any such forward looking statement made by Willamette with respect to the
Weyerhaeuser tender offer is not entitled to the benefit of the safe harbor
protections of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties and actual
results could differ materially from those projected. Such risks and
uncertainties include, but are not limited to, the effect of general economic
conditions; the level of new housing starts and remodeling activity; the
availability and terms of financing for construction; competitive factors,
including pricing pressures; the cost and availability of wood fiber; the
effect of natural disasters on the Company's timberlands; construction delays;
risk of nonperformance by third parties; and the impact of environmental
regulations and other costs associated with complying with such regulations.
Please refer to Willamette Industries' Securities and Exchange Commission
filings for further information.
(1) For further details regarding the amount and timing of these
investments and anticipated benefits, please refer to the Definitive
Additional Materials on Schedule 14A filed by Willamette on May 9, 2001.
(2) The "Industry Composite" is comprised, on an equal-weighted basis, of
Boise Cascade Corporation, Georgia-Pacific Group, International Paper Company,
Louisiana-Pacific Corporation, Smurfit-Stone Container Corporation,
Temple-Inland, Inc., and Weyerhaeuser. The Willamette Board believes the
companies included in the "Industry Composite" are most representative of
Willamette's business mix.
(3) Willamette's current stock price implies valuation multiples of
7.6x EBITDA and 13.7x Consensus EPS Estimates, while Industry Composite
medians are 7.2x and 15.8x, respectively.
SOURCE Willamette Industries, Inc.
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Related links:
http://www.wii.com
Company News On-Call:
http://www.prnewswire.com/comp/971763.html or fax,
800-758-5804, ext. 971763
CONTACT:
Greg Hawley, EVP & CFO, 503-273-5640, or
Cathy Dunn, VP Communications, 503-273-5642, both of Willamette
Industries, Inc.; or Paul Verbinnen, David Reno or Jim Barron,
all of Citigate Sard Verbinnen, 212-687-8080, for Willamette
Industries, Inc.
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