Weyerhaeuser to Buy Longview Timber from Brookfield Capital Partners For $2.65B

reminiscences of a stock operator pdf

Weyerhaeuser Company (NYSE:WY) made several announcements on Sunday around M&A and leadership changes. Weyerhaeuser announced: 1) it had signed a definitive stock purchase agreement to acquire Longview Timber from Brookfield Capital Partners for $2.65bn. Weyerhaeuser Company (NYSE:WY) is looking to finance the transaction with debt and equity); 2) it is exploring strategic alternatives with respect to WRECO which could include keeping, selling, merging or spinning-off the business; 3) Mr. Doyle Simons has been appointed as CEO elect, effective immediately to succeed Mr. Fulton as President & CEO on August 1, 2013.

 Weyerhaeuser to Buy Longview Timber from Brookfield Capital Partners For $2.65B

 Weyerhaeuser Company (NYSE:WY) Conference Call

The company will host a conference call at 8:30am ET on Monday. Some keys for the stock to evaluate on its upcoming conference call — (a) the amount of EBITDA WY expects to acquire with the timberlands; (b) the amount of equity capital it expects to raise to finance the purchase; and (c) potential borrowing costs.

 Weyerhaeuser Company (NYSE:WY) Rationale

The company is growing its presence in timberlands and adding a CEO who is well-regarded by the Street with a very good track record. Combined with the acquisition of timberlands, the potential divestiture of Weyerhaeuser Real Estate Co. (WRECO) would also be positive for valuation multiples on a blended basis over the course of the cycle. WY stated the acquisition is accretive to Funds Available for Distribution (FAD), BAML analysts point out that low costs of borrowing make it easier for deals to be accretive in the current environment. WY is raising it annual dividend by eight cents to $0.88.
Negative for the stock, BAML also points out that WY is paying what initially appears to be a full price for the timberlands ($4000-plus/acre) and may need to finance the purchase with equity.

While we don’t know how profitable the acquired timberlands are, a potential sale/spin of WRECO could also prove dilutive, depending on timing and proceeds.


For exclusive info on hedge funds and the latest news from value investing world at only a few dollars a month check out ValueWalk Premium right here.

Multiple people interested? Check out our new corporate plan right here (We are currently offering a major discount)

About the Author

Sheeraz Raza
Sheeraz is our COO (Chief - Operations), his primary duty is curating and editing of ValueWalk. He is main reason behind the rapid growth of the business. Sheeraz previously ran a taxation firm. He is an expert in technology, he has over 5.5 years of design, development and roll-out experience for SEO and SEM. - Email: sraza(at)valuewalk.com

Be the first to comment on "Weyerhaeuser to Buy Longview Timber from Brookfield Capital Partners For $2.65B"

Leave a comment

Your email address will not be published.