) yesterday announced the successful divestment of its homebuilding
and