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International Paper makes takeover bid for Temple-Inland

BY Brae Canlen

Temple-Inland, one of the industry’s largest producers of wood and paper products, announced June 6 that it has received an unsolicited offer from International Paper Co. (IP), another pulp and paper giant, to acquire the company for $30.60 per Temple-Inland share in cash.

Temple-Inland’s board of directors voted unanimously to reject the offer “after careful consideration with its independent financial and legal advisers,” according to a public statement. IP’s proposal “grossly undervalues Temple-Inland and is not in the best interest of Temple-Inland’s stockholders,” the board said. 

In a letter to IP’s chairman and CEO, John Faraci, the chief executive of Temple-Inland made his intentions clear.

"Since we launched the ‘new’ Temple-Inland in January 2008, we have delivered superior results to our stockholders compared with our corrugated packaging peers (including IP), building products peers and the S&P 500,” wrote Doyle Simons, Temple’s chairman and CEO. “Since that time, our total return to stockholders of 22% greatly exceeds the 5% total return that IP has achieved. Through our proven ability to execute our strategy focused on maximizing return on investment (ROI) and profitably growing our business, the board believes the company will continue to provide superior results for our stockholders."

Simons also stated that, "As the economic recovery continues and the benefits from our strategy continue to be realized, it is the stockholders of Temple-Inland who should gain from those anticipated benefits, not the stockholders of IP."

Among the many reasons listed in the letter were expected opposition from governmental antitrust authorities, “extremely opportunistic timing” of the offer and an overstatement of Temple-Inland’s net debt.

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Beazer exec forms consulting group

BY Brae Canlen

Tony Callahan, the former senior VP national purchasing, planning and design for Beazer Homes, has left the Atlanta-based home-building firm to form his own consulting firm. The Callahan Consulting Group (CCG) specializes in helping building product and residential construction companies lower costs and lead times, while managing risk throughout the supply chain.

At Beazer, Callahan was also responsible for the architectural designs, CAD drawings and standardization initiative. He joined the company from home builder NVR, where he spent six years in the purchasing and materials management arena.

“I have spent a career helping organizations reduce cost, cycle time and risk,” Callahan told Home Channel News. “The fact is our economy is weak, and the home-building industry is struggling. I have always felt like I can make a difference, and I plan to do just that with this new venture. Whether the client is big or small, I want to be there to help any company within the industry gain market share, reduce costs and get through this downturn.”

In addition to supply chain efficiency, CCG also specializes in assistance with putting together an RFI, RFP or RFQ and meeting with suppliers, service providers and operations team to eliminate waste and help drive costs out of the system, Callahan said.

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Analyst sees bright skies for apartment builders

BY Brae Canlen

Rents are rising, occupancy rates are high, and the apartment business is about to explode — all of which spells good news for the multi-family construction business, according to an analyst for John Burns Real Estate Consulting. In her Housing Dimensions blog, VP Lesley Deutch cited pent-up demand from young adults, modest job recovery and government policy as the three top factors pushing this trend.

Calculations done by John Burns, an independent housing research, advice and consulting firm, have estimated 3.4 million units of unmet household demand. “The largest segment of this demand is young adults, who have either moved back in with their parents or taken on roommates,” Deutch wrote. “We expect this demand to materialize over the next few years, with most of the demand entering the apartment market because of the inability to qualify for a home and uncertainty over their employment situation.”

The firm believes that job growth will approach 2% by 2012, not enough security for many people considering taking on a mortgage. 

As for rent increases, the forecast is for an average 4.5% growth per year through 2015, based on a range of MSAs. And although development money is flowing steadily into apartment construction, renters will eventually hit a ceiling when they realize it is cheaper to own than rent, Deutch warned. 

But in the short term, the most influential factor may be the backseat role of government in promoting housing in the years to come. “[We believe] 19 years of continually more aggressive government intervention toward homeownership is about to reverse itself,” Deutch wrote. 

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