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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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TJ International, Inc.
(Name of Subject Company)
TJ International, Inc.
(Name of Person Filing Statement)
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Common Stock, $1.00 Par Value
(including the Associated Preferred Share Purchase Rights)
(Title of Class of Securities)
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872534102 (Common Stock)
(CUSIP Number of Class of Securities)
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RICHARD B. DRURY
Corporate Secretary
TJ International, Inc.
200 East Mallard Drive
Boise, Idaho 83706
(208) 364-3300
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person filing statement)
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Copy to:
David A. Katz, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212) 403-1000
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Item 1. Security and Subject Company.
The name of the subject company is TJ International, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is 200 East Mallard Drive, Boise, Idaho 83706. The title of the
class of equity securities to which this Statement relates is the Company's
Common Stock, par value $1.00 per share ("Common Stock"), and the associated
preferred share purchase rights (the "Rights") issued pursuant to the Company's
Rights Agreement, dated as of August 26, 1999, between the Company and First
Chicago Trust Company of New York, as rights agent. The tender offer described
in Item 2 of this Statement is also for the Company's ESOP Convertible
Preferred Stock, par value $1.00 per share ("Preferred Stock" and, together
with Common Stock, "Capital Stock"), and each share of Preferred Stock
generally is convertible into one share of Common Stock. Preferred Stock is
held by the trustee for the employee stock ownership plan portion of the
Company's Investment Plan, and Preferred Stock is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). This
Statement relates only to Preferred Stock to the extent it is converted into
Common Stock pursuant to its terms.
Item 2. Tender Offer of the Bidder.
This Statement relates to the tender offer by WTJ, Inc. (the "Purchaser"),
which is a wholly owned subsidiary of Weyerhaeuser Company, a Washington
corporation ("Weyerhaeuser"), to purchase all of the outstanding (i) shares of
Common Stock ("Common Shares"), and associated Rights, at a price per Common
Share of $42, and (ii) shares of Preferred Stock ("Preferred Shares" and,
together with Common Shares, "Shares") at a price per Preferred Share of $42,
in each case, net to the seller in cash, without interest thereon (the "Offer
Price"), upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated November 30, 1999, and in the related Letter of Transmittal
(which, together with amendments or supplements hereto or thereto, collectively
constitute the "Offer"). The Offer is disclosed in a Tender Offer Statement on
Schedule 14D-1, dated November 30, 1999 (the "Schedule 14D-1"), as filed with
the Securities and Exchange Commission (the "Commission"). The Offer is being
implemented pursuant to the Agreement and Plan of Merger, dated as of November
23, 1999, among Weyerhaeuser, the Purchaser and the Company (the "Merger
Agreement") providing for a tender offer, which is to be followed by the merger
of the Purchaser into the Company (the "Merger"), with the Company as the
surviving corporation of the Merger becoming a wholly owned subsidiary of
Weyerhaeuser. The Offer to Purchase states that the principal executive offices
of the Purchaser and Weyerhaeuser are located at 33663 Weyerhaeuser Way South,
Federal Way, Washington 98003.
Item 3. Identity and Background.
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) On November 23, 1999, the Company, the Purchaser and Weyerhaeuser
entered into the Merger Agreement which provides, among other things, for the
price to be paid pursuant to the Offer to be $42 per Share, net to the seller
in cash without interest thereon, and, subject to certain conditions, for the
Merger following consummation of the Offer. In the Merger, each issued and
outstanding Common Share (other than Common Shares held by Weyerhaeuser, the
Purchaser, any subsidiary of Weyerhaeuser other than the Purchaser, in the
treasury of the Company or by any subsidiary of the Company, and Common Shares
held by stockholders, if any, who perfect their dissenters' rights under
Delaware law, but including each Common Share issued upon the automatic
conversion of Preferred Shares pursuant to their terms immediately prior to the
effective time of the Merger) will be converted into the right to receive the
Offer Price in cash.
The Merger Agreement also provides, among other things, that if the Merger
Agreement is terminated under certain circumstances involving a withdrawal,
modification or change of recommendation of the Board of Directors of the
Company (the "Company Board") with respect to the Offer, or termination of the
Merger Agreement by the Company if the Company Board approves and pursues an
alternative transaction involving the Company (subject to the limitations set
forth in the Merger Agreement), the Company will be required to pay
Weyerhaeuser a termination fee of up to $25,000,000.
A description of the Merger Agreement is contained in Section 12 of the
Offer to Purchase, dated November 30, 1999, which is filed as Exhibit 1 to the
Schedule 14D-9 and which description is incorporated herein by reference. The
Offer to Purchase is being mailed to the Company's stockholders together with
this Statement. Such description is qualified in its entirety by reference to
the Merger Agreement, a copy of which is filed as Exhibit 2 to this Statement
and is incorporated herein by reference.
Certain contracts, agreements, arrangements and understandings between the
Company and certain of its executive officers, directors and affiliates are
described in Annex A to this Statement, which description is incorporated
herein by reference.
The Company has a Severance Pay Plan that provides for severance benefits to
employees (other than the executive officers) who are terminated in certain
circumstances. The amount of the benefit is a specified number of weeks' pay,
depending upon how long the terminated employee has worked for the Company. In
connection with entering into the Merger Agreement, Weyerhaeuser and the
Company agreed to amend the severance pay formula under the Company's Severance
Pay Plan so that the severance payable to participants who become entitled to
severance under the Company's Severance Pay Plan as a result of termination of
employment after the purchase of Shares in the Offer will be increased by eight
weeks.
Item 4. The Solicitation or Recommendation.
(a) and (b) Background; Recommendation of the Company Board; Reasons. On
September 30, 1991, the Company entered into the Limited Partnership Agreement,
as amended (the "Partnership Agreement"), with MacMillan Bloedel of America,
Inc. ("MBA"). Under the Partnership Agreement, Trus Joist MacMillan A Limited
Partnership, a Delaware limited partnership (the "Partnership") was formed.
Substantially all of the current business of the Company is conducted through
the Partnership. The Company contributed its North American engineered lumber
products business to the Partnership in exchange for general and limited
partnership interests representing a 51% interest in the Partnership issued to
the Company. MBA, a wholly owned subsidiary of MacMillan Bloedel Limited, a
corporation existing under the laws of Canada ("MB"), contributed all of its
and MB's North American engineered lumber technology and manufacturing
facilities, and entered into a long-term distribution arrangement, in exchange
for a 49% limited partnership interest in the Partnership issued to MBA.
On September 27, 1997, W. Thomas Stephens became the President and Chief
Executive Officer of MB, succeeding Robert Findlay, who retired; Mr. Findlay,
who also was on the Company Board, resigned thereafter from the Company Board
and was not replaced. Subsequently, from time to time, Mr. Stephens and Thomas
H. Denig, President and Chief Executive Officer of the Company, had discussions
regarding possible alternatives for the Partnership, although the Company
continually expressed its preference for maintaining the Partnership in its
current form.
On June 11, 1999, Mr. William R. Corbin, Executive Vice President of
Weyerhaeuser, and Mr. Keith Purchase, Executive Vice President and Chief
Operating Officer of MB, met with Mr. Denig to inform him that Weyerhaeuser was
pursuing a transaction with MB that, if completed, would result in MB becoming
a wholly owned subsidiary of Weyerhaeuser (the "MB Transaction"). At this
meeting, Mr. Purchase proposed that the Company waive any right that it might
have to purchase MBA's 49% interest in the Partnership as a result of the MB
Transaction.
On June 13 and June 14, 1999, Mr. Steven R. Rogel, President and Chief
Executive Officer of Weyerhaeuser, and Mr. Denig had telephone conversations
regarding the anticipated MB Transaction and its potential impact on the
Partnership. Mr. Denig stated that the Company had retained financial and legal
advisors to assist the Company in analyzing its options in light of the
proposed MB Transaction. Mr. Rogel stated that Weyerhaeuser did not believe
that the consummation of the MB Transaction would give rise to any rights of
the Company under the Partnership Agreement. Mr. Denig, however, stated that
the Company believed that the MB Transaction would give the Company the rights
provided in the Partnership Agreement upon a change of control of a partner,
including the right to purchase MBA's interest in the Partnership. Messrs.
Rogel and Denig agreed that they should arrange meetings with other senior
officers of their respective companies to
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discuss the future of the Partnership after the MB Transaction. Mr. Denig
suggested that the two companies enter into a confidentiality and standstill
agreement before discussing the various options that might be available and
sent a form of agreement to Mr. Rogel on June 14, 1999. This confidentiality
and standstill agreement was never executed by Weyerhaeuser.
Following the June 14, 1999 telephone conversation between Messrs. Rogel and
Denig, there were conversations between Goldman, Sachs & Co. ("Goldman Sachs"),
the Company's financial advisor, and Morgan Stanley & Co. ("Morgan Stanley"),
Weyerhaeuser's financial advisor regarding these matters.
Messrs. Rogel and Denig spoke again by telephone on June 17, 1999 regarding
the conversations between the financial advisors to the two companies and the
confidentiality and standstill agreement proposed by the Company. Mr. Rogel
stated that Weyerhaeuser was not willing to enter into such a confidentiality
and standstill agreement. Mr. Denig stated that, after consulting with members
of the Company Board, he did not believe that consolidation with Weyerhaeuser
was the Company's preferred alternative, but that he would take any compelling
proposal by Weyerhaeuser to acquire the Company to the Company Board for
consideration. In addition, Mr. Denig indicated that, absent such a
transaction, the Company would determine what alternatives to pursue under the
Partnership Agreement.
On June 20, 1999, Weyerhaeuser, an indirect wholly owned subsidiary of
Weyerhaeuser and MB entered into a merger agreement (the "MB Agreement")
providing for the MB Transaction. On June 21, 1999, the proposed MB Transaction
was publicly announced by Weyerhaeuser and MB.
Later on June 21, 1999, the Company issued a press release announcing that
it was evaluating its options in light of the announcement of the MB
Transaction. In its press release, the Company indicated that, under the terms
of the Partnership Agreement, the Company had certain rights upon a change of
control of MBA. The Company noted that it believed that the MB Transaction
triggered those rights and that, if those rights were triggered, the Company
would have the right to purchase MBA's 49% interest in the Partnership without
a takeover premium, or have the right to sell the Company's 51% interest to
Weyerhaeuser as the acquirer of MB with a takeover premium. The Company also
noted that it also could allow Weyerhaeuser to assume MB's rights and
obligations under the Partnership Agreement and that it was evaluating its
options under the Partnership Agreement and otherwise in order to determine the
most advantageous option for its stockholders, associates, customers and
suppliers.
On July 7, 1999, Messrs. Rogel and Denig met in Seattle, Washington, with
Mr. Corbin and Mr. Jody B. Olson, Vice President of the Company, to discuss the
future of the Partnership, strategies for growth of the Partnership's business,
and the future relationships between the Company, Weyerhaeuser and MB. Mr.
Denig stated that, although the Company was still reviewing its alternatives
and no decision had been reached, in his view there were three viable
alternatives for the Company: the Company would purchase MBA's 49% Partnership
interest, Weyerhaeuser would acquire the Company, or MBA would agree to
significantly reduce its interest in the Partnership and relinquish certain
rights under the Partnership Agreement.
On July 22, 1999, Messrs. Rogel, Denig and Olson and Mr. William C. Stivers,
Executive Vice President and Chief Financial Officer of Weyerhaeuser, met in
Seattle, Washington. The Weyerhaeuser representatives stated that an
acquisition of the Company was Weyerhaeuser's strongly preferred alternative
and indicated that Weyerhaeuser was considering a purchase price for all
outstanding Shares in the mid-$30's range. The Weyerhaeuser representatives
indicated that, although Weyerhaeuser preferred a cash transaction, it would be
willing to consider a tax-deferred transaction with the Company involving
Weyerhaeuser stock. At this meeting, in addition to discussing other
alternatives, Messrs. Denig and Olson proposed a structure in which the Company
would acquire MBA's Partnership interest on a tax-advantaged basis to
Weyerhaeuser. Subsequent to this meeting, representatives of the Company and
Weyerhaeuser and their respective financial, legal and tax advisors had
discussions regarding the alternative proposed by Messrs. Denig and Olson for
the Company to acquire MBA's Partnership interest on a tax-advantaged basis,
and, subsequently, Morgan Stanley informed Goldman Sachs that Weyerhaeuser had
no interest in pursuing such a transaction.
