$872-Million Merger : Pacific Lumber, Maxxam Agree on Deal

Pacific Lumber Co. and Maxxam Group said Wednesday that they have executed a definitive merger agreement that calls for Maxxam to raise its offer by $1.50 a share to $40 for all Pacific Lumber shares, for a total price of $872 million.

Pacific’s directors have approved the tender offer and merger and will recommend that stockholders of the 116-year-old San Francisco-based lumber company do the same.

“With this agreement, we will be able to conclude rapidly a transaction that serves the interests of both companies’ shareholders, employees and customers,” said Charles E. Hurwitz, chairman of Maxxam, a New York City-based real estate management and development company.

“We have consistently maintained the position that we would do whatever is best for all our shareholders,” said Gene G. Elam, president and chief executive of San Francisco-based Pacific.

On Oct. 9, directors of Pacific rejected Hurwitz’s offer of $38.50 a share. He is said to be interested in increasing the company’s lumber production and selling off some timberland or portions of Pacific’s cutting and welding operations, which account for 58% of revenue.

Pacific, the world’s largest private owner of virgin redwood trees, has always followed conservative harvesting techniques, harvesting only as much timber as it grows each year. Its 1984 revenue was about $280.7 million, and it has 21.8 million shares of outstanding stock.