) made a number of strategic announcements on June 16, 2013, all
of which might have long-term implications on its operations once
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WEYERHAEUSER CO (WY): Free Stock Analysis
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Firstly, Weyerhaeuser's board of directors announced the election
of Doyle Simons as the company's new president and chief
executive officer. Simons will be replacing Dan Fulton and the
change will be effective from Aug 1, 2013.
Secondly, Weyerhaeuser's board authorized the search for suitable
alternatives for its homebuilding and real estate company, WRECO.
The company mentioned that the alternatives will include the
continuation of WRECO's operations, or merger, sale and spin-off
among others. However, the board did not specify any specific
time period for review.
WRECO's financial results are recorded under the company's Real
Estate segment. WRECO develops single-family housing and
residential lots, including master-planned communities and other
real estate activities. In 2012, roughly 15.1% of the company's
total revenue was derived from this segment.
Thirdly, Weyerhaeuser announced the signing of an agreement to
acquire Longview Timber LLC for roughly $2.65 billion from
Brookfield Asset Management Inc. The transaction value will be
paid through funds raised from issuances of debt and equity.
The transaction will add approximately 645,000 acres of
timberlands to the company's Washington and Oregon asset base.
Post the acquisition, the company's timberland assets in Pacific
Northwest will reach 2.6 million acres, representing 33%
increase, while Weyerhaeuser's total ownership of U.S.
timberlands will be roughly 6.6 million acres. The transaction is
expected to be completed by Jul 2013 and is subject to closing
Weyerhaeuser expects the acquisition to enhance its funds
available for distribution. Thus, the company targets to raise
its quarterly dividend for the third quarter to 22 cents from 20
cents. Also, the acquisition is likely to fetch $20 million in
synergies within two years of the completion of the transaction.
We believe the aforementioned announcements, when fully
implemented, will bode well for the company's growth prospects.
Also, shares might benefit in the near term from these
announcements. Currently, the Zacks Consensus Estimate for
Weyerhaeuser is $1.19 for 2013 and $1.42 for 2014, representing
year-over-year growth of 104.7% and 19.5%, respectively.
Weyerhaeuser currently carries a Zacks Rank #2 (Buy). Other
stocks to watch out for in the industry are
Boise Cascade Company
Universal Forest Products Inc.
), each with a Zacks Rank #2 (Buy).