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On September 3, 1999, Messrs. Rogel and Corbin met with Messrs. Denig and
Olson in Boise, Idaho. Mr. Rogel stated that Weyerhaeuser did not agree with
the Company's assessment of alternatives available to the parties and stated
that continuation of the Partnership in its current form also should be
considered. They again stated that Weyerhaeuser did not agree that the Company
would have an option to purchase MBA's Partnership interest as a result of the
MB Transaction. Mr. Rogel emphasized the strategic importance to Weyerhaeuser
of the engineered wood products business and stated that Weyerhaeuser would be
prepared to offer $36 per Share to acquire all the outstanding Shares of the
Company. Mr. Denig stated that he did not view that offer as compelling
compared to the other alternatives he believed were available to the Company,
and suggested that the respective financial advisors to the two companies meet
to discuss the business and operational assumptions underlying their respective
valuations of the Company. Mr. Denig also indicated that the Company would
continue to work on the alternative of exercising its rights under the
Partnership Agreement to acquire MBA's Partnership interest, but that he did
not believe that the continuation of the Partnership in its current form
following consummation of the MB Transaction would be an acceptable alternative
for the Company and its stockholders, given Weyerhaeuser's potential influence
on the Company in such a circumstance.
On September 21 and October 1, 1999, the financial advisors to the Company
and the financial advisors to Weyerhaeuser met to discuss their respective
views on valuation. During this period, Goldman Sachs advised Morgan Stanley
that the Company did not intend to pursue a transaction at $36 per Share in
light of its other alternatives. On October 11, 1999, Morgan Stanley advised
Goldman Sachs in a telephone call that Weyerhaeuser did not intend to discuss
any changes in its proposal to acquire the Company until it received the
Company's view as to an appropriate acquisition price. Morgan Stanley further
stated that Weyerhaeuser wished to wait until after the MB Transaction was
consummated to pursue any further discussions with the Company. In a telephone
conversation with Mr. Denig on October 19, 1999, Mr. Rogel reiterated these
statements.
During this period, the financial advisors to the Company and the financial
advisors to Weyerhaueser continued to discuss valuation issues and the Company
and its advisors continued to review the alternatives the Company believed were
available under the Partnership Agreement and continued to focus on exercising
the right under the Partnership Agreement to buy out MBA's Partnership interest
following consummation of the MB Transaction. In addition, the Company
contacted and engaged in discussions with potential financing sources that
could assist the Company in exercising its purchase right under the Partnership
Agreement. In mid-October, the Company's management and financial and legal
advisors updated the Company Board as to the status of discussions between the
Company and Weyerhaeuser and discussed other alternatives available to the
Company. On October 19, 1999, when the Company announced its third quarter
earnings and noted that Weyerhaeuser's acquisition of MB was scheduled to close
in early November 1999, the Company stated that it was in the final stages of
evaluating its options under the Partnership Agreement and otherwise in order
to determine the most advantageous option for the Company's shareholders,
associates, customers, and suppliers and that it intended to disclose its plans
for the Partnership in mid-November 1999.
The MB Transaction was consummated on November 1, 1999. On the evening of
November 1, 1999, Messrs. Stivers, Rogel and Corbin met with Messrs. Denig and
Olson and Ms. Valerie A. Heusinkveld, Vice President and Chief Financial
Officer of the Company, in Seattle, Washington. At this meeting, the Company
representatives discussed certain of the assumptions underlying Weyerhaeuser's
$36 per Share proposal. The Company's representatives presented reasons why
they believed a higher price was justified for the Shares. At the end of this
meeting, Messrs. Rogel and Denig met separately and Mr. Rogel proposed a $40
per Share price to acquire the Company. Mr. Denig indicated that he would not
be willing to support such a proposal.
On November 3, 1999, Mr. Denig invited Mr. Rogel to visit the Company's
Deerwood, Minnesota facility the following weekend in order to show the
potential value of a transaction. On November 7, 1999, during the visit to the
Deerwood, Minnesota facility, Messrs. Rogel and Denig again discussed the
acquisition of the
4
Company by Weyerhaeuser, and Mr. Denig indicated that he might be prepared to
support a transaction at $43 per Share. Mr. Rogel indicated that Weyerhaeuser
was not prepared to increase its price above $40 per Share, although it would
be willing to consider using consideration consisting of 50% Weyerhaeuser stock
and 50% cash in lieu of an all-cash transaction. Mr. Denig also indicated that
the Company Board would be meeting on November 11, 1999 and that he would
inform the Company Board of his most recent discussions with Mr. Rogel.
On November 10, 1999, Mr. Rogel sent the following letter to Mr. Denig:
Mr. Tom Denig
TJ International
200 East Mallard Drive
Boise, ID 83706
Dear Tom:
Following our recent discussions regarding the combination of TJ
International (TJI) and Weyerhaeuser Company (Weyerhaeuser), I wanted to
reemphasize, on behalf of Weyerhaeuser and its board of directors, our
strong interest in pursuing a transaction between our two companies. We
believe that the combination of our companies is mutually beneficial for
all of our shareholders. As we discussed, in order to avoid any
miscommunication, I felt it important to commit to paper the proposal we
are making.
After carefully considering all of the information discussed in our various
meetings and taking into account all of the potential synergies and
operating improvements that are realistically achievable, we propose to
purchase TJI for cash at a price of $40.00 for each share of TJI common
stock. Alternatively, as you have indicated a preference for a stock
component, we also would consider a transaction with one-half of the
consideration in cash and one-half in Weyerhaeuser common stock. This
alternative transaction would be structured as a cash tender at $40.00 for
half of the outstanding TJI common stock followed by a second step merger
of 0.6375 shares of Weyerhaeuser common stock for each remaining share of
TJI common stock, based on Weyerhaeuser's closing price yesterday of
$62.75. This proposal assumes there are approximately 18.3 million shares
of TJI common stock outstanding on a fully diluted basis.
We believe this offer creates superior value for your shareholders versus
other options available to TJI. This significant premium we are offering
represents an upfront payment to your shareholders for the synergies and
operating improvements we expect to achieve. Our proposal represents a 30%
premium to the closing price of TJI common stock on November 9, 1999, and a
50% premium to TJI's stock price before the announcement of our merger with
Macmillan Bloedel. In addition, our offer represents substantial premiums
of 50%, 52% and 81% to TJI's l-, 2- and 5-year average stock prices,
respectively, as well as a meaningful premium to the long-term price
targets of research analysts who cover TJI. In addition to the premium, if
a component of Weyerhaeuser common stock is included, TJI shareholders
would have a tax-deferred transaction on the stock received, a currency
with significant liquidity, and an enhanced dividend with pickup of more
than 130%. TJI shareholders who choose to receive common stock will also
benefit from the substantial upside in Weyerhaeuser common stock as we
realize benefits from the pulp and paper cycle as well as the benefits from
our recent merger with MacMillan Bloedel and a combination with TJI.
In analyzing your business, we have adopted an aggressive view of the
future prospects for engineered wood products and TJI's position in the
market. We have projected operating parameters that exceed TJI's historical
performance. Given the strategic alliance between Weyerhaeuser and TJI
signed in 1993 and the close working relationship between our two
companies, we believe we have fully accounted for all potential synergies.
Furthermore, now that we have completed our transaction with MacMillan
Bloedel, Weyerhaeuser is responsible for distributing and providing in-
market support for products generating over
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60% of your revenues, a system that would be time consuming and difficult
to replicate. For these and other reasons, we are convinced that a
combination of TJI and Weyerhaeuser will generate the highest value for TJI
shareholders relative to any other alternative.
As we indicated in recent meetings, and you and I discussed this past
Monday, this price reflects our full valuation of TJI and is not
negotiable. We are willing to proceed at this price only if we can achieve
a prompt, negotiated transaction. We are prepared to negotiate a definitive
merger agreement with you and to commence a tender offer quickly. To that
end we are in position to promptly deliver the merger agreement once we
hear back affirmatively from you after your board meeting. We could
concurrently commence our confirmatory due diligence process which we
expect could be completed within one week with your full cooperation. As
part of the agreement, we will require the strong and full commitment of
insiders to this transaction, customary no-shop provisions and a break-up
fee of $30 million. We anticipate the transaction will be subject only to
customary closing conditions, including regulatory approvals and
clearances.
Given the significance to TJI of our proposal, the premium to TJI's recent
and historical trading prices and the strategic alternatives available to
TJI, we expect that our proposal will be carefully considered by the TJI
board.
We look forward to hearing from you shortly.
Very truly yours,
/s/ Steven R. Rogel
Steven R. Rogel
Chairman, President & CEO
At a meeting of the Company Board on November 11, 1999, the Company Board
discussed with the Company's management and financial and legal advisors the
proposal made by Weyerhaeuser, as well as possible alternatives to a
transaction with Weyerhaeuser, including exercising the Company's rights under
the Partnership Agreement to acquire MBA's Partnership interest. The Company
Board agreed to continue discussions with Weyerhaeuser, as well as to continue
its pursuit of other alternatives under the Partnership Agreement. Following
the conclusion of the meeting of the Company Board, two outside directors
selected by the Company Board (Dan R. Nelson and J. L. Scott) contacted Mr.
Rogel to indicate that, if Weyerhaeuser was prepared to increase the price in
its proposal to $42 per Share, in their view this price would have the support
of the Company Board; these directors did not discuss any of the other
conditions set forth in the Weyerhaeuser letter, dated November 10, 1999.
On November 12, 1999, Mr. Rogel called Mr. Scott to advise him that he would
discuss a $42 per Share price with the Board of Directors of Weyerhaeuser on
November 15, 1999 and that he would be in a position to respond on November 16,
1999. Mr. Rogel stated that any increase by Weyerhaeuser above its proposed
price of $40 per Share would have to be on an all-cash basis.
On November 15, 1999, the Board of Directors of Weyerhaeuser approved a cash
offer price of $42 per Share.
On November 16, 1999, Mr. Rogel called Mr. Scott and stated that
Weyerhaeuser was willing to offer $42 per Share in an all-cash transaction. Mr.
Rogel then called Mr. Denig and confirmed Weyerhaeuser's willingness to proceed
with a transaction on this basis.
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Later on November 16, 1999, Mr. Rogel sent the following letter to Mr.
Denig:
Mr. Tom Denig
TJ International
200 East Mallard Drive
Boise, ID 83706
Dear Tom:
Following up on my conversation earlier today with Joe Scott, I wanted to
reemphasize Weyerhaeuser Company's strong interest in pursuing a
combination with TJ International (TJI). The Weyerhaeuser Company
(Weyerhaeuser) board has unanimously authorized me to pursue a transaction
between our two companies and is convinced that the union would further
strengthen our combined leadership position in the engineered wood products
market.
After thorough consideration and based on the terms outlined below, we have
agreed to meet your price for TJI of $42.00 per share, payable solely in
cash. As we discussed on the phone this morning, this meets the price you
provided me to receive strong and unanimous board support for a cash
transaction on the terms we have proposed. We believe this represents an
extremely compelling transaction for your shareholders based on its
substantial premium to TJI's recent and historical share price.
The transaction would be structured as a cash tender offer for all of the
outstanding common and preferred shares, followed by a second step merger
for the remaining shares. In order to move quickly to completion, the
Weyerhaeuser team is in place and prepared to commence confirmatory due
diligence immediately. We would expect that with TJI's full cooperation a
definitive agreement could be signed and announced next Monday as you
suggested.
In consideration for increasing our bid to $42.00 per share, Weyerhaeuser
expects to receive the following terms (all of which are detailed in the
draft merger agreement):
. Strong support from TJI's insiders including shareholder agreements
locking up insider shares;
. A break-up fee of $30 million payable under customary circumstances;
. A customary no-shop provision; and
. A waiver of any buy/sell rights TJI may have under the Partnership
Agreement as a result of the MacMillan-Bloedel transaction.
