COMPANIES & FINANCE INTERNATIONAL: Adviser asked to step into paper
Financial Times; May
By SCOTT MORRISON
Disgruntled shareholders of Willamette, the US
forest products group targeted by Weyerhaeuser, have asked a corporate
governance adviser to get involved in the bitter takeover battle between
the two rivals, a move seen as increasing the pressure on Willamette's
The request comes after Willamette said
last week that Weyerhaeuser's revised Dollars 5.5bn offer was still too
Weyerhaeuser's revised offer, which
includes USDollars 1.7bn in assumed debt, was an attempt to break the
six-month deadlock between the two US paper companies and bring its rival
to the negotiating table.
Gary Lutin, an investment banker who now
acts as a corporate governance adviser, said yesterday he would sponsor a
shareholders' forum through which all Willamette shareholders would be
able to share information and views with Willamette's directors.
But Mr Lutin said he was disappointed by
the initial response from Duane McDougall, Willamette's chief executive.
Mr Lutin said he was told that Willamette's
board did not want to hear alternatives to the recommendations provided by
the firm's advisers.
Weyerhaeuser has said more than 50 per cent
of Willamette's shareholders have accepted its bid. It was hoped that
Willamette's board would be pressed to take into account pro-merger
opinions voiced through the forum.
In a letter to William Swindells, chairman
of Willamette's board, Mr Lutin said Willamette's defensive position
precluded the kind of co-operative exploration that would normally lead to
negotiations allowing Weyerhaeuser to increase its bid by 5-15 per cent.
It has been widely believed that
Weyerhaeuser would increase its offer if Willamette agreed to negotiate.
Mr Lutin said the terms under which
Willamette engaged Goldman Sachs - a USDollars 30m payment if there is no
transaction by September 1, 2001 - created a significant financial
incentive for the adviser to prevent or at least delay a combination.
Mr Lutin said he hoped for a resolution
before next month, when Willamette shareholders are scheduled to vote for
three new members of the company's nine-member board.
Weyerhaeuser has nominated three candidates
and appears likely to win its bid to install its nominees on Willamette's
While that would not give Weyerhaeuser
control of Willamette's board, it would create an embarrassing and
Mr Lutin said the shareholder vote would
usher in a situation that would be "terribly destructive" for Willamette.
Willamette declined to comment yesterday.
Copyright: The Financial Times Limited