Weyerhaeuser Acquires Canadian Timber Company, Clayoquot & Others at
Risk
6/21/99
OVERVIEW & COMMENTARY by EE
My, my, how fast things change. Nary a day after thinking the
Clayoquot Sound area had at least a chance of slowing the destruction
( http://forests.org/recent/clatruce.txt ), Weyerhaeuser has bought
out MacMillan Bloedel, the area's developer, which had just indicated
it would phase out clear-cut logging in old growth forests. Now this
entire agreement is at risk. This should be viewed as a companion
article to what went out two days ago, and shows how fast community
organizing can be squelched by corporate finance. Following are two
articles on the matter--the first some sugar coated industry
propaganda about the deal and the second, Rainforest Action Network's
throwing down the gauntlet. Weyerhaueser, honor the agreement, or
face "blockades, protests and high profile demonstrations the likes of
which haven't been seen in decades."
g.b.
*******************************
RELAYED TEXT STARTS HERE:
ITEM#1
Title: Weyerhaeuser Company to Acquire MacMillan Bloedel Limited
Source: Business Wire
Status: Copyright 1999, contact source for permission to reprint
Date: June 21, 1999
FEDERAL WAY, Wash./VANCOUVER--(BUSINESS WIRE)--June 21, 1999-- US$2.45
Billion Stock Transaction
Creates the Leading North American Forest Products Company Two of
North America's largest forest products companies today announced that
they have reached an agreement for Weyerhaeuser Company to acquire
MacMillan Bloedel Limited in a stock transaction valued at
approximately US$2.45 billion (CN$3.59 billion) based on Friday's
closing prices of both stocks.
Once the transaction is complete, Weyerhaeuser will become a company
with annual sales of approximately $13.3 billion (CN$19.5 billion) and
a market capitalization of approximately $16.5 billion (CN$24.2
billion) based on Friday's closing price.
Already the world's largest producer of softwood lumber and market
pulp, and the second largest manufacturer of oriented strand board
(OSB), the agreement makes Weyerhaeuser one of the top three producers
of packaging solutions.
"This is an excellent strategic combination for Weyerhaeuser and its
shareholders," said Steven R. Rogel, Weyerhaeuser chairman, president
and chief executive officer. "We have been impressed by the action
taken by MacMillan Bloedel's management to improve their operations
and the positive way in which their employees have responded. We are
acquiring modern and well-maintained manufacturing facilities
throughout Canada and the United States that fit naturally with our
operations, plus we add some of the highest quality timberlands in
Canada and the Southern U.S. to our portfolio. These additions will
have an immediate positive effect on our earnings."
"We believe that this combination will create the powerhouse in the
industry," said Tom Stephens, MacMillan Bloedel president and chief
executive officer. "While we were not seeking a merger of this nature,
the terms of this agreement provide an attractive premium to our
shareholders, plus the opportunity to maintain an interest in the
clear leader in the business. The value created for MacMillan Bloedel
shareholders is a reflection of the benefits of the restructuring and
transformation program underway over the last 18 months. It's a
resounding tribute to the hard work and dedication of all MacMillan
Bloedel employees."
The boards of both companies unanimously have approved an agreement
that provides MacMillan Bloedel shareholders with 0.28 shares of
common stock in Weyerhaeuser, or 0.28 equivalent exchangeable shares
in a new Weyerhaeuser Canadian subsidiary, for each MacMillan Bloedel
share owned. The exchangeable shares will be issued to Canadian
residents who elect to receive such shares and will be exchangeable,
on a share-for-share basis, for Weyerhaeuser Company common stock.
Weyerhaeuser intends to account for the transaction as a pooling of
interest.
Weyerhaeuser expects to realize approximately US$150 million (CN$219
million) in annual benefits through savings in transportation and
distribution, improving purchasing practices, increasing the balance
in its manufacturing system and streamlining operations.
Expected to close this fall, the transaction is subject to normal
regulatory approvals in the United States and Canada and court
approval in Canada. The transaction also requires a favorable vote by
MacMillan Bloedel shareholders.
This transaction adds a significant new chapter to Weyerhaeuser's
history as a leading North American company. It has a history of
continuous growth and investment that spans nearly 100 years in the
United States and 35 years in Canada. Of its 35,000 North American
employees, 5,900 currently work for Weyerhaeuser Canada, which is
headquartered in Vancouver. Weyerhaeuser currently owns or manages 5.3
million acres of timberland throughout the United States and has
timber licenses on 27 million acres (10.9 million hectares) in Canada.
Its North American operations produce pulp, paper, packaging, lumber
and structural panels that are sold around the world.
MacMillan Bloedel, which also has a long and distinguished history in
North America, currently employs 9,500 people, with 5,500 in Canada,
and assets that include: -- Three containerboard mills with an annual
capacity of 1.1 million tons and 19 converting facilities with an
annual production capability of 8.2 billion square feet of packaging.
-- Three oriented strand board (OSB) facilities with an annual
capacity of 1.1 billion square feet (3/8 basis). The new Saskatchewan
OSB mill, currently under construction, will add 570 million square
feet (3/8 basis). The agreement also includes two plywood facilities
in Eastern Canada and one in Alabama. -- Six lumber mills, many
producing high value specialty lumber from Western Red Cedar and other
specialty grades in B.C., two sawmills in Ontario, one sawmill in
Saskatchewan and one in Alabama. -- 6.9 million acres (2.8 million
hectares) of productive timberlands, of which 427,500 acres (173,000
hectares) are held in the United States. This includes fee simple
ownership of approximately 741,300 acres (300,000 hectares) of
forestland. -- 49 percent ownership of Trus Joist MacMillan
(TJM), a leading manufacturer of engineered wood products. -- 33
distribution centers located through the United States and Canada.