An important reason why our Board is willing to increase the price to
$42.00 per share is the ability to complete the tender offer and merger in
approximately six weeks versus the several month process to complete the
second step merger if a stockholder vote is required. In order to ensure
the acquisition of 90% of each class of TJI's stock, the draft merger
agreement will require a "share top up" provision. In addition, we will
need to obtain and review a copy of TJI's ESOP Plan, which is not publicly
available. Furthermore we expect full cooperation from TJI in structuring
the transaction so that the ESOP and the ESOP convertible preferred stock
does not limit our ability to use the "short form" merger procedure.
As soon as we have confirmation from you following your Board meeting this
morning, we will deliver a draft merger agreement. We believe it is in the
best interests of both our companies for our discussions to be kept on a
strictly confidential basis.
7
We have been impressed by the strength of the management team and the
significant steps you have taken to position the company for future growth.
We are excited about the prospects of acquiring such an outstanding company
with strong brand and product recognition. I believe a combination of TJI
and Weyerhaeuser will create the leading engineered wood products company
in the world.
Very truly yours,
/s/ Steven R. Rogel
Steven R. Rogel
Chairman, President & CEO
At a meeting of the Company Board held on November 16, 1999, following its
review of various alternatives and the November 16, 1999 letter from
Weyerhaeuser with the Company's management and the Company's financial and
legal advisors, the Company Board instructed Mr. Denig, senior management, and
the Company's financial and legal advisors, to proceed with negotiations with
Weyerhaeuser, but indicated that certain of the conditions stipulated by
Weyerhaeuser, which included a $30,000,000 break-up fee, lock-up agreements
with certain inside stockholders and waiver of the Company's right to
repurchase MBA's Partnership interest, needed to be further negotiated, and
were, as a whole, unacceptable to the Company Board. In addition, the Company
Board indicated that, if the Company was going to permit Weyerhaeuser to
undertake due diligence, Weyerhaeuser would need to enter into a customary form
of confidentiality agreement. Subsequent to the November 16, 1999 meeting of
the Company Board, Mr. Denig informed Mr. Rogel that the Company was prepared
to proceed with negotiation of a transaction at $42 per Share, assuming that
the parties could agree to a mutually acceptable merger agreement.
Later that evening, Weyerhaeuser and the Company entered into a
confidentiality agreement covering nonpublic information to be provided to
Weyerhaeuser by the Company beginning on November 17, 1999. This
confidentiality agreement did not contain any standstill provisions restricting
a unilateral offer by Weyerhaeuser. A copy of such confidentiality agreement is
filed as Exhibit 3 to this Statement.
On November 16, 1999, counsel to Weyerhaeuser provided counsel to the
Company with a draft form of merger agreement. During the period from November
17 until November 23, 1999, representatives of Weyerhaeuser and the Company and
their respective financial and legal advisors negotiated the terms of the
merger agreement, and Weyerhaeuser held meetings on November 17 and 18, 1999 in
Boise, Idaho to conduct a due diligence investigation of the Company.
On November 22, 1999, the Company Board held a special meeting to consider
the proposed acquisition of the Company by Weyerhaeuser. (From November 11,
1999 through November 22, 1999, the Company Board met seven times with the
Company's management and its advisors.) At the meeting on November 22, 1999
Mr. Denig and the Company's senior management reviewed the status of the
proposed transaction with Weyerhaeuser and discussed with the directors of the
Company management's views regarding the proposed transaction, representatives
of Goldman Sachs made a financial presentation concerning the proposed
transaction, the Company's legal advisors outlined the terms of the proposed
transaction, and the Company Board and its advisors discussed the proposed
transaction with Weyerhaeuser and alternatives thereto. At this meeting,
Goldman Sachs delivered its oral opinion to the Company Board that, as of such
date, subject to finalization of definitive documentation, and based upon and
subject to assumptions made, matters considered and limitations in connection
with the opinion, the $42 per Common Share in cash proposed to be paid by the
Purchaser in the Offer and the Merger to the holders of Common Shares was fair
from a financial point of view to such holders. Goldman Sachs subsequently
delivered its written opinion dated November 23, 1999. The entire text of the
opinion of Goldman Sachs provided to the Company Board regarding the Offer and
the Merger, which sets forth assumptions made, matters considered and
limitations in connection with such opinion, is attached as Annex B to this
Statement, and the Company stockholders are urged to read such opinion in its
entirety. At the special meeting, the Company Board approved and adopted the
Merger
8
Agreement and the related transactions by unanimous vote, determined that the
transactions contemplated by the Merger Agreement, including the Offer and the
Merger, were fair to the Company and its stockholders from a financial point of
view, and also declared the Merger Agreement to be advisable. THE COMPANY BOARD
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER. The Company Board also recommends that the
Company's stockholders vote to adopt the Merger Agreement to the extent
required by applicable law. A copy of the letter to the Company's stockholders
communicating the Company Board's recommendation and the joint press release
issued by the Company and Weyerhaeuser on November 23, 1999, are filed as
Exhibits 4 and 5 to this Statement and are incorporated herein by reference.
At the November 22, 1999 meeting of the Company Board, the Company Board
also approved the Offer and the Merger for the purposes of rendering Section
203 of the Delaware General Corporation Law and Article Tenth of the Company
Certificate of Incorporation, as amended (the "Company's Certificate")
inapplicable (A) to Weyerhaeuser and the Purchaser solely by reason of their
entering into the Merger Agreement or consummating the Offer or the Merger or
the grant or exercise of an option (the "Option") (which the Company granted to
the Purchaser pursuant to the Merger Agreement to allow the Purchaser
(following consummation of the Offer) to purchase for a price of $42 per Common
Share in cash a number of Common Shares equal to the number of Common Shares
that, when added to the number of Common Shares owned by Weyerhaeuser and the
Purchaser immediately prior to its exercise of the Option, would result in the
Purchaser owning 90% of the then-outstanding Common Shares); and (B) to the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement. The Company Board further approved and adopted an amendment to the
Rights Agreement, filed as Exhibit 7 to this Statement, providing for, among
other things, changes to the definition of the terms "Acquiring Person," "Share
Acquisition Date," and "Distribution Date," and a change in the final
expiration date, and in doing so ensured that the Rights Agreement will not be
applicable to the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, and providing for expiration of the
Rights Agreement immediately prior to the Merger.
In reaching the conclusions and recommendations described above, the Company
Board considered a number of factors, including, without limitation, the
following:
(i) The terms and conditions of the Offer, the Merger and the Merger
Agreement, including the price to be paid in the Offer and the Merger, and
the fact that, although the Offer could be consummated as early as the end
of December of 1999, Weyerhaeuser had agreed to consummate the Offer as
early as the first week of January 2000 if all of the conditions to the
Offer were satisfied;
(ii) The terms of the Partnership Agreement, and the various
alternatives available to the Company under the terms of the Partnership
Agreement and otherwise. The Company and the Company Board believed that
consummation of the MB Transaction by Weyerhaeuser constituted an "Event of
Default" under the Partnership Agreement and evaluated the Company's
alternatives accordingly, although the Company and the Company Board
recognized that Weyerhaeuser could contest such belief and engage in
litigation that could delay the Company's ability to assert its rights
under the Partnership Agreement;
(iii) The fact that, following Weyerhaeuser's acquisition of MB,
Weyerhaeuser was the Partnership's largest customer, responsible for more
than 60% of the Company's annual revenues;
(iv) The potential disruption of the Partnership by Weyerhaeuser (and
the effect of such disruption on the Company) should Weyerhaeuser use any
of its rights under the Partnership Agreement to frustrate the Company's
intentions for the Partnership, and the possibility that, over time,
Weyerhaeuser might on its own enter into businesses directly competitive
with the Company;
(v) The fact that, under the terms of the Merger Agreement, a third
party interested in pursuing a transaction with the Company would have the
certainty of being able to acquire MBA's 49% interest in the Partnership
for $700,000,000 (approximately equivalent to the price of $42 per Share),
if such third party were willing to pay more for the Company than
Weyerhaeuser was willing to pay, as opposed to the uncertain price that
would need to be determined under the terms of the Partnership Agreement
and the
9
uncertain timing for any such determination. The Company Board also
considered the fact that any such third party, even if they were to acquire
the entire Partnership, would have to renegotiate the distribution
arrangements between Weyerhaeuser and the Partnership;
(vi) The oral opinion of Goldman Sachs delivered to the Company Board at
its November 22, 1999 meeting, that, as of such date subject to
finalization of definitive documentation, and based upon and subject to the
assumptions made, matters considered and limitations in connection with
such opinion, the $42 per Common Share in cash proposed to be paid by the
Purchaser in the Offer and the Merger to the holders of Common Shares was
fair from a financial point of view to such holders (the entire text of the
written opinion of Goldman Sachs dated November 23, 1999 subsequently
delivered to the Company Board regarding the Offer and the Merger, which
sets forth assumptions made, matters considered, and limitations in
connection with such opinion, is attached as Annex B to this Statement, and
stockholders are urged to read such opinion in its entirety);
(vii) The recommendation of the Company's management that the Merger
Agreement, including the Offer and the Merger, be approved;
(viii) The directors' knowledge of the Company's business, financial
condition, results of operations, current business strategy and future
prospects, the nature of the markets in which the Partnership operates,
including the Partnership's growth prospects, the Partnership's position in
such markets, and Weyerhaeuser's position in such markets;
(ix) Possible alternatives to the Offer and the Merger, the value to the
Company's stockholders of such alternatives and the timing and likelihood
of achieving additional value from these alternatives, and the possibility
that equally suitable partners for merger and consolidation would be
available. In this connection, the Company Board considered the fact that,
since the Company issued its press release on June 21, 1999 regarding its
evaluation of alternatives under the Partnership Agreement and otherwise,
no third parties had contacted the Company expressing any significant
interest in pursuing a transaction with the Company. The Company Board also
considered that fact that it had not explicitly put the Company up for sale
in light of the provisions set forth in the Partnership Agreement (relating
to the fact that a change of control of the Company would be an "Event of
Default" under the Partnership Agreement), and the difficulties that such
an announcement could have created with the Company's associates, customers
and suppliers. The Company Board also considered the possibility of
remaining an independent company with Weyerhaeuser as its partner in the
Partnership. The Company also had discussed Weyerhaeuser's willingness to
reduce its interest in the Partnership, which would give the Company
greater autonomy over the Partnership, which Weyerhaeuser had rejected. The
Company Board concluded that the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, were superior to such
alternatives, and that, if a superior alternative did become available, the
Company would be able to pursue such an alternative under the terms of the
Merger Agreement; and
(x) The historical and current market prices for Common Shares.
The Company Board also considered certain countervailing factors in its
deliberations concerning the Merger Agreement, the Offer and the Merger,
including:
(i) The terms and conditions of the Merger Agreement, including the
requirement under the Merger Agreement that the Company pay to Weyerhaeuser
termination fees of up to $25,000,000 if the Merger Agreement is terminated
under certain circumstances specified in the Merger Agreement, including,
among others, if the Company Board changed its recommendation or exercised
its right to terminate the Merger Agreement and enter into an alternative
transaction. While the Company Board thought that these provisions could
result in significant fees being borne by the Company, it accepted these
provisions as a means to obtain other terms favorable to the Company, in
particular, the right to negotiate or exchange information with potential
bidders and the right to terminate the Merger Agreement, under certain
limited
10
circumstances set forth in the Merger Agreement, in the event of an
alternative transaction that the Company Board determined would be superior
to the transaction with Weyerhaeuser.
(ii) The fact that, under the Merger Agreement, it was delaying the
exercise and/or waiving certain rights that it believed the Company
possessed under the Partnership Agreement to buy MBA's 49% interest in the
Partnership, or to sell to Weyerhaeuser (through its ownership of MB) the
Company's interest in the Partnership. The Company Board accepted these
provisions, both as a means to obtain other terms favorable to the Company,
and because it believed that an attempt to exercise these rights would be
less favorable to the Company and its stockholders than negotiating an
agreement to sell the Company to Weyerhaeuser at a price of $42 per Share,
given, among other things, that Weyerhaeuser refused to admit that the
Company had such rights and that Weyerhaeuser was the Partnership's most
significant customer and distributor.
