Greenpeace Is Clear-Cut About Its Disdain for MacMillan-Weyerhaeuser Merger

As Weyerhaeuser embarks on a new reign in the Great White North, the last thing the company wants is a drawn-out war in the rain forest of British Columbia.
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Whales and rainforests have long been a great draw for tourists along Canada's west coast. At the same time, they've also served as symbolic rallying points for environmentalists worldwide -- making British Columbia a famous hotspot for earth-friendly activist groups.

The biggest of these,

Greenpeace

, was founded in Vancouver in 1971 to protest U.S. nuclear testing off the west coast of Alaska. Since then, the organization has branched out into 30 countries and has campaigned against governments and corporations worldwide, including a good many in its country of birth.

One such target, Vancouver-based

MacMillan Bloedel

(MMBL)

, is, like Greenpeace, an icon in British Columbia. Unlike the rainbow warriors, however, MacBlo's reputation lies in harvesting trees, not hugging them. And the historic clashes between the two are the stuff of western Canada legend.

In 1993, Greenpeace members, along with allied environmental groups, launched a widely publicized campaign against the company's logging of old-growth timber on Vancouver Island, resulting in the arrests of more than 800 activists. Throw an organized boycott of MacBlo products into the fray, and the Canadian icon took a global public relations beating during the mid-1990s.

The bitter feud in the Canadian woods took a breather in 1998 when MacBlo stunned activists and the forest industry equally with the announcement it would phase out clear-cut logging in old-growth forests within five years. Instead, the company committed itself to using "variable-retention" logging: A selective technique that targets trees individually or in small groups.

The progressive truce reached its zenith during the past summer, when Thilo Bode, executive director of

Greenpeace International

, commended MacBlo for living up to its environmental promises. Competing for MacBlo's affections, however, was a surprising new suitor: Tacoma, Wash.-based

Weyerhaeuser

(WY) - Get Report

, another forestry giant on the North American stage.

Its June 21 takeover bid of MacBlo, a stock transaction worth $2.45 billion, and expected to be finalized around midfall, will bring Weyerhaeuser annual sales of $13.3 billion and a market capitalization of $16.5 billion. Since the announcement, shares of Weyerhaeuser have traded down to around 62, compared to a preannouncement price of about 70 -- not an uncommon pattern for an acquiring company.

The deal was a no-brainer for the president of the acquired company, Tom Stephens, and his hungry shareholders, who've suffered through some lean years in the wake of the Asian financial crisis that squeezed overseas lumber markets. "This combination will create the powerhouse in the industry," Stephens said the day of the takeover.

Unlike MacBlo shareholders, who've welcomed their American cousins with open arms, Greenpeace is less than thrilled with Weyerhaeuser's role in this bizarre love triangle. To its credit, Weyerhaeuser has agreed not to roll back MacBlo's environmental commitments, as well as in-place cooperative agreements with

First Nations

groups and local communities, which promote innovative land uses -- including ecotourism -- to reinvigorate the region's economy. That, however, hasn't been enough to prompt the earth activists to embrace the new deal.

"We'd rather take our chances on Macmillan Bloedel," says Tamara Stark, Greenpeace Canada's forests campaign coordinator. "We don't see anything on Weyerhaeuser's record that makes us believe they're capable of being creative and innovative in finding solutions. From our perspective, they're not a good bet."

Those sentiments have been echoed by other groups, such as the

Western Canada Wilderness Committee

, one of Canada's leading wilderness preservation organizations.

Weyerhaeuser, in turn, has begun meeting activists and forestry workers along the British Columbia coast and has even launched a media campaign of its own, emphasizing the words "Ending Clearcutting" in a series of newspaper ads.

Weyerhaeuser representatives were unavailable for comment.

By following up on MacBlo's initiatives, Weyerhaeuser has the opportunity to ride out a public-relations dream for any natural resources company. And maybe, just maybe, being on the forefront of environmental progressivism can translate into profit leadership as well.

"That is the hope and the million dollar question," says Ben Cashore, assistant professor of forestry at

Auburn University

in Alabama, who has studied both companies in terms of their environmental track records. "Everything is up in the air, but what we do know is that it wasn't good business for Macmillan Bloedel to ignore environmental groups."

As Weyerhaeuser embarks on a new reign in the Great White North, the last thing the company wants is a drawn-out war in the rainforest of British Columbia. Canada's largest lumber producer is asking its green critics to peace out. If clearcutting goes the way of the old-growth forests it once victimized, there's a good chance that Greenpeace will.

Derek Moscato, a financial journalist in Vancouver, follows Internet investment culture as an editor/writer at Stockscape.com. He is a frequent contributor to TSC.