By TOM KELLY
Editor and Publisher

The Weyerhaeuser-Willamette war of the hostile takeover bid may be ending, with Weyerhaeuser poised to pick up the victory based on a reported offer by the Clark family to sell its major block of shares at $55.

Reuters news agency reported on Friday evening, September 28 that the Clark family's offer to sell is for the purpose of raising cash for estate taxes. Market analyst Joshua Jarrett with ABN Amro was quoted as saying, "Basically, this should lead to the conclusion of this saga. It breaks the log jam."

Willamette shares rose 3.20 to $45.85 on reports that the Clark family, a large Willamette shareholder, wrote to Weyerhauser saying they needed to sell to settle the estate.

According to news reports, Richard J. Clark, son of longtime Willamette board member Maurice Clark, released a letter sent to the chairmen of both companies, saying he was prepared to tender the shares he held in his deceased father's estate, in support of a merger with Weyerhaeuser at $55 per share, or $6.04 billion.

The Weyerhaeuser offer, which began at $48 offered last November, was raised to $50, or 5.5 billion, in May of this year. Up to now, Willamette has refused to negotiate at that price, and Weyerhaeuser has refused to up the ante.

Clark told the companies he would seek permission to sell the Clark estate shares within the next two months. He said he believes the $50 offer by Weyerhaeuser is "seriously undervalued," and said he would not tender his shares for less than $55 per share.

The Clark family estate owns 8.2 million shares, or 7.39 percent of the company, ranking it as the third-largest single holding behind chairman William Swindells and Wells Fargo.

This news reverses speculation which emerged during the final week of September that Weyerhaeuser may drop its bid for a hostile takeover of Willamette Industries, Inc., based on a stock analyst's downgrade of Willamette stock in the recent market decline.

However, Weyerhaeuser spokesmen were quoted in various media reports as saying they continue to maintain the acquisition effort.

Sparking the speculation was a ratings announcement by Deutsche Banc Alex Brown that it had cut its rating on Willamette stock to "underperform" from "market perform."

Deutsche Banc analyst Mark Wilde said on Bloomberg Television that "there's at least a 50 percent chance that the deal doesn't happen," according to internet reports.

Willamette officials were not dancing in the streets at that breaking news, only saying cautiously, "I would like to believe it."

One market watcher alerted The Piney Woods Journal as a "for what it's worth" tip, that analysts, based on "inside information, that the deal with Weyerhaeuser will not go through. They say that due to the weakness of the stock market, Weyerhaeuser will voluntarily back away from the deal."

However, Weyerhaeuser spokesman Bruce Amundson was quoted by Bloomberg as saying, "We remain committed to the transaction. That's where our focus remains, on trying to complete the transaction as soon as possible."

Bloomberg reported also that Steve Rogel, the former head of Willamette who now is CEO of Weyerhaeuser, called Willamette CEO Duane McDougal on September 13 and asked again to begin negotiations. McDougall agreed to open talks only if Weyerhaeuser raised the offer, according to the SEC filing made by Weyerhaeuser. The company refused to raise its offer.

In a separate news release, Weyerhaeuser in September announced the extension of its $50 per share offer to October 17. The offer has been extended routinely after each deadline expired, since the first public offer was made in November, 2000. Price has remained at $50 per share. Willamette has maintained that the company is more valuable, and has refused to deal voluntarily at that level.

Simultaneously, Weyerhaeuser nominated three members to Willamette's nine-member board of directors, and won the seats by a narrow 51% margin in the shareholder election in July.

Willamette has made a determined effort to fend off the takeover bid by Weyerhaeuser, and since a high point reached at the election time, the number of shares offered in response to the Weyerhaeuser tender has declined from a high of slightly over 46 million shares, to 32.7 million shares tendered and not withdrawn, or about 30 percent of the total outstanding, on September 10.

According to Willamette's filings and stock reports, it has approximately 108.6 million shares outstanding. At the July 7 election, the Weyerhaeuser slate of three directors received votes of 49.16 million shares, or 44.85 percent of shares outstanding, while Willamette's directors, standing for reelection, received votes of 46.91 million shares, or approximately 42.80 percent of outstanding shares.

In commenting on the current stock values, Deutsche Banc's Wilde said Weyerhaeuser may opt to buy assets from Georgia Pacific Group, which reportedly has a number of assets on the market, to reduce debt. One major move recently completed by Georgia Pacific is the sale of its subsidiary, The Timber Company, to Plum Creek Timber Company.

Since the July board election, Willamette officials have also been considering acquisitions to grow the value of the company. Traditionally, Willamette has grown by expansion of timberland holdings, manufacturing facilities, sales efforts, and acquiring and expanding smaller regional companies. According to one source, remaining a well-run mid-sized company may not satisfy shareholders who seek capital growth through acquisitions and mergers.

During the last days of September, Willamette's stock value fell 90 cents per share to $42.10. Weyerhaeuser dropped 34 cents to $47.25. Georgia Pacific fell 43 cents to $27.62, as financial markets reacted negatively to the terrorist attacks in Washington, DC, and New York on September 11.

The Piney Woods Journal's market watcher reported following the attacks, "All of the New York futures markets were located in the World Trade Center, and have not traded until today (Sept. 17). They have jointly set up one old trading floor and will rotate 90 minute daily trading sessions until they get new quarters. That includes cocoa, coffee, sugar, cotton, orange juice, US Dollar index, CRB index, crude oil, heating oil, unleaded gasoline, natural gas, propane, gold, silver, platinum, and copper . . . The Chicago exchanges are unaffected and in good shape, and they handle the bigger volume in things like stock index futures, bonds and interest rate futures, foreign currencies, U.S. grains and meats, and lumber - important to your folks."

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