"We're merging with a company that also has been focusing on improving
its operations to enhance shareholder return and employee safety,"
Rogel said. "This common focus will allow us to implement this
transaction without disrupting similar initiatives currently underway
at Weyerhaeuser. We will continue to pursue improvements during the
transition process and after the MacMillan Bloedel employees join our
company."
"MacMillan Bloedel's people will be joining one of the world's most
highly respected companies that puts a priority on safety and is
strongly committed to the environment," Stephens said. "Weyerhaeuser's
long history in Canada, their commitment to the same business and
community values that we prize most--and their aggressive growth--will
serve our people, customers, communities and shareholders
exceptionally well."
Weyerhaeuser Company (NYSE: WY), one of the world's largest integrated
forest products companies, was incorporated in 1900. It has offices or
operations in 12 countries, with customers worldwide. Weyerhaeuser is
principally engaged in the growing and harvesting of timber; the
manufacture, distribution and sale of forest products; and real estate
construction, development and related activities. Additional
information about Weyerhaeuser's businesses, products or practices is
available at www.weyerhaeuser.com.
MacMillan Bloedel (TSE: MB; NASDAQ: MMBL) is one of Canada's largest
forest products companies with integrated operations in Canada, the
United States and Mexico. The products of MacMillan Bloedel and its
affiliate companies are marketed throughout the world and include
lumber, panelboard, engineered lumber, containerboard and corrugated
containers. Additional information about MacMillan Bloedel is
available at www.mbltd.com
This news release contains statements concerning Weyerhaeuser
Company's future results and performance, including an estimate of
annual benefits from Weyerhaeuser's acquisition of MacMillan Bloedel,
that are forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The accuracy of such
statements is subject to a number of risks, uncertainties and
assumptions that may cause actual results to differ materially from
those projected, including, but not limited to, the effect of general
economic conditions, including the level of interest rates and housing
starts; market demand for the company's products; the effect of
forestry, land use, environmental and other governmental regulations;
the ability to obtain regulatory and other approvals for the
acquisition; the ability of Weyerhaeuser to successfully integrate the
two companies, and the risk of losses from fires, floods and other
natural disasters. The company is also a large exporter and is
affected by changes in economic activity in Europe and Asia,
particularly Japan, and by changes in currency exchange rates and
restrictions on international trade. These and other factors that
could cause or contribute to actual results differing materially
from such forward looking statements are discussed in greater detail
in the company's Securities and Exchange Commission filings. c
CONTACT: Weyerhaeuser
ITEM#2
Title: ENVIROS CONCERNED AS WEYERHAEUSER PURCHASES MACMILLAN BLOEDEL
FAILURE TO HONOR MB ENVIRONMENTAL COMMITMENTS
WILL BRING MARKETPLACE MAYHEM
Source: Rainforest Action Network
For immediate release - June 21, 1999
Press Contact - Mark Westlund: 415/398-4404
Status: Distribute freely with credit given to source
Date: June 21, 1999
"With its program of phasing out old growth clear-cuts, MacMillan
Bloedel brought the world one step closer to ending all logging in the
last remaining old growth forests. Weyerhaeuser must continue MB's
plans or suffer the consequences."
- Christopher Hatch, RAN Campaigns Director
SAN FRANCISCO - News of Weyerhaeuser's purchase of British Columbia
logging company MacMillan Bloedel has environmentalists across the US
and Canada in a state of concerned anticipation. The sale came just
days after MB signed a memorandum of understanding with environmental
organizations and Canadian Indians not to log in pristine forest areas
within the company's British Columbia holdings. Last year, MB
instituted a new logging plan to phase out clear-cut logging in old
growth forests. Weyerhaeuser has yet to comment on whether it will
honor these commitments.
"Weyerhaeuser is teetering on a precipice," said Rainforest Action
Network Campaigns Director Christopher Hatch. "If the company honors
MB's commitment to lessening the strain on the Earth's last old growth
forests, it could become the world's leader in ancient forest
preservation. If it doesn't, Weyerhaeuser will have its market ripped
apart by blockades, protests and high profile demonstrations the likes
of which haven't been seen in decades."
"In a time when only 22 percent of the world's original old growth
forests remain, continuing logging of old growth wood is simply
barbaric," RAN's Hatch concluded. "Whether you approach the issue
economically, ecologically or ethically, it's just not a sound
business practice to cut down old growth forests."
In December 1998, 27 U.S. corporations - including IBM, Dell, Kinko's,
Nike, 3M, Levi-Strauss, Mitsubishi Motors America, Mitsubishi Electric
America, and others - announced their commitment to stop selling or
using old growth wood. Europe's largest home improvement center, B&Q,
has nearly completed removing old growth wood from its shelves.
Rainforest Action Network works to protect the rainforests and their
inhabitants through education, grassroots organizing, and non-violent
direct action.
__________________________________________
Rainforest Action Network
221 Pine Stret #500
San Francisco, CA 94014
Telephone: 415/398-4404; fax: 415/398-2732
Website: http://www.ran.org