Unsolicited Tender Offer

6 Months Ended

Jul. 02, 2011

Unsolicited Tender Offer [Abstract]

Unsolicited Tender Offer

Note 3 - Unsolicited Tender Offer

On June 6, 2011, International Paper Company (IP) made public an unsolicited proposal to acquire all our outstanding shares of common stock for $30.60 per share in cash.  After careful consideration with our independent financial and legal advisors, our Board of Directors determined unanimously that IP's proposal grossly undervalued Temple-Inland and was not in the best interests of our stockholders and voted unanimously to reject IP's proposal.  On July 12, 2011, IP commenced an unsolicited tender offer to acquire all our outstanding shares of common stock for $30.60 per share in cash.  Our Board of Directors, after careful consideration with our independent financial and legal advisors, again unanimously voted to reject IP's tender offer.  Our Board of Directors unanimously believes that IP's tender offer grossly undervalues Temple-Inland and is not in the best interests of our stockholders.  On July 18, 2011, we filed with the Securities and Exchange Commission a Solicitation/Recommendation Statement on Schedule 14D-9 detailing the recommendation of our Board of Directors in response to IP's tender offer and the reasons it rejected the offer.

On June 7, 2011, after careful consideration and consultation with our independent financial and legal advisors, our Board of Directors adopted a Stockholder Rights Plan (Rights Plan) and declared a dividend of one preferred purchase right (Right) for each outstanding share of our common stock.  The Rights Plan is designed to protect stockholders from coercive or otherwise unfair takeover tactics.  In general terms, it works by imposing a significant penalty upon any person or group that acquires beneficial ownership of 10 percent or more of our outstanding common stock without the prior approval of our Board of Directors.  The Rights Plan should not interfere with any merger or other business combination approved by our Board of Directors.  Please read Note 11 for additional information.

In connection with these matters, in second quarter 2011, we expensed $2 million of professional fees and other costs, and we committed to minimum financial advisor fees of $20 million, which we anticipate expensing over a one year period as services are rendered.  We expect to incur additional costs in the future in connection with IP's unsolicited tender offer.