Weyerhaeuser Company (WY), a well renowned forest products company, announced to have successfully completed acquiring Longview Timber LLC for roughly $2.65 billion from Brookfield Asset Management Inc. The transaction was originally announced on Jun 16, 2013.
Weyerhaeuser paid the transaction value through funds raised from issuances of debt and equity.
Approximately 645,000 acres of timberlands in the Washington and Oregon asset base has been added to Weyerhaeuser’s portfolio. This has increased the company’s timberland assets in Pacific Northwest to 2.6 million acres, reflecting an increase of 33% while its total ownership of U.S. timberlands has reached roughly 6.6 million acres.
Weyerhaeuser expects the acquisition to enhance its funds available for distribution and hence it contemplates raising its quarterly dividend for the third quarter 2013 to 22 cents from 20 cents. Also, the acquisition is expected to fetch $20 million in synergies within two years of the completion of the transaction.
We believe the acquired assets will bode well for Weyerhaeuser’s growth prospects over the long run. The company is slated to released its second quarter 2013 financial results on Jul 26. Currently, the Zacks Consensus Estimate for the second quarter is 30 cents while that for 2013 and 2014 are pegged at $1.13 and $1.39, respectively.
Weyerhaeuser currently has a $16.1 billion market capitalization. The stock carries a Zacks Rank #3 (Hold). The company’s prime competitor Universal Forest Products Inc. (UFPI) reported its second quarter results on Jul 17. The company rode high on the back of double-digits revenue growth in all five market segments while its adjusted earnings per share came in at 79 cents, up 17.9% year over year and above the Zacks Consensus Estimate of 72 cents.
Two other peer companies that are slated to release their earnings soon are Louisiana-Pacific Corp. (LPX) on Aug 6, 2013 and Plum Creek Timber Co. Inc. (PCL) on Jul 29, 2013.
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