The foregoing discussion of the information and factors considered and given
weight by the Company Board is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Offer,
the Company Board did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in
reaching its determination. In addition, individual members of the Company
Board may have given different weights to different factors.
Item 5. Persons Retained, Employed or To Be Compensated.
Pursuant to a letter agreement dated June 16, 1999, the Company engaged
Goldman Sachs to act as its financial advisor in connection with the Offer and
the Merger. Pursuant to the terms of the letter agreement, the Company has
agreed to pay Goldman Sachs upon consummation of the Offer a transaction fee of
1.0% of the aggregate consideration paid or payable in connection with the
Offer and the Merger (calculated assuming all the Shares are acquired in the
Offer and including amounts paid or payable to holders of options, warrants and
other convertible securities) plus the principal amount of all indebtedness for
borrowed money as shown on the most recent consolidated balance sheet of the
Company prior to the consummation of the Offer. The Company has previously paid
Goldman Sachs $250,000 which will be deducted from the amount payable described
in the preceding sentence. The Company has agreed to reimburse Goldman Sachs
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws.
Except as described above, neither the Company, nor any person acting on its
behalf, currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to the Company's stockholders on its
behalf concerning the Offer.
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) To the knowledge of the Company, no discretionary transactions in Common
Stock have been effected within the past 60 days by the Company or any
executive officer, director, affiliate or subsidiary of the Company.
(b) To the knowledge of the Company, the Company's executive officers,
directors, affiliates and subsidiaries intend to tender, pursuant to the Offer,
all Shares that are held of record or that are beneficially owned by such
persons. Harold Thomas, the Chairman of the Company, has indicated that he
intends to donate certain amounts of his Common Shares to charities and may
make other gifts prior to the consummation of the Offer as part of his estate
and tax planning.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth in this Statement, the Company is not engaged in any
negotiation in response to the Offer that relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization,
11
involving the Company or any subsidiary of the Company; (ii) a purchase, sale,
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth in this Statement, there are no transactions,
resolutions of the Company Board, agreements in principle, or signed contracts
in response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above. Subject to the terms of the Merger
Agreement incorporated by reference in Item 3(b) of this Statement, the Company
may engage in discussions or negotiations with respect to transactions or
proposals of the type referred to above in this Item 7. At its meeting held on
November 22, 1999, the Company Board determined that public disclosure with
respect to the parties to, and the possible terms of any proposals made in
connection with, or agreement that may result from, any such discussions or
negotiations, might jeopardize the continuation of such discussions or
negotiations and adopted a resolution authorizing and directing management not
to make any such public disclosure unless and until an agreement in principle
is reached relating thereto.
Item 8. Additional Information To Be Furnished.
(a) Rights Agreement. Each Right issued pursuant to the Rights Agreement
initially entitles the registered holder thereof to purchase one one-hundredth
of a share of the Company's Series A Junior Preferred Stock, par value $1.00
per share ("Junior Preferred Shares"), of the Company at a price of $135 per
one one-hundredth of a Junior Preferred Share, subject to adjustment. On the
earlier of (i) the tenth day following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) the tenth business day (or such later date as
may be determined by action of the Company Board prior to the time any person
becomes an Acquiring Person) following the commencement of a tender offer or
exchange offer the consummation of which would result in that person becoming
an Acquiring Person (the earlier of such dates being the "Distribution Date"),
the Rights become exercisable and trade separately from the Common Stock. After
the Distribution Date, each holder of a Right (other than the Acquiring Person)
will thereafter have the right to acquire Common Shares having a market value
of two times the exercise price of the Right; or, in certain circumstances, the
right to acquire shares of the Acquiring Person's capital stock. The Rights may
be redeemed at a price of $0.001 per Right at any time prior to a person
becoming an Acquiring Person. For a complete description of the Rights
Agreement, see the Company's Form 8-A, dated September 17, 1999, the Company's
Current Report on Form 8-K, dated September 17, 1999, and the Rights Agreement
filed as an exhibit to such Form 8-A, each as filed with the Commission and
incorporated herein by reference.
The Company has entered into an amendment to the Rights Agreement to make it
inapplicable to the Offer, the Merger and the other transactions contemplated
by the Merger Agreement, as described in Item 4 above. In addition, this
amendment to the Rights Agreement provides that the Rights Agreement will
expire immediately prior to the Merger. A copy of such amendment to the Rights
Agreement is filed as Exhibit 7 to this Statement and incorporated herein by
reference.
(b) Delaware General Corporation Law. As a Delaware corporation, the Company
is subject to Section 203 of the Delaware General Corporation Law ("Section
203"). In general, Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or approved the Business Combination, (ii) upon
consummation of the transaction that resulted in the Interested Stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding, for purposes of determining the number of
shares outstanding, stock held by directors who are also officers and by
employee stock ownership plans that
12
do not allow plan participants to determine confidentially whether to tender
shares), or (iii) following the transaction in which such person became an
Interested Stockholder, the Business Combination is (A) approved by the board
of directors of the corporation and (B) authorized at a meeting of stockholders
by the affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock of the corporation not owned by the Interested Stockholder. In
accordance with the provisions of Section 203, the Company Board has approved
the Merger Agreement, as described in Item 4 in this Statement, and, therefore,
the restrictions of Section 203 are inapplicable to the Offer, the Merger and
the related transactions.
(c) Idaho Control Share Acquisition Statute and Business Combination
Statute. As a corporation that does business in Idaho, has its headquarters in
Idaho and has a significant number of stockholders in Idaho, the Company has
the option to apply to itself the provisions of Section 1603 ("Section 1603")
and Section 1704 ("Section 1704") of the Idaho Corporations Code (the "ICC").
In general, Section 1603 provides that the shares of a public corporation
acquired by an acquiring person in a "control share acquisition" (generally
defined as an acquisition by an acquiring person that would otherwise, when
added to all other shares of the public corporation beneficially owned by the
acquiring person, entitle the acquiring person to increase such acquiring
person's voting power into a new range of voting power (with those ranges being
20-33 1/3%, 33 1/3% to 50%, and over 50%)) have voting rights limited to the
extent that such an acquisition has not been approved by resolution of holders
of 66 2/3% of the voting power of the corporation. In general, Section 1704
prevents an "interested shareholder" (generally defined as a person
beneficially owning 10% or more of a corporation's voting stock) from engaging
in a "Business Combination" (as defined in Section 1701 of the ICC) with such a
corporation for three years following the date such person became an interested
shareholder unless the business combination or the acquisition of shares made
by the interested shareholder on the date such interested shareholder becomes
such is approved by a committee of the board of directors of the public
corporation consisting of "disinterested directors" before such date. The
Company Board has not amended the Company Bylaws to make either Section 1603 or
Section 1704 applicable to the Company.
(d) Article Tenth of Charter. In general, Article Tenth of the Company's
Certificate ("Article Tenth") would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 5% or more of the Common
Shares) from engaging in a "Business Combination" (as defined in Article Tenth)
with the Company unless such Business Combination is approved by the
affirmative vote or consent of the holders of at least a majority of the then-
outstanding Common Shares, excluding those Common Shares beneficially owned by
any Interested Stockholder or any affiliate of any Interested Stockholder. The
Company Board has taken action sufficient to render Article Tenth inapplicable
(A) to Weyerhaeuser, and the Purchaser solely by reason of their entering into
the Merger Agreement or consummating the Offer or the Merger or the grant or
exercise of the Option; and (B) to the Offer, the Merger and the other
transactions contemplated by the Merger Agreement.
(e) Antitrust.
United States. Under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") and the FTC and certain waiting period requirements
have been satisfied. The acquisition of Shares by the Purchaser pursuant to the
Offer is subject to such requirements. Pursuant to the requirements of the HSR
Act, Weyerhaeuser and the Company intend to file their respective required
Notification and Report Forms (the "Forms") with the Antitrust Division and the
FTC in early December of 1999. The statutory waiting period applicable to the
purchase of Shares pursuant to the Offer is scheduled to expire at 11:59 P.M.,
New York City time, on the 15th day after Weyerhaeuser has filed its Form,
unless early termination of the waiting period is granted or Weyerhaeuser and
the Company receive a request for additional information or documentary
material prior thereto. However, prior to such date, the Antitrust Division or
the FTC may extend the waiting period by requesting additional information or
documentary material relevant to the acquisition. If such a request is made,
the waiting period will be extended until 11:59 P.M., New York City time, on
the tenth day after substantial
13
compliance by Weyerhaeuser with such request, unless earlier terminated by the
Antitrust Division or the FTC or the filing parties voluntarily agree to extend
further the waiting period. Thereafter, such waiting periods can be extended
only by court order. In practice, complying with a request for additional
information or documentary material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Expiration or termination of the applicable
waiting period under the HSR Act is a condition to the Purchaser's obligation
to accept for payment and pay for Shares tendered pursuant to the Offer.
Pursuant to the HSR Act, Weyerhaeuser will request early termination of the
applicable waiting period. There can be no assurance that the waiting period
will be terminated early.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the
consummation of any such transaction, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as either deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer,
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Weyerhaeuser or the Company, or seeking the imposition of unfavorable
conditions on the proposed transaction. Private parties and states may also
bring legal actions under the antitrust laws under certain circumstances.
Although Weyerhaeuser currently owns a 49% interest in the Partnership, there
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made, or, if such a challenge is made, what the result will be.
Canadian Competition Act. Under the provisions of the Competition Act
(Canada) (the "Canadian Act"), the acquisition of Shares under the Offer may be
consummated after the expiration of a seven-calendar day waiting period
commenced by the filing by Weyerhaeuser of a short-form premerger filing under
the Canadian Act with respect to the Offer, unless Weyerhaeuser receives a
request to complete a long-form filing prior to the expiration of the seven-
calendar day waiting period, in which case a long-form filing must be made,
after completion of which a 21-day calendar day waiting period is mandated.
These waiting periods are expected to be doubled by legislative changes that
may be implemented in respect of premerger notification filings under the
Canadian Act made after mid-December 1999. Weyerhaeuser expects to make a
short-form filing under the Canadian Act in the near future. Before or after
the waiting periods referred to above have expired, upon application by the
Commissioner of Competition under the Canadian Act (the "Commissioner") which
certifies that in the Commissioner's opinion more time is required to complete
his inquiry into the Offer, the Canadian Competition Tribunal may issue an
interim order forbidding any person from, among other things, completing the
Offer. The interim order shall not have a term longer than thirty days; on
further application by the Commissioner that he is unable to complete an
inquiry within the period specified in the order because of circumstances
beyond his control, the Canadian Competition Tribunal may extend the duration
of the order to a day not more than sixty days after the order takes effect. In
the course of his inquiry, the Commissioner may request additional information.
In practice, complying with such requests can take a significant amount of
time. In addition, if the Commissioner raises substantive issues in connection
with a proposed transaction, the parties frequently engage in negotiations with
the Commissioner concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations
continue. Expiration of the applicable waiting periods under the Canadian Act
is a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Merger will not require an additional filing under the Canadian Act if
the Purchaser owns more than 50% of the outstanding Shares at the time of the
Merger or if the Merger is completed within one year after the making of the
premerger notification filings under the Canadian Act.
The Commissioner frequently scrutinizes the legality under the Canadian Act
of transactions such as the Purchaser's proposed acquisition of the Company. At
any time before or after the Purchaser's acquisition of
14
Shares pursuant to the Offer, the Commissioner could take such action under the
Canadian Act as he deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by the
Purchaser or the divestiture of substantial assets of the Company or its
subsidiaries or Weyerhaeuser or its subsidiaries. Although Weyerhaeuser
currently owns a 49% interest in the Partnership, there can be no assurance
that a challenge to the Offer under the Canadian Act will not be made or, if
such a challenge is made, of the result thereof.
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals may
be required or desirable in connection with the consummation of the Offer.
Certain of such filings or approvals, if required or desirable, may not be made
or obtained prior to the expiration of the Offer. The Purchaser is seeking
further information regarding the applicability of any such laws and currently
intends to take such action as may be required or desirable.
