Willamette purchase could form Oregon's largest company

By

Posted 7:35AM on Monday, January 21, 2002

PORTLAND - If Portland-based Willamette Industries buys part of Atlanta-Based Georgia-Pacific, it would become Oregon's biggest company, shedding its status as a regional company with an obscure name and surpassing Nike. It would have annual sales of 12-point-five (b) billion dollars. It could rocket from Number 368 into the top 160 on the Fortune 500 list. The family-bred company, with Oregon roots dating to 1906, also would jump tracks from decades of cautious, independent-minded growth based on a tried-and-true trees-to-paper business to a debt-ridden growth trajectory fueled by a complex array of products and operations. It is considering buying the building products division of G-P. Bigger than Willamette, the division is a one-third chunk of North America's Number two forest-products company. The unit employs 16-thousand people in 20 states, mostly in the South. Until lately, many analysts have seen Willamette's interest in G-P as a ploy to pressure Weyerhaeuser to sweeten its 14-month-old takeover bidding. But since Willamette refused Weyerhaeuser's ``final,'' seven-point-six (b) billion dollar offer January third, analysts have given the prospect more weight. They recognize that it would make Willamette a much bigger enterprise while keeping it Oregon-based, apparently an aim of Willamette. Weyerhaeuser has vowed that a deal between G-P and Willamette would cut off its interest. But analysts said they worry about Willamette undoing its tradition of industry-leading profitability -- and abandoning a lucrative fit with Weyerhaeuser. They warn that Willamette would take on weak businesses with thin profits that could sap the company's time, energy and money. Even analysts who want a bigger Willamette fear a G-P deal might be the wrong move. Officials of Willamette and G-P remain coy about the prospective combination. Negotiations are intense.