Weyerhaeuser Company (NYSE:WY) will buy 645,000 acres of timberland from Longview Timber for $2.65 billion. Weyerhaeuser Company (NYSE:WY) plans to fund the deal with a 50-50 split of equity and debt that would total $2.45 billion. This company – and the timber industry in general – has been systematically positioning itself for the housing recovery. Who says only tech companies can mega-deal?
Weyerhaeuser Company (NYSE:WY) has spent the past few years optimizing its business and cutting costs as it slowly morphs into a real estate investment trust (REIT). Weyerhaeuser Company (NYSE:WY)’s board wants to reduce its tax rate — becoming a real estate investment trust (REIT) will do that. Weyerhaeuser Company (NYSE:WY) has unloaded $10 billion in assets since 2006. This $2.65 billion acquisition of Washington state-based Longview Timber is big — 640,000 acres of prime Washington state and Oregon timberland. This deal expands Weyerhaeuser Company (NYSE:WY)’s presence in the Northwest to 2.6 million acres. Weyerhaeuser controls 7 million acres of timberland, mostly comprised of old growth premium trees — this premium wood is key to this deal.
Weyerhaeuser has just bought one thing it’s commonly thought money can’t buy — time. How? Trees take time to grow, especially the kind of trees you use to build homes. Weyerhaeuser just bought lots of trees — good trees, Douglas firs to be exact. Douglas firs, also known as Oregon pine or Douglas spruce, are the most desired wood for structural building. The product commands a premium price for the global export market. The Douglas fir is often cited as the world’s best timber producer — it produces more timber than any other in North America. Douglas firs are responsible for flooring, plywood, furniture, pilings — even Christmas tree. This acquisition of Longview Timber puts Weyerhaeuser in a strong position to supply the market with many premium building materials.
This space has been active. Louisiana-Pacific Corporation (NYSE:LPX) recently purchased a 50 percent share of a Canfor Corporation joint venture in British Columbia. Canfor is a major Canadian green-building products producer. Louisiana-Pacific Corporation (NYSE:LPX) has been busy making deals in Chile and Brazil. Louisiana-Pacific Corporation’s LP SmartSide products are certainly innovative — who knew wood could be so “tech?”
LP SmartSide has been one of the go-to products for many homebuilders. They like the look of the product as well as the workability. That fact the product is “green” is a significant selling point for builders and home buyers.