(f) Purchaser's Designation of Persons To Be Elected to the Company
Board. The Information Statement attached as Annex A to this Statement is being
furnished in connection with the possible designation by the Purchaser,
pursuant to the terms of the Merger Agreement, of certain persons to be
appointed to the Company Board other than at a meeting of the Company's
stockholders.
Item 9. Material To Be Filed as Exhibits.
The following Exhibits are filed herewith:
Exhibit No. Description
----------- -----------
Exhibit 1 --Offer to Purchase, dated November 30, 1999.
Exhibit 2 --Agreement and Plan of Merger, dated as of November 23, 1999,
among Weyerhaeuser Company, WTJ, Inc. and TJ International, Inc.
Exhibit 3 --Confidentiality Agreement, dated November 16, 1999, between
Weyerhaeuser Company and TJ International, Inc.
Exhibit 4 --Letter to Stockholders, dated November 30, 1999.*
Exhibit 5 --Joint Press Release issued by Weyerhaeuser Company and TJ
International, Inc., dated November 23, 1999.
Exhibit 6 --Opinion of Goldman, Sachs & Co., dated November 23, 1999.*
Exhibit 7 --Amendment No. 1 to Rights Agreement, dated November 23, 1999,
between TJ International, Inc. and First Chicago Trust Company
of New York, as Rights Agent.
- --------
* Included in copy of Statement mailed to stockholders.
15
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
TJ INTERNATIONAL, INC.
/s/ Thomas H. Denig
By: _________________________________
Thomas H. Denig
President and
Chief Executive Officer
Dated: November 30, 1999
16
ANNEX A
TJ INTERNATIONAL, INC.
200 East Mallard Drive
Boise, Idaho 83706
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about November 30, 1999 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Statement") of TJ International, Inc. (the "Company"). You are receiving this
Information Statement in connection with the possible election of persons
designated by Weyerhaeuser Company ("Weyerhaeuser") to a majority of seats on
the Board of Directors of the Company (the "Company Board"). On November 23,
1999, the Company entered into the Agreement and Plan of Merger (the "Merger
Agreement") with Weyerhaeuser and WTJ Inc., a Delaware corporation and a wholly
owned subsidiary of Weyerhaeuser (the "Purchaser"), pursuant to which the
Purchaser is required to commence a tender offer to purchase (i) all issued and
outstanding shares of the Company's Common Stock, par value $1.00 per share
(the "Common Shares"), and associated Rights (as defined below), at a price per
Common Share of $42, and (ii) all the issued and outstanding shares and,
together with the Common Shares (the "Shares"), of the Company's ESOP
Convertible Preferred Stock, par value $1.00 per share (the "Preferred Shares")
at a price per Preferred Share of $42, in each case, net to the seller in cash,
without interest thereon (the "Offer Price"), upon the terms and conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal (which,
together with amendments and supplements hereto or thereto, collectively
constitute the "Offer"). Copies of the Offer to Purchase and the Letter of
Transmittal have been mailed to the Company's stockholders and are filed as
Exhibits (a)(1) and (a)(2) respectively, to the Schedule 14D-1 (as amended from
time to time, the "Schedule 14D-1") filed by Weyerhaeuser and the Purchaser
with the Securities and Exchange Commission (the "Commission"), and the Offer
to Purchase is also filed as Exhibit 1 to this Statement. The Merger Agreement
contemplates that, following consummation of the Offer and the satisfaction or
waiver of certain conditions, Purchaser will be merged with and into the
Company (the "Merger"), with the Company as the surviving corporation of the
Merger becoming a wholly owned subsidiary of Weyerhaeuser. As of the effective
time of the Merger, each issued and outstanding Share (other than Common Shares
owned by the Company, Weyerhaeuser, the Purchaser or their respective
subsidiaries, and Common Shares as to which appraisal rights have been
perfected) will, by virtue of the Merger and without any action by the holder
thereof, be converted into the right to receive the Offer Price in cash, as
more fully set forth in the Merger Agreement.
The Offer, the Merger and the Merger Agreement are more fully described in
the Offer to Purchase as well as in the Statement to which this Information
Statement forms Annex A, which was filed by the Company with the Commission on
November 30, 1999 and which is being mailed to the Company's stockholders along
with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 promulgated thereunder. The information set forth herein
supplements certain information set forth in the Statement. Information set
forth herein related to Weyerhaeuser, the Purchaser or the Purchaser Designees
(as defined below) has been provided by Weyerhaeuser. You are urged to read
this Information Statement carefully. You are not, however, required to take
any action.
Pursuant to the Merger Agreement, Weyerhaeuser and the Purchaser commenced
the Offer on November 30, 1999. The Offer is currently scheduled to expire at
8:00 PM, New York City time, on January 5, 2000, unless Weyerhaeuser extends
it.
A-1
GENERAL
The Common Shares and the Preferred Shares are the only classes of equity
securities of the Company outstanding. The holders of Preferred Shares are
entitled to vote on all matters submitted to a vote of the Company's
stockholders, voting together with the holders of Common Shares as one class.
The holder of each Preferred Share is entitled to the same voting power that
the holder of one Common Share holds, which in all cases is equal to one vote.
As of the close of business on November 17, 1999, there were outstanding
18,351,054 Common Shares, and Weyerhaeuser and the Purchaser own no Common
Shares as of the date hereof.
RIGHTS TO DESIGNATE DIRECTORS AND PURCHASER DESIGNEES
The Merger Agreement provides that, promptly upon the acceptance for payment
of, and payment by the Purchaser for, any Shares pursuant to the Offer, the
Purchaser shall be entitled to designate such number of directors (the
"Purchaser Designees") on the Company Board as will give the Purchaser
representation on the Company Board equal to at least that number of directors,
rounded up to the next whole number, which is the product of the total number
of directors on the Company Board multiplied by the percentage that such number
of Shares so accepted for payment and paid for by the Purchaser plus the number
of Shares otherwise owned by the Purchaser or any other subsidiary of
Weyerhaeuser bears to the number of fully diluted Shares.
Following the election or appointment of the Purchaser Designees as
described above, and prior to the Effective Time of the Merger, the Company
Board shall have at least three directors who were directors on the date of the
Merger Agreement and who are not officers of the Company ("Independent
Directors"); and, if the number of Independent Directors is reduced below three
for any reason whatsoever, any remaining Independent Directors (or Independent
Director if only one remains) shall be entitled to designate persons to fill
such vacancies who shall be deemed to be Independent Directors for the purposes
of the Merger Agreement. If no Independent Directors remain, the other
directors shall designate three persons to fill such vacancies who are not
officers, stockholders or affiliates of the Company, Weyerhaeuser, or the
Purchaser, and such persons shall be deemed to be Independent Directors for the
purposes of the Merger Agreement.
To the fullest extent permitted by applicable law, the Company is obligated
to take all actions requested by Weyerhaeuser necessary to effect the election
of any Purchaser Designee. In connection with the foregoing, the Company will
promptly, at the option of Weyerhaeuser, use all reasonable efforts to either
increase the size of the Company Board or obtain the resignation of such number
of its current directors as is necessary to enable the Purchaser Designees to
be elected and appointed to the Company Board as provided above.
The Purchaser Designees will be selected by Weyerhaeuser from among the
persons listed below. Each of the following persons has consented to serve as a
director of the Company if appointed or elected. None of the Purchaser
Designees currently is a director of, or holds any positions with, the Company.
To the best of Weyerhaeuser's knowledge, except as set forth below, none of the
Purchaser Designees or any of their affiliates beneficially owns any equity
securities or rights to acquire any such securities of the Company, nor has any
such person been involved in any transaction with the Company or any of its
directors, executive officers or affiliates that is required to be disclosed
pursuant to the rules and regulations of the Commission other than with respect
to transactions between Weyerhaeuser and the Company that have been described
in the Schedule 14D-1 or the Statement.
The name, age, present principal occupation or employment and five-year
employment history of each of the persons are set forth below. Unless otherwise
indicated, each such person has held his or her present position as set forth
below for the past five years and each occupation refers to employment with
Weyerhaeuser unless otherwise noted. Unless otherwise noted, each such person
is a citizen of the United States, and the business address of each person
listed below is 33663 Weyerhaeuser Way South, Federal Way, Washington 98003.
A-2
Name, Principal Occupation and Employment History of Purchaser Designees Age
- ------------------------------------------------------------------------ ---
Robert A. Dowdy, a director of the Purchaser, has been an attorney with 58
Weyerhaeuser Company since 1972; a Senior Legal Counsel from 1974 to 1986;
Assistant General Counsel 1986 to 1991; Deputy General Counsel from 1991
to 1997 and Vice President and General Counsel since 1997. From 1970 to
1972, he was an attorney with American Airlines, Inc. Mr. Dowdy is a
member of the Association of General Counsel, the American Forest and
Paper Association, General Counsel's Committee; the Advisory Council of
the Kitsap County Foundation; and the Board of Law Fund. He received his
Doctor of Laws and B.A. from the University of California at Berkeley.
William R. Corbin has been the Executive Vice President, Wood Products, 57
for Weyerhaeuser Company since 1998, was Executive Vice President,
Timberlands and Distribution, from 1995 to 1998, and was Executive Vice
President, Wood Products, from 1992 to 1995. In 1991, he served as Vice
President and General Manager of land and timber for International Paper
Company and President of IP Timberlands Ltd. From 1989 to 1991, Mr. Corbin
was Vice President of Operations for Redwood Empire. He served as Chief
Executive Officer and President of Superstill Technology Inc., an emerging
medium technology company from 1986 to 1989 and was with Crown Zellerback
Corp. from 1974 to 1986, where he served as Vice President of Southern
Timber and Wood Products, Senior Vice President of Timber and Wood
Products and Group President. Mr. Corbin serves as a director and officer
of various Weyerhaeuser subsidiaries and affiliates and is a trustee and
executive committee member of the Weyerhaeuser Company Foundation. He is
an advisory board member of both the University of Washington's School of
Business Administration and College of Forest Resources. He serves as Vice
President and an executive committee member of The Mountains to Sound
Greenway Trust. Mr. Corbin is a charter member of the International
Advisory Board of the Institute for Environment and Natural Resource
Research and Policy at the University of Wyoming. He received a B.S. in
Forest Products from the University of Washington and a Master of Forestry
from Yale University.
Scott R. Marshall has served as the Vice President, Policy, Finance & 53
Strategic Planning, Timberlands for Weyerhaeuser Company since 1991. He
joined Weyerhaeuser Company in 1977 as Project Leader, Raw Materials,
Research & Development; in 1979 was Long-Term Planning Analyst, Wood
Products; from 1979 to 1981 was Strategic Planning Manager, Lumber
Business; served as Assistant to Region Vice President--Klamath Falls from
1981 to 1984; Manager Special Projects from 1984 to 1985; and Director
Finance/Planning/Administration, Forest Products Company from 1985 through
1990. Mr. Marshall is a member of the Technical Association of the Pulp
and Paper Industry, the Society of American Foresters, Forest Products
Research Society, BOD Foundation for Russian-American Economic
Cooperation, World TimberFund Management Committee and the Executive
Committee of the Board of Directors for APEC. He received a B.S. in Forest
and Wood Science and an M.S. in Wood Science and Technology from Colorado
State University and an M.B.A. in Forest Industries from the University of
Oregon.
William C. Stivers has been the Executive Vice President and Chief 60
Financial Officer of Weyerhaeuser Company since 1998 and was Senior Vice
President and Chief Financial Officer from 1990 to 1998. He joined
Weyerhaeuser Company in 1970 as Finance Manager and was also Treasurer of
Weyerhaeuser Real Estate Company, a subsidiary of Weyerhaeuser Company.
From 1972 to 1980 he was Treasurer of Weyerhaeuser Company; served as a
Vice President from 1980 to 1990 and as Chief Financial Officer from 1990.
From 1962 to 1970, Mr. Stivers was employed by First Interstate Bank of
California, where he served as Assistant Vice President and as Vice
President. He is a director and officer of various Weyerhaeuser
subsidiaries and affiliates. In addition, he serves on the boards of the
Factory Mutual Insurance Co. and the Pacific-Rim Finance Center at the
University of Washington's Graduate School of Business Administration. Mr.
