This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

The Deal: Weyerhaeuser Pares Gains Following $2.65 Billion Longview Deal

"About two-thirds of the timberland's inventory is Douglas fir, which we have more than 100 years experience owning and managing," executive vice president Thomas F. Gideon added on the call.

Gideon said the acquired land will enhance the buyer's export prospects. "The highest quality logs are going to Japan, which represents more than 80% of our export market. The Japanese value the favorable properties of Douglas fir, including its size, its strength, its stiffness, its resistance to splitting and its ability to stay straight," he explained.

Longview Timber generated $43 million in Ebitda and investment distributions of about $20 million for the first quarter, said CFO Patricia Bedient on the call. Weyerhaeuser said it would realize about $20 million in annual synergies through the deal.

A committed senior unsecured bridge facility from Morgan Stanley will support the financing, Weyerhaeuser added. The buyer plans to raise up to $558 million through the sale of mandatory convertible preference shares and up to $884 million of common stock to finance its $2.4 billion acquisition of Longview Timber, according to Securities and Exchange Commission filings. In addition to the equity issuance, the company said it plans to raise $1.22 billion in debt and use $335 million in cash to pay for the acquisition. The convertible shares will be priced at $50 per share and total up to 11.5 million with an underwriter option. The common share offering will total up to 32.2 million if underwriters exercise the option.

Meanwhile, Weyerhaeuser said on the call the time was right for a strategic review of its homebuilding business because of improving economic conditions. Analysts had predicted a sale of this unit since at least November 2011, seeing it as noncore to Weyerhaeuser's role as a timber producer. A source put the value of the homebuilding unit at between $2.4 billion and $3.1 billion.

" Weyerhaeuser Real Estate owns or controls land and lots in southern California, Las Vegas, Washington D.C., Houston and Washington State," analyst Joshua Barber of Stifel, Nicolaus & Co. wrote in a Monday note. Homebuilder confidence is indeed increasing. The National Association of Home Builders/Wells Fargo Housing Market index surged to 52 in June from 44 in May, handily topping forecasts for 45, according to a report Monday. Longview didn't return calls Monday. Brookfield declined comment.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
WY $35.11 0.06%
AAPL $128.46 -1.50%
FB $78.97 -1.79%
GOOG $558.40 0.53%
TSLA $203.34 -1.86%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs