FEDERAL WAY, WA-Locally based Weyerhaeuser Co. revealed that it would explore “strategic alternatives with respect to Weyerhaeuser Real Estate Co.,” Weyerhaeuser's homebuilding and real estate development business. According to a prepared statement, the board intends to consider a broad range of alternatives including, but not limited to, continuing to hold and operate WRECO, or a merger, sale or spin-off of the business.
“The board of directors and management team are committed to further enhancing value for all Weyerhaeuser shareholders,” explains Dan Fulton, Weyerhaeuser president and chief executive officer. “WRECO is one of the 20 largest homebuilders in the country, with industry-leading margins. Given the improving fundamentals of the housing market, we believe now is a prudent time to explore strategic alternatives for this business. This process will help ensure that WRECO achieves its full potential while we continue to build on Weyerhaeuser's track record of shareholder value creation.”
The company noted that there can be no assurance that the board's evaluation process will result in any transaction, or that any transaction, if pursued, will be consummated. The company does not intend to provide any additional information unless or until the evaluation process is completed or terminated, according to a release.
In addition, the firm revealed that it has a signed definitive stock purchase agreement to acquire Longview Timber LLC from affiliates of Brookfield Asset Management Inc. for $2.65 billion, which includes the assumption of debt. The transaction is subject to the satisfaction of customary closing conditions and is expected to close in July 2013.
The company is acquiring approximately 645,000 acres of unique, high-quality timberlands in Washington and Oregon that are highly complementary and contiguous with the company's existing acreage. This transaction will expand Weyerhaeuser's timber holdings in the Pacific Northwest by 33% 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. The company expects to reach annual synergies of approximately $20 million within two years of closing, according to a prepared statement.
Upon closing, Weyerhaeuser expects the acquisition to be immediately accretive to the company's funds available for distribution per share, according to a release. In conjunction with and subject to the completion of the acquisition, the company intends to increase its quarterly dividend from $0.20 per share to $0.22 per share beginning with the third quarter dividend, payable in September 2013. Weyerhaeuser expects that the cash flows and synergies from the acquisition will enhance its ability to further increase its dividend in the future, says the release.
"We believe our company is uniquely positioned to maximize the value of these timberlands," says Fulton. "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.
According to Fulton, “the transaction delivers immediate value to our shareholders, and enhances Weyerhaeuser's ability to increase the quarterly dividend.”
In conjunction with this transaction, Weyerhaeuser intends to raise approximately $2.45 billion in a combination of debt and equity. The company has a committed senior unsecured bridge facility from Morgan Stanley.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
