Weyerhaeuser Ups Bid As Willamette Pursues G-P

Willamette Industries has agreed to finally meet with hostile suitor Weyerhaeuser Co. to discuss its revised $6.05 billion takeover offer.

Weyerhaeuser upped its bid by IOVo three days after Willamette revealed that it had begun negotiations to possibly acquire Georgia-Pacific's building products division. Acquisition of the unit, with $7.9 billion in sales last year, 687o more than Willamette, would invalidate Weyerhaeuser's bid.

Stephen Rogel, Weyerhaeuser president and chief executive, called the sweetened $55 per share, all-cash bid his company's "best and final offer."

Willamette's board will reconvene the first week of January to review its alternatives and, in the meantime, urged shareholders not to tender any

Palco Closes Historic Mill A

A century of milling in Scotia, Ca., ended last month as Pacific Lumber Co. closed its remaining redwood plant in town.

Mill A, whose production will shift to more modern mills in Fortuna and Carlotta, Ca., had employed 140 workers.

The action comes on the heels of the closure of Mill B in Scotia this past May, which had processed old growth logs for over 100 years.

"We are being strangled by operating costs," stated president Robert Manne, noting that the company has lost $600 million over the last three years-including an estimated $85 million in 2001.

Manne emphasized that the 1999 Headwaters Agreement (see Dec., p. 31) has resulted in an array of state and federal oversight actions, rendering 627o of its timberlands unavailable for logging.

"Put simply, we are not getting enough logs to continue operations as in the past," said v.p.-production Dennis Wood. "The result has been that many of our customers can't get the products they want."

The closure of both mills also had a direct impact on Scotia itself, which is one of the West's last company owned towns. Laid-off workers were given six months to vacate company-owned housing.

Palco will continue to operate its Scotia remanufacturing plant, which employs 200. The company headquarters will also remain in town.

shares until it issued its recommendation. In October, Willamette said it would negotiate only if Weyerhaeuser submitted a bid closer to $60 a share.

"On October 10, we publicly invir ed (Weyerhaeuser) to sit down with our investment bankers in order to get the information they needed to revise their inadequate $50 offer," said Willamette president and c.e.o. Duane McDougall. "They publicly slammed the door shut on that overture in less than two hours without so much as a phone call, and we made it clear that we intended to pursue our strategic plan. That's what we are doing."

G-P's building products unit includes a network of distribution centers and produces lumber, structural panels, industrial wood products, gypsum and chemicals. The sale would help G-P concentrate on its consumer products and reduce debt, primarily a result of its $l I billion acquisition of Fort James Corp. a year earlier.

Chairman and c.e.o. A.D. "Pete" Correll said G-P had been evaluating several strategic options, including a plan for a possible separation of the company into two entities, when it was approached by Willamette.

It'S tf Ue: our LVL door and window components and trim stringers could be the smartest part of your business. They're stiffer, straighter and stronger than lumber or composite products. They're engineered to meet even the most stringent building codes. They virtually eliminate waste and help cut labor costs. And here's the best part: we can precision manufacture and precut components to your exact specifications. That's why we're such an important part of so many companies' products.

Need a product or component made straighter,