Weyerhaeuser shares fell 1.5% to $28.24 after gaining 1.3% on Monday.
The deal comes after Weyerhaeuser has spent seven years restructuring its operations and paring down assets from 2006 as part of a conversion to a real estate investment trust. Weyerhaeuser's board approved the change to a REIT structure in December 2009; the move was done to reduce its tax rate. Almost $10 billion in assets were unloaded between 2006 and 2011.
"This strategic acquisition comprises approximately 640,000 acres of unique, high-value timberland in Washington state and Oregon. This acquisition will expand Weyerhaeuser's holdings in the Pacific Northwest by 33% to approximately 2.6 million acres and will increase the amount of timberlands we own or control to approximately 7 million acres," chief executive and president Daniel S. Fulton said on a conference call Monday morning.The Longview, Wash.-based target is held by Toronto global investment firm Brookfield Asset Management Inc. After debt repayment and distribution of funds to investors, Brookfield and affiliates will realize a total of $1.07 billion in proceeds through the deal. Brookfield also announced the sale Sunday of a sister business, Longview Fibre Paper and Packaging Inc., to KapStone Paper and Packaging Corp. for $1.025 billion. Longview Fibre Paper and Packaging operates a large integrated paper mill at Longview and seven container plants in the Pacific Northwest. After repayment of debt and distribution of proceeds to the other investors in the fund, net cash proceeds to Brookfield will be approximately $250 million on the Longview Fibre Paper deal. "We acquired these timberlands and manufacturing assets as one business in 2007 and restructured the business, separating the manufacturing business from the timberlands," said Cyrus Madon, senior managing partner in Brookfield's private equity group. The Longview Timber deal should close in July. Weyerhaeuser will fund the deal with a 50-50 newly raised split of equity and debt worth $2.45 billion, according to an investor presentation accompanying the call. Much of the acquired land breeds Douglas fir, a preferred tree species that is prized as a structural building material and thus commands a premium in the export market.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV