In what might be called the third-largest forestry acquisition of North America, Weyerhaeuser Co., a U.S based real estate investment trust, is buying Longview Timber LLC, a forestry industry leader for $2.6 billion. The deal includes all debt liabilities, according to various media reports.
The purchase, which comes with 645,000 acres of woodlands will increase Weyerhaeuser's timber holdings in the Pacific Northwest to around 2.6 million acres and elevate its overall holdings to 6.6 million acres in the country, reports The New York Times.
The deal is expected to close by the end of July 2013. Apparently, Weyerhaeuser will be paying for the deal by raising cash through debt, equity and loans from Morgan Stanley. It is also considering a sale, a merger or a spin-off of its homebuilding portfolio, WRECO, to take advantage of the rebounding housing market, reports Reuters.
The company hopes to benefit well from the transaction. It plans to raise its dividend per quarter to 22 cents from the existing 20 cents a share. The hike is expected to apply from September 2013, reports The Seattle Times.
Longview Timber LLC is owned by popular property firm, Brookfield Asset Management Inc. Brookfield is also selling another packaging unit to Kapstone Paper and Packaging Corp for 1.02 million in a separate deal.
"While the timing of the (separate) sale transactions is coincidental, for investors in our funds these transactions represent monetization at excellent returns and puts each of these assets into the hands of strategic buyers who will be able to take them to the next level," Cyrus Madon, Senior Managing Partner in Brookfield's Private Equity Group, said in a statement.
These new plans are a part of Weyerhaeuser's revamped business strategies. More recently, the company also announced that Doyle Simmons will be taking over as CEO from August 1, 2013.