Stivers is Chairman of the Financial Management committee of the American
Forest & Paper Association, a member of the Financial Executives
Institute, and President of S&S Land and Cattle Company. He received a
B.A. from Stanford University, an M.B.A. from the University of Southern
California, a certificate from the Pacific Coast School of Banking and has
completed the Advanced Management Program at Harvard Graduate School of
Business Administration.
A-3
TJ INTERNATIONAL, INC.
Stock Ownership
Common Stock Ownership by 5% Stockholders, Officers and Directors
The following table shows the stock ownership, as of November 22, 1999, for
(1) each person or group known by the Company to beneficially own more than 5%
of Common Stock; (2) each of the directors; (3) the executive officers named in
the Executive Compensation Tables below; and (4) all of the directors and
executive officers as a group.
Number of Percent of
Shares Acquirable Class
Beneficially Within 60 Outstanding
Name and Address of Beneficial Owner Owned (2) Days (3) (4)
- ------------------------------------ ------------ ---------- -----------
Beneficial Owners of More Than 5%
Trimark Financial Corporation (1)......... 1,710,000 -- 11.0%
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario, Canada M5X 1E5
Directors
Thomas H. Denig........................... 43,877 115,346 **
Joyce A. Godwin........................... 4,299 4,333 **
Richard L. King........................... 2,200 1,000 **
Mark R. Peterson.......................... 2,000 0 **
Dan R. Nelson............................. 2,000 0 **
J. L. Scott............................... 16,967 4,333 **
Harold E. Thomas (2) (6).................. 498,549 25,000 3.4%
Steven C. Wheelwright..................... 5,000 4,333 **
William J. White.......................... 5,000 4,333 **
Other Named Executives
Robert J. Dingman......................... 16,536 52,179 **
Randy W. Goruk............................ 18,969 44,100 **
Valerie A. Heusinkveld.................... 11,089 42,104 **
Patrick D. Smith.......................... 15,649 38,880 **
All directors and executive officers as a
group (17 persons) (5)................... 2,515,060 427,841 19.0%
- --------
(1) The beneficial ownership information for Trimark Financial Corporation
("TFC"), is taken from a Commission Schedule 13G report, Amendment No. 3,
dated February 16, 1999. Certain TFC mutual funds, which are trusts
organized under the laws of Ontario, Canada, are owners of record of
1,690,000 shares of Common Stock. Robert C. Krembil, a Canadian citizen
and Chairman and stockholder of TFC, is also an owner of record of 20,000
shares of Common Stock. Trimark Investment Management, Inc. ("TIMI"), a
corporation incorporated under the laws of Canada, is the manager and
trustee of the mutual funds. TIMI is qualified to act as an investment
advisor and manager of the mutual funds in the province of Ontario
pursuant to the registration under the Securities Act (Ontario). TFC is a
corporation incorporated under the laws of Ontario, Canada. It owns 100%
of the voting equity securities of TIMI. Consequently, TFC may be deemed
to be the beneficial owner of the securities.
(2) The number of Common Shares shown includes Common Shares that are
individually or jointly owned, as well as Common Shares over which the
individual has either sole or shared investment or voting authority.
Harold E. Thomas disclaims beneficial ownership of some of the Common
Shares included in the table, as follows: 44,236 Common Shares held in a
non-profit private foundation established for charitable, religious, or
educational purposes, and 100,056 Common Shares held in trust. The table
does not include
A-4
168,000 Common Shares owned by several Thomas family trusts for the benefit
of Mr. Thomas' grandchildren because the trust agreements do not permit him
to exercise voting or investment power; and he disclaims beneficial
ownership of these Common Shares. Because of their relationship, however, he
may influence the exercise of those powers by Mr. J. Robert Tullis, former
member of the Company Board and Trustee of the trusts.
(3) Reflects the number of Common Shares that could be purchased by exercise
of options available on November 22, 1999 or within 60 days thereafter
under the Company's stock option plans.
(4) Based on the number of Common Shares outstanding on November 22, 1999.
(5) The amount beneficially owned by all directors and executive officers as a
group includes 1,837,958 shares of Common Stock held by the Trustee for
the Company's United States retirement plans. All of the executive
officers participate in these plans; and certain of the Company's
employees administer these plans.
(6) In May 1983, the Company's stockholders approved a stock purchase and
resale agreement between the Company and four of the Company's
stockholders ("Stockholders"), consisting of Mr. Thomas and his wife,
Phyllis S. Thomas, and Mr. Troutner and Katherine Troutner, Mr. Troutner's
former wife. The agreement provides that, upon the death of a Stockholder,
the Company is required to purchase (or arrange for someone else to
purchase) one-half of the total number of Common Shares owned by such
Stockholder at the date of death. In addition, the Company has the option
to purchase (or arrange for someone else to purchase) all or any part of
the remaining Common Shares owned by such Stockholder. The estate of the
Stockholder is required to sell the Common Shares in such circumstances.
The agreement also provides that during the lifetime of the Stockholders,
the Company has the right of first refusal with respect to voluntary or
involuntary transfers of Common Shares owned by any of the Stockholders,
with certain exceptions. Any purchase price is based on average trading
prices on the Nasdaq National Market for specified periods of time prior
to the purchase. In connection with its approval of the Merger Agreement,
the Company waived the obligations of the Stockholders to sell their
shares to the Company pursuant to the stock purchase and resale agreement
for the period that the Merger Agreement is in effect.
Preferred Stock
In September 1990, the Company issued 634,921 Preferred Shares (equivalent,
after giving effect to a subsequent stock split, to 1,269,842 Preferred Shares)
at $11.8125 per share to the Company's employee retirement plan (the
"Investment Plan"). Each share of Preferred Stock has one vote and receives a
preferential dividend of $1.065 each year. The Company may redeem the Preferred
Stock under certain circumstances. When any person receives a payout from the
Investment Plan, the Company first converts each share of Preferred Stock into
one share of Common Stock. If the current stock price is below $11.8125, the
shares of Preferred Stock are valued at $11.8125 per share. The Company then
has the choice to pay the participant in Common Stock, cash, or any combination
of Common Stock and cash. As of November 22, 1999, 100% of the Preferred Stock,
or 1,097,719 shares of Preferred Stock, was held by the Trustee for the
Investment Plan. All of the Company's executive officers participate in the
Investment Plan; and certain of the Company's employees administer the
Investment Plan.
Executive Officers
Information regarding executive officers has been placed under the caption
"Directors and Executive Officers of the Registrant" in Part III of the
Company's Annual Report on Form 10-K, for the period ended January 2, 1999.
Terms of Directors
The directors are divided into three classes. At each annual meeting, the
term of one class expires. Directors in each class serve three-year terms.
A-5
Directors
Elected at the 1999 Annual Meeting
Term Expires at the 2002 Annual Meeting
Richard L. King (3)
Director since 1998
Mr. King, 49, is the former President and Chief Operating Officer of
Albertson's, Inc., Boise, Idaho (supermarkets, drug stores and combination food
and drug stores), and held that position from 1996 to 1999. He was formerly the
Senior Vice President / Regional Manager from 1995 to 1996, the Group Vice
President of Merchandising in 1994, and a Vice President, Colorado from 1991 to
1994 of Albertson's, Inc. He has served in various management positions with
Albertson's, Inc. at the division and store levels since 1982. He is a graduate
of Utah State University and the Stanford Executive Program. He also is serving
as a director of Albertson's, Inc., and is on the Advisors Council to the Idaho
Supreme Court.
Elected at the 1997 Annual Meeting
Terms Expire at the 2000 Annual Meeting
Joyce A. Godwin (3) (4)
Director since 1997
Ms. Godwin, 55, retired in December 1993 as the Vice President and Secretary
of Presbyterian Healthcare Services in Albuquerque, New Mexico, a position she
had held since 1979. She was also Chairman and President of Southwest Business
Ventures, Inc., a holding company for Presbyterian Healthcare Services' for-
profit ventures from 1986 until 1989. She is a graduate of Florida State
University and has a M.A. from George Washington University. She is also a
director of Public Service Company of New Mexico.
J. L. Scott (1) (3)
Director since 1980
Mr. Scott, 69, is the former President and Chief Executive Officer of
American Stores Co., in Salt Lake City, Utah (supermarkets, drug stores and
combination food and drug stores), a position he held from June 1990 to
September 1992. Prior to that, he served in various senior executive positions
with American Stores Co. and American Superstores, Inc. from 1987 to June 1990;
as Chairman and Chief Executive Officer of J.L. Scott Enterprises, Inc., from
1980 to 1987; as Chairman and Chief Executive Officer of the Great Atlantic and
Pacific Tea Company, Inc. from 1975 to 1980; and, prior to 1975, as Vice
Chairman and Chief Executive Officer of Albertson's, Inc. He is a graduate of
Albertson College of Idaho.
Harold E. Thomas (1)
Director since 1960
Mr. Thomas, 72, is Co-founder and Chairman of the Board of the Company,
Boise, Idaho, and has been Chairman of the Board since 1960. He also served as
President of the Company from 1960 to 1971, and as Chief Executive Officer from
1971 to 1975 and again from 1979 to 1986 of the Company. He is a graduate of
the University of Idaho.
William J. White (1) (2)
Director since 1994
Mr. White, 60, is a professor at Northwestern University, Evanston, Illinois
since the beginning of 1998. He was the Chairman and Chief Executive Officer of
Bell & Howell Company from February 1990 to December 1997. He served as
Chairman and President of Whitestar Graphics, Inc. in 1989; as Executive Vice
President and Director of USG Corporation and as President and Chief Executive
Officer of its largest subsidiary, United States Gypsum Co., from 1984 to 1989;
and as President and Chief Operating Officer of Masonite Corporation from 1981
to 1984 (when it was acquired by USG Corporation). He is a graduate of
Northwestern University and Harvard Business School, and currently is a
director of Bell & Howell Company, IVEX Packaging Corporation, Reader's Digest
Association, Inc., and The Chicago Stock Exchange, Inc.
A-6
Elected at the 1998 Annual Meeting
Terms Expire at the 2001 Annual Meeting
Thomas H. Denig (1)
Director since 1995
Mr. Denig, 52, is the President and Chief Executive Officer of the Company,
in Boise, Idaho, a position he has held since January 1995. He is also
President and Chief Executive Officer of Trus Joist MacMillan A Limited
Partnership, a joint venture between the Company and MacMillan Bloedel of
America, since September 1991. He was President of Trus Joist Corporation, 1990
to 1991, Vice President, Eastern Operations from 1985 to 1989, and Western
Division Manager from 1983 to 1985. He has been employed by the Company in a
variety of sales, marketing and management roles since 1974. He was a
Lieutenant in the U.S. Marine Corps from 1968 to 1971 and is a graduate of
Valparaiso University. He is a director of Trus Joist MacMillan Management
Board.
Steven C. Wheelwright (2) (4)
Director since 1980
Mr. Wheelwright, 55, is the Senior Associate Dean, Chair of the MBA Program,
Graduate School of Business, Harvard University in Boston, Massachusetts, since
October 1995. He is also the Edsel Bryant Ford Professor of Management,
Graduate School of Business, Harvard University, and has been at Harvard
University since September 1988. He was formerly the Kleiner, Perkins, Caufield
and Byers Professor of Management, Graduate School of Business, Stanford
University in Stanford, California from 1983 to 1988; and a visiting professor,
Harvard Business School from 1985 to 1986. Previously, he was a faculty member
of Stanford Graduate School of Business and Harvard Graduate School of
Business. He is the author and co-author of numerous cases, articles and books
in the areas of product development manufacturing strategy, operations
management, and forecasting. He is a graduate of the University of Utah and has
an MBA and Ph.D. from the Graduate School of Business, Stanford University. He
is a director of Quantum Corp., Franklin-Covey Corporation and Heartport
Corporation.
Appointed by the Board of Directors in May 1999
Term Expires at the 2000 Annual Meeting
Mark R. Peterson (3)
Director since 1999
Mr. Peterson, 37, is the President and Chief Executive Officer of Preco,
Inc., the parent corporation for Preco Electronics, SCP Global Technologies and
Ampro Computers. He is also a member of the Board of Directors of Preco, Inc.
