Willamette Industries has rejected rival Weyerhaeuser’s newly increased US$7.6bn bid for the company.

Board members of Willamette dismissed the US$55 per share offer as ‘inadequate’ and have terminated the takeover discussions. The company says it will continue negotiations with Georgia-Pacific about buying its building products division.

William Swindells, Willamette board chairman, said: ‘Following close examination of our options, the board has decided that a transaction with Georgia-Pacific will deliver significant value to Willamette and is in the best interests of our shareholders.’

Willamette shares sank 11% to US$44.11 after the news, while Weyerhaeuser’s stock rose slightly.

Weyerhaeuser has been attempting to buy its American rival for more than a year and increased its bid from US$50 to US$55 per share shortly before Christmas.

An attempt by Willamette to get Weyerhaeuser to further increase its share offer by claiming savings of US$400m would be created by a takeover was rebuffed. Weyerhaeuser, which estimates savings to be about US$300m, says Willamette’s figure is either unattainable or based on outdated information.

Steven Rogel, chairman and chief executive of Weyerhaeuser, said: ‘Based on a thorough analysis of everything Willamette has provided, US$55 per share represents the highest price we are prepared to pay for Willamette.’