Weyerhaeuser Invests to Cash in on Housing Boom
Weyerhaeuser Homebuilding in $2.7 Billion Spinoff

Weyerhaeuser Invests to Cash in on Housing BoomFEDERAL WAY, WA - One of the world's largest private timberland owners and lumber producers, Weyerhaeuser looks to get even bigger following news of a $2.65 billion acquisition and plant upgrades as the company bolsters its core timber business for the growing housing boom.

Weyerhaeuser announced June 16 it has signed a definitive stock purchase agreement to acquire 645,000 acres of Longview Timber LLC from affiliates of Brookfield Asset Management Inc. The $2.65 billion transaction, which includes the assumption of debt, is is expected to close in July.

Weyerhaeuser Invests to Cash in on Housing BoomThe acquisition announcement was simultaneous to news that the company is looking at "strategic alternatives with respect to Weyerhaeuser Real Estate Co., Weyerhaeuser's homebuilding and real estate development business." Options include a merger, sale or spin-off of the homebuilding business, while the company focuses on its core business of timber.

Weyerhaeuser said the addition of Longview's timberlands, which are located in Washington and Oregon, will expand the company's timber holdings in the Pacific Northwest by 33 percent, to approximately 2.6 million acres, and increase the total amount of U.S. timberlands it owns or controls to approximately 6.6 million acres.

"We believe our company is uniquely positioned to maximize the value of these timberlands," Dan Fulton, Weyerhaeuser president and CEO, said in a statement. "The acquired timberlands are highly complementary to our existing acreage in Washington and Oregon, where we have more than 100 years of experience managing Douglas fir. By increasing our high-value timber holdings west of the Cascade mountain range, we will leverage our infrastructure as well as our expertise in silviculture, logistics and marketing, giving us a distinct competitive advantage both domestically and with export markets."

The company said it expects to reach annual synergies of approximately $20 million within two years of closing the deal.

To help finance the acquisition, the company announced on June 17 plans to offer 10 million of Weyerhaeuser's Mandatory Convertible Preference Shares and 28 million of Weyerhaeuser's common shares in a registered public offering. Weyerhaeuser (NYSE: WY) also said it intends to grant the underwriters an option to purchase up to an additional 4.2 million of its common shares.

In related news, Weyerhaeuser said it will spend $23 million for production upgrades at its dimensional softwood lumber mill in Drayton Valley, Alberta, in Canada. Weyerhaeuser said the 18-month project will increase capacity at the mill by 35 percent and enable it to cash in on the resurging housing market.

In other news, Weyerhaeuser announced June 16 that Doyle Simons will take over as president and CEO in August, upon Fulton's retirement.


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