He has been the President of the SCP Global Technologies division of Preco,
Inc. since January of 1996. Mr. Peterson joined the Preco Electronics Division
in June of 1984 after graduating with a BSEE from the University of Colorado.
In 1991, Mark moved to Boise as the Director of Engineering for Preco
Electronics and became President of the Division in 1994. From January 1995 to
December 1995, he was the Acting Chief Engineer at SCP. He filled this role
during a search for a new Director of Engineering. In this capacity, he was
responsible for the direction of Research and Development, Product Development,
Software, Product Safety and Reliability Engineering.
Appointed by the Board of Directors in June 1999
Term Expires at the 2000 Annual Meeting
Dan R. Nelson
Director since 1999
Mr. Nelson, 62, retired in 1996 as the President and Chief Operating Officer
of U.S. Bancorp in Portland, Oregon, a position he had held since 1995. He was
also a member of the Board of Directors of U.S. Bancorp from 1995-1997. From
1986 to 1996, he was the Chairman and Chief Executive Officer of West One
Bancorp in Boise, Idaho; from 1985 to 1986, he had been the President and Chief
Operating Officer of West One
A-7
Bancorp. He received a BBA from Washington State University and graduated from
the Executive Program of the University of Washington in 1967.
- --------
(1)Member of the Executive Committee.
(2)Member of the Executive Compensation Committee.
(3)Member of the Audit Committee.
(4)Member of the Nominating and Corporate Governance Committee.
Director Compensation
Cash Compensation. During 1998, each director who was not an officer
received fees of $3,600 per year, with each Committee Chairperson receiving an
additional $3,600 per year. Both of these fees were paid in semi-annual
installments of $1,800 each. Each director also received $2,000 for each
meeting of the Company Board attended in person; $500 for each committee
meeting attended in person on the same day as a meeting of the Company Board
and $1,000 for each committee meeting attended in person on a day other than
the day of a meeting of the Company Board. Fees for any meeting of the Company
Board or committee thereof attended via telephone call are one-half the regular
fees. The Company reimburses directors for any related expenses. Directors who
are also officers of the Company, Messrs. Denig and Thomas, receive no
additional compensation for service as directors.
Stock Compensation. At the Company's 1997 annual meeting, the Company's
stockholders approved a stock plan containing both nonstatutory stock option
provisions and stock award provisions for non-employee directors. This plan
replaced the previous restricted stock plan, which stockholders had approved in
1993. The purpose of the 1997 plan was to encourage non-employee directors to
own the Company's stock, to more closely align the financial incentives of non-
employee directors with the Company's performance and stockholder's return on
investment, and to provide further incentive to outside directors to remain as
directors.
Non-employee directors receive options to purchase 3,000 shares of Common
Stock each year of their term. The exercise price of the stock options is the
fair market value of the Common Stock on the grant date. The stock options
become exercisable in three equal annual installments, beginning one year after
the grant date. The stock options can be exercised, in whole or in part, at any
time after they become exercisable. All stock options expire, if not exercised,
ten years from the grant date.
In addition to the stock options, non-employee directors are awarded 2,000
shares of restricted stock when first elected to the Company Board. A director
cannot take delivery of these shares, and the shares cannot be sold or pledged
for three years from the date the stock is awarded. A director vests in these
shares (the shares become non-forfeitable) in three equal annual installments,
beginning one year after the award date. If a director stops being a non-
employee director before the end of three years, the director forfeits any
shares that are not yet vested. In connection with the Merger, directors will
forfeit any shares of restricted stock that have not vested prior to the time
they cease to be directors pursuant to the terms of the Merger Agreement and
the Merger. A director has the right, starting on the award date, to receive
dividends and to vote the shares of Common Stock.
A non-employee director who retires from service on the Company Board after
completing at least one full term on the Company Board is awarded 1,000 shares
of stock upon retirement if the director served on the Company Board for more
than four but less than nine years. If the director served on the Company Board
for nine or more years, the director is awarded 2,500 shares of stock upon
retirement.
All stock options granted under the 1997 plan that had not previously become
exercisable became exercisable as a result of the Company entering into the
Merger Agreement.
1998 Board Meetings
The Company Board met four times during 1998. Each director attended more
than 75% of the total number of meetings of the Company Board and of the
committees thereof on which he or she served with the exception of Mr. Jerre L.
Stead, who resigned from the Company Board at the end of his then-current term
that expired with the May 1999 annual meeting.
A-8
Board Committees in 1998
The Company's Board has Executive, Executive Compensation, Audit, and
Nominating and Corporate Governance Committees.
Executive Committee. This Committee exercises virtually all the powers of
the Company Board when the Company Board is not in session, as permitted by
law. It meets whenever needed at the request of the Company management or at
the direction of the Company Board. Any action taken by this Committee is
reported to the full Board at its next regular meeting. This Committee did not
meet in 1998. The Company's Chairman and President are required by the
Company's Bylaws to be on the Committee. The current members of the Committee
are Messrs. Thomas H. Denig, J. L. Scott, Harold E. Thomas (Chairperson), and
William J. White.
Executive Compensation Committee. This Committee reviews the Company's
general compensation strategy; establishes salaries and reviews benefit
programs for the Chief Executive Officer, those persons who report directly to
him, and other key employees; and reviews, approves, recommends and administers
the Company's incentive compensation and stock option plans. It also is
responsible for keeping abreast of compensation programs in similar businesses
in order to make sure that the Company is competitive in the recruitment and
retention of top quality employees. This Committee met twice in 1998. All
members are non-employee directors. The current members of the Committee are
Messrs. Wheelwright and White (Chairperson).
Audit Committee. This Committee recommends appointment of the independent
auditors and reviews their independence and the arrangements for and scope of
their audit. It considers the adequacy of the Company's system of internal
accounting controls and reviews any proposed corrective actions. It reviews and
monitors the Company's policies relating to ethics and conflicts of interests.
It discusses with management and the independent auditors the Company's draft
annual financial statements and key accounting and/or reporting matters, and
reviews the activities and recommendations of the Company's internal audit
department. The Company's outside auditors and various top executives are
generally asked by the Committee Chairperson to attend the meetings as
appropriate to answer questions posed by the Committee. This Committee met
three times in 1998. All members are non-employee directors. The current
members of the Committee are Ms. Godwin, and Messrs. King, Peterson and Scott
(Chairperson).
Nominating and Corporate Governance Committee. This Committee reviews,
advises, and makes recommendations to the full Company Board regarding nominees
to fill vacancies on the Board, as well as on the general structure,
responsibilities, and functions of the Company Board and the committees
thereof. It will consider nominations recommended by stockholders to fill
vacancies on the Company Board. Nominations by stockholders must be in writing,
submitted on a timely basis, and directed to the Secretary of the Company.
Nominations for consideration at the 2000 annual stockholders' meeting must be
received by the Company no later than December 31, 1999. (If the Offer is
consummated, the 2000 annual meeting is not expected to be held.) This
Committee met twice in 1998. The current members of the Committee are Ms.
Godwin and Mr. Wheelwright (Chairperson).
Compensation Committee Interlocks and Insider Participation
During 1998, there were no Executive Compensation Committee interlocks or
other comparable relationships requiring disclosure under applicable rules of
the Commission.
Compensation of Executive Officers
The following sections of this Information Statement provide information
concerning the compensation the Company paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers
(collectively, the "Named Executives"), based on salary and incentive
compensation for 1998, as of the end of 1998.
A-9
SUMMARY COMPENSATION TABLE
Annual Compensation (3) Long Term Compensation (4)
------------------------ --------------------------
Name and Principal Options Granted All Other
Position Year Salary (1) Bonus (number) Comp (2)
- ------------------ ---- ---------- -------- -------------------------- ---------
Thomas H. Denig......... 1998 $432,697 $218,875 35,000 $65,837
President and CEO 1997 359,686 285,340 0 47,696
1996 290,729 127,457 105,000 26,872
Robert J. Dingman....... 1998 225,587 79,310 12,000 31,150
Senior Vice President, 1997 204,668 114,188 0 26,697
Trus Joist MacMillan 1996 186,266 71,138 34,500 16,063
Randy W. Goruk.......... 1998 232,060 81,776 12,000 31,989
Senior Vice President, 1997 209,872 116,860 0 26,214
Trus Joist MacMillan 1996 189,139 60,802 34,500 16,805
Valerie A. Heusinkveld.. 1998 215,232 75,705 12,000 29,766
Vice President, Finance 1997 194,270 109,230 0 24,272
and Chief Financial 1996 176,472 56,842 34,500 15,864
Officer
Patrick D. Smith........ 1998 234,210 82,540 12,000 32,736
Senior Vice President, 1997 211,039 122,858 0 26,450
Trus Joist MacMillan 1996 190,411 61,612 34,500 18,344
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(1) Includes compensation reduction amounts that the Company contributes to the
Profit Sharing Plan for the benefit of the Named Executive and cash profit
sharing distributions.
(2) Includes contributions that the Company makes to defined contribution
retirement plans other than compensation reduction amounts described in
note (1). The amounts reported in each year in this column represent the
contributions that became vested during such fiscal year without regard to
the year in which the contributions were made.
(3) Columns for "Other Annual Compensation," "Restricted Stock Award(s),"
"Securities Underlying Options SARs," and "LTIP Payouts" are excluded
because the Company had no such compensation items or amounts. The Company
makes available no special fringe benefits other than stock options to
executive officers that are not made available to all full-time employees.
As a matter of philosophy, the Company does not provide company cars,
subsidized travel, club memberships or like perquisites to the executive
officer group.
(4) As described below, as part of the LTIP (as defined below), the Company
Board set stock ownership guidelines for certain key employees, including
the Named Executives. Each participant was given the right to purchase
shares of Common Stock directly from the Company at the prevailing market
price at the time of the purchase. The Company agreed, at the election of
each participant, to lend a portion of the purchase price of the shares of
Common Stock purchased through full-recourse, interest bearing loans to the
participant. In January 1997, the Company made loans to the executive
officers in the amounts shown, which, in each case, is the largest amount
outstanding since December 31, 1996, and is the amount of principal,
including accrued but unpaid interest through December 31, 1998,
outstanding on March 29, 1999: Mr. Denig, $113,298.18; Mr. Dingman,
$239,729.78; Ms. Heusinkveld, $237,790.11; Mr. Smith, $239,729.78; Mr.
Juday, $143,837.87; Mr. Olson, $143,837.87; Mr. Ware, $143,837.87; and Mr.
Drury, $119,864.89. The loans mature in a lump sum on December 31, 2005,
and interest accrues each year at a variable rate equal to the "applicable
federal rate" (the "AFR") for January of that year. Because the purchase
price of the Common Stock was the prevailing market price, and the interest
rate on the loans is the AFR, the Company does not impute any income to the
participants from the loans. As noted below, as a result of the Company
entering into the Merger Agreement, a change of control occurred under the
plan in which the loans were issued. See "Stock Options and the Long-Term
Incentive Program" for more information.
A-10
Option Grants During 1998
Individual Grants
--------------------------------------------
Stock Options % of Total Exercise Expiration Grant Date
Name Granted (1) Stock Options Granted Price (1) Date Value (2)
- ------------------------ ------------- --------------------- -------- ---------- ----------
Thomas H. Denig......... 35,000 11.4% $27.625 5-27-08 $ 447,300
Robert J. Dingman....... 12,000 3.9% 27.625 5-27-08 153,360
Randy W. Goruk.......... 12,000 3.9% 27.625 5-27-08 153,360
Valerie A. Heusinkveld.. 12,000 3.9% 27.625 5-27-08 153,360
Patrick D. Smith........ 12,000 3.9% 27.625 5-27-08 153,360
Executive Officers as a
Group.................. 108,000 35.3% 27.625 5-27-08 1,380,240
All Other Employees..... 198,000 64.7% 27.625 5-27-08 2,530,440
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(1) The stock options vest 33 1/3% after one year, 66 2/3% after two years and
100% after three years. All unexercised stock options expire ten years
after grant date. If an optionee stops being employed by the Company, all
stock options, whether exercisable or not, are immediately forfeited, with
certain exceptions. These exceptions are described in this Information
Statement. All options vested as a result of the Company's entering into
the Merger Agreement.
