The Shareholder Forum

supporting investor interests in long term enterprise value

 

Purpose & History of Services

The Shareholder Forum

The Shareholder Forum supports investor interests in corporate enterprise value with services that require independence – and that may benefit from the Forum’s network resources and recognition for advocacy of long term investor interests – to assure a definition of relevant issues and fair access to information that can be relied upon by both corporate and investor decision-makers.

The policies that provide a foundation for the Forum’s marketplace functions have been carefully developed and tested to allow any investor to participate in its communications, either anonymously or visibly, without acting in concert. Established originally to accommodate professional fund managers, this independent moderator function has proved to be consistently effective in managing orderly processes of issue definition for rational analysis by fiduciaries who are responsible for informed decisions.

Initiated in 1999 by the New York Society of Security Analysts with lead investor and former corporate investment banker Gary Lutin as guest chairman to address the professional interests of its members, and independently supported by Mr. Lutin since 2001, Forum programs have achieved wide recognition for their effective definition of important issues and orderly exchange of the information and views needed to resolve them. The Forum's ability to convene all key decision-making constituencies and influence leaders has been applied to subjects ranging from corporate control contests to the establishment of consensus marketplace standards for fair disclosure, and has been relied upon by virtually every major U.S. fund manager and the many other investors who have participated in programs that addressed their interests.

Currently important applications of the Forum’s independent position include the support of corporate managers who wish to provide the leadership expected of them by responding to activist challenges with orderly reviews of issues relevant to long term investor interests.

Requests for Shareholder Forum consideration of support may be initiated confidentially by any investor or by the subject company, or by the professional advisors to either.

 

Forum Report: Situation Analysis, Prospects for Value Enhancement

(July 4, 2001)

(includes July 4, 2001 Financial Times, "Weyerhaeuser faces prospect of long war")

From: Gary Lutin
To: Distribution: Willamette Shareholders
Sent: Wednesday, July 04, 2001 3:36 PM
Subject: FT: Situation analysis, prospects for value enhancement

 
As indicated in the report copied below, the Willamette-Weyerhaeuser situation is developing exactly as expected in the post-election phase.  (See my 6/5/01 email summary of the opposing positions, copied beneath the FT article.)
 
What happens now, to the negotiating process as well as to Willamette's stock price, depends on whether shareholders are willing to assert their own interests in an alternative to the management squabbling contest.  If anyone wants to do anything about this "value enhancement opportunity," let me know.
 
                    GL - 7/4/01
 

 
 

Hopes of a relatively quick resolution to the USDollars 7.2bn takeover battle between Weyerhaeuser and Willamette, the rival US forest products groups, have been dashed after a vote by Willamette shareholders provided neither side with a clear-cut mandate.

The result of Monday's vote, in which Weyerhaeuser barely managed to gain a foothold on Willamette's board, was seen as the worst possible scenario for shareholders of the two companies, which now face the prospect of a year-long war of attrition.

The shareholder vote, which Weyerhaeuser won by less than 1 per cent, was designed to pressure Willamette into takeover negotiations. Willamette has since last November bitterly resisted Weyerhaeuser's offer, which has been raised to the current price of USDollars 50 per share, for a total of Dollars 5.5bn in cash and Dollars 1.7bn in assumed debt.

Weyerhaeuser's success in getting its three candidates elected to Willamette's nine-member board increases the likelihood that the larger Weyerhaeuser could eventually succeed in taking control of its target.

But Weyerhaeuser will have to wait another year for a chance to alter the balance of power on Willamette's board and the close result left observers wondering what each company would do next.

Weyerhaeuser claims its victory shows Willamette shareholders want their board to enter into negotiations that would lead to a takeover agreement.

Willamette argues that the closeness of the vote suggests there is no mandate to sell the company.

Observers were divided on how the war would unfold. Mark Wilde, analyst at Deutsche Banc Alex Brown, said Willamette was not likely to be willing to risk losing control of its board in another shareholder vote.

He argued that pressure on Willamette to conclude a deal would increase significantly in the first quarter of 2002 as the date of the next shareholder meeting approached.

Others, however, questioned whether Weyerhaeuser would be willing to wait that long. Takeover battles are distracting at the best of times and more so in an industry struggling to reduce capacity to meet demand. Some observers argue Weyerhaeuser cannot make capacity rationalisation plans until it knows exactly how much capacity is available to be cut.

Weyerhaeuser has denied its strategy and operations have been negatively affected by the uncertainty, but some observers believe it would be better off raising its offer sooner than later.

"Because the vote wasn't a runaway, Weyerhaeuser will have to bump it up to the mid- to high-Dollars 50s," said one industry observer.

What is almost certain is that this battle will be fought strictly between the two companies. With both based in the Pacific north-west, they would provide greater synergies than any other combination.

Copyright: The Financial Times Limited

 


 

 

----- Original Message -----
From: Gary Lutin
To: Distribution: Willamette Shareholders
Sent: Tuesday, June 05, 2001 10:28 AM
Subject: Responses to 5/29 letter

 
The responses of both Willamette's and Weyerhaeuser's chairmen -- or, more accurately, their failure to respond -- indicates that both sides are dedicated to fighting rather than negotiating.
 
Willamette's Swindells essentially reaffirmed his "go away" position.
 
Weyerhaeuser's Rogel never called, apparently changing his mind after asking me to wait for his return on Monday (yesterday).
 
Under these circumstances, shareholders should assume that there is a high probability that both sides will continue their squabbling after the June 7th vote.  Willamette's management has demonstrated their dedication to a "no surrender" strategy and can be expected to focus on disparaging Weyerhaeuser and its delegates' disruption of Willamette's board.  Weyerhaeuser, by their failure to exploit my letter's opportunity to position themselves for negotiations, has signaled their very logical adoption of a standard strategy for completing the acquisition of a "captive" company at the lowest possible cost -- after allowing some deterioration in market value, which they will of course blame on Willamette's management.
 
There appears to be little chance now that either side will be genuinely receptive to a cooperative process of negotiation, either before or after the vote.  (Of course, as part of their positioning, both sides will probably claim that they would be willing but that the other side is obstructive.)  But I will continue to observe the situation, and will welcome suggestions of anything I might do to support shareholder interests.
 
                GL - 6/5/01 

 

 

 

 

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Publicly open programs of the Shareholder Forum are conducted for free participation of all shareholders of a subject company and any fiduciaries or professionals concerned with their decisions, according to the Forum’s stated "Conditions of Participation." In all cases, each participant is expected to make independent use of information obtained through the Forum, and participation is considered private unless the party specifically authorizes identification.

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