(2) The grant date value is determined by the modified Black-Scholes option
pricing model. The Company used the following assumptions: grant date
market value per share-$27.625; option price per share-$27.625; annual
stock volatility-.32; risk-free rate of return-6.5%; dividend yield-$.22
per year; and, vesting adjustment-94% based on the term and vesting
schedule described in note (1) above. The Company does not believe that any
model can accurately determine the future value of an option because that
value depends on future unpredictable factors. The future values realized
may vary significantly from the values estimated by this or any other
model. Please note that the ultimate value of the options, as well as the
shares of stockholders, depends on actual future share values. Market
conditions and the efforts of the directors, the officers and others to
foster the future success of the Company can influence those future share
values.
Aggregated Option Exercises in Fiscal 1998
and Fiscal 1998 Year-End Option Values
Number of Value of
Unexercised Unexercised
Stock Options Stock Options
at Year End at Year End (2)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized (1) Unexercisable Unexercisable
- ------------------------ ----------- ------------ ------------- --------------
Thomas H. Denig......... 24,040 $595,210 52,400 $ 276,075
114,960 1,470,515
Robert J. Dingman....... 720 20,520 32,866 478,508
39,434 510,168
Randy W. Goruk.......... 960 27,750 31,366 403,883
40,154 528,303
Valerie A. Heusinkveld.. 0 0 26,146 308,949
39,134 502,162
Patrick D. Smith........ 7,100 137,270 18,666 104,487
36,374 432,945
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(1) Value realized is the market value on date of exercise less exercise price.
These amounts are subject to United States federal and state income
taxation.
(2) Value of unexercised stock options at year end represents market value at
year end less exercise price. It does not consider the volatility of the
underlying stock, the vesting schedule of the stock options, or the risk of
forfeiture.
A-11
Stock Options and the Long-Term Incentive Program. The Executive
Compensation Committee believes that stock ownership by management and
employees is a major incentive in building stockholder value and aligning the
interest of employees with those of the Company's stockholders. As a result,
options are granted to persons much deeper in the organization than is typical
in the industry. Other equity incentives, primarily in the form of discounted
matching stock purchase programs, are available to employees who do not
participate in the stock option program. Stock options are granted from stock
option plans approved by stockholders. Generally, stock option grants are in
the form of nonstatutory stock options.
During the latter half of 1996, the Company implemented a new Long-Term
Incentive Program (the "LTIP"). The primary reason for the new program was to
link managers' goals and a significant portion of their compensation directly
to stockholders' interests as stockholders. There were two core elements of
this program:
. Stock ownership by managers. Senior managers, including the Named
Executives, are encouraged to own at least a minimum amount of the
Company's stock to ensure that senior managers have a significant
personal financial stake in the future of the Company. Mr. Denig has an
ownership guideline of two times his base salary, while all other
participants have a guideline of one times base salary. These guideline
amounts increase to 2.5 for Mr. Denig and 1.5 for all other participants
at the end of 1999. If an eligible manager does not meet the minimum
ownership guideline, no additional stock options will be granted to that
manager until the guideline is achieved. As a transition into the new
program, eligible managers were given the opportunity to buy the number
of shares equal to their individual ownership guideline amount from the
Company at market price, with a long-term, full-recourse, interest-
bearing, nine-year, recourse loan from the Company. Loans in the amounts
indicated on page A-10 are outstanding to executive officers in
connection with this program. The outstanding principal balance of each
loan is reduced upon a "change of control" to the extent that it exceeds
the net after-tax proceeds that the executive would have received if he
or she had sold the shares purchased with the loans on the date of the
change of control at a price equal to the average of the high and low
trading prices for Common Shares on that day. For these purposes, the
effective date of the Merger Agreement, November 23, 1999, was a change
of control. However, no reduction in any loans actually occurred because
the outstanding principal balance of each loan was less than such net
after-tax proceeds on that date.
. Annual grants of nonstatutory stock options with an exercise price equal
to the fair market value of Common Shares on the date of grant ("FMV
options"). The purpose in using FMV options is to reward participants
for contributions to the Company's long-term success, measured primarily
by increased stockholder value. These options encourage management to
look for opportunities to increase the value of Common Shares, which
will benefit all of the Company's stockholders. The new FMV options are
exercisable 33 1/3% after one year, 66 2/3% after two years and 100%
after three years. Any unexercised options expire ten years after the
date of grant.
If the employee ceases to be employed by the Company, all unexercised stock
options, whether exercisable or not, are generally forfeited. However, the
Company Board can accelerate the exercisability of stock options that have been
outstanding at least three years at the time a manager stops being employed if
the termination is a result of retirement at age fifty-five or older, death or
permanent or total disability, or is involuntary but not for cause. The rate of
acceleration is 100% of the eligible unvested stock options if the termination
is a result of retirement at age fifty-five or older. The rate is 3% for each
year of service for that employee in all other qualified terminations. In other
words, the Company Board could allow a 20-year employee terminating prior to
age fifty-five to exercise 60% of the otherwise unvested stock options that
have been outstanding at least three years.
All stock options that had not previously become exercisable became
exercisable as a result of the Company's entering into the Merger Agreement.
A-12
Severance policy
The Executive Compensation Committee determines the terms and conditions of
any severance arrangements with the Company's executive officers and key
management personnel on a case-by-case basis. The Executive Compensation
Committee takes into account the officer's tenure with the Company and his or
her responsibilities, duties, and contribution to the business and operations
of the Company.
Change of control provisions
During 1997, the Executive Compensation Committee of the Company Board and
the full Company Board determined that appropriate steps should be taken so the
Board could expect to receive and rely on loyal service and high standards of
duty from executive officers and key employees regarding the best interests of
the Company and the Company's stockholders in the event the Company was
involved in an extraordinary transaction involving the possible sale or other
disposition of all or a significant portion of the Company. These types of
extraordinary transactions can be distracting and create significant personal
uncertainties and risks, and can disrupt the availability of continued service
from executives and key employees. As a result, the Company has entered into
change of control employment agreements with each of the Named Executives and
with the other key employees included in the LTIP.
The change of control employment agreements provide for severance benefits
only if both (1) a Change of Control (as defined in the change of control
employment agreement) of the Company occurs and (2) the executive's employment
is terminated under certain circumstances set forth in the change of control
employment agreement. The purchase of Shares pursuant to the Offer will be a
Change of Control for purposes of these change of control employment
agreements. These change of control employment agreements have three-year
terms, which terms extend for one year upon each anniversary unless a notice
not to extend is given by the Company. If a Change of Control occurs during the
term of a change of control employment agreement, then the change of control
employment agreements become operative for a fixed three-year period. The
change of control employment agreements provide generally that the executive's
terms and conditions of employment (including position, location, compensation
and benefits) will not be adversely changed during the three-year period after
a Change of Control. If the Company terminates the executive's employment
(other than for cause, death or disability) or if the executive terminates for
good reason during the three-year period after a Change of Control (or upon
certain terminations prior to a Change of Control or in connection with or in
anticipation of a Change of Control), the executive generally is entitled to
receive the following: (1) three times (a) the executive's annual base salary
plus (b) the executive's annual bonus (as determined in the change of control
employment agreements), (2) unpaid deferred compensation and vacation pay, and
(3) welfare benefits for three years. If the executive terminates employment
for any reason during the 30-day period following the first anniversary of the
Change of Control, the executive generally is entitled to receive the
following: (1) two times (a) the executive's annual base salary plus (b) the
executive's annual bonus (as determined in the change of control employment
agreements), (2) unpaid deferred compensation and vacation pay, and (3) welfare
benefits for two years. In addition, in each case, the executive is entitled to
receive an additional payment, if any, in an amount sufficient to make the
executive whole for any excise tax on excess parachute payments imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended.
The stock options described above under "Director Compensation--Stock
Compensation" and the options and loans described above under "Compensation of
Executive Officers--Stock Options and Long-Term Incentive Programs" also have
change of control provisions, as described above.
The execution of the Merger Agreement constitutes a "Change of Control" for
the Company's stock options and loans and consummation of the Offer will
constitute a "Change of Control" under the change of control employment
agreements described above.
A-13
[GOLDMAN, SACHS & CO. LETTERHEAD]
November 23, 1999
Board of Directors
TJ International, Inc.
200 East Mallard Drive
Boise, Idaho 83706
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, par value $1.00
per share (the "Shares"), of TJ International, Inc. (the "Company") of the
$42.00 per Share in cash proposed to be paid by Sub (as defined below) in the
Tender Offer and the Merger (as such terms are defined below) pursuant to the
Agreement and Plan of Merger, dated as of November 23, 1999, among Weyerhaeuser
Company ("Parent"), WTJ, Inc., a wholly-owned subsidiary of Parent ("Sub"), and
the Company (the "Agreement"). The Agreement provides for a tender offer for
all of the Shares (the "Tender Offer") pursuant to which Sub will pay $42.00
per Share in cash for each Share accepted. The Agreement further provides that
following completion of the Tender Offer, Sub will be merged into the Company
(the "Merger") and each outstanding Share, other than Appraisal Shares, as
defined in the Agreement, and other than Shares owned by the Company, Parent or
Sub will be converted into the right to receive $42.00 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, including
competitive biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. We are familiar with the Company having provided certain investment
banking services to the Company from time to time, including having acted as
its financial advisor in connection with, and having participated in certain of
the negotiations leading to, the Agreement. We also have provided certain
investment banking services to Parent and MacMillan Bloedel Ltd., which Parent
recently acquired, from time to time, including having acted as co-managing
underwriter of a public offering by Parent in October 1997 of $300 million of
6.95% debentures due in 2027 and may provide investment banking services to
Parent in the future. Goldman, Sachs & Co. provides a full range of financial
advisory and
Board of Directors
TJ International, Inc.
November 23, 1999
Page Two
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or Parent for its own account and for the accounts
of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Partnership Agreement (as defined in the Agreement); Annual
Reports to Stockholders and Annual Reports on Form 10-K of the Company for the
five fiscal years ended January 2, 1999; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding its past and current business operations, financial condition and
future prospects. In addition, we have reviewed the reported price and trading
activity for the Shares, compared certain financial and stock market
information for the Company with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the Forest Products and
Building Materials industries specifically and in other industries generally
and performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In addition, we have not
made an independent evaluation or appraisal of the assets and liabilities of
the Company or any of its subsidiaries and we have not been furnished with any
such evaluation or appraisal. We were not requested to solicit, and did not
solicit, interest from other parties with respect to an acquisition of or other
business combinations with the Company. Our advisory services and the opinion
expressed herein are provided for the information and assistance of the Board
of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute
a recommendation as to whether or not any holder of Shares should tender such
Shares in connection with such transaction.
Board of Directors
TJ International, Inc.
November 23, 1999
Page Three
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $42.00 per
Share in cash proposed to be paid by Sub in the Tender Offer and the Merger to
the holders of the Shares is fair from a financial point of view to such
holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
- -------------------------------------
(Goldman, Sachs & Co.)
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
Exhibit 1 --Offer to Purchase, dated November 30, 1999.
Exhibit 2 --Agreement and Plan of Merger, dated as of November 23, 1999, by
and among Weyerhaeuser Company, WTJ, Inc. and TJ International,
Inc.
Exhibit 3 --Confidentiality Agreement dated November 16, 1999, between
Weyerhaeuser Company and TJ International, Inc.
Exhibit 4 --Letter to Stockholders, dated November 30, 1999.*
Exhibit 5 --Joint Press Release issued by Weyerhaeuser Company and TJ
International, Inc. dated November 23, 1999.
Exhibit 6 --Opinion of Goldman, Sachs & Co., dated November 23, 1999.*
Exhibit 7 --Amendment No. 1 to Rights Agreement, dated November 23, 1999,
between TJ International, Inc. and First Chicago Trust Company
of New York.
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* Included in copy of Statement mailed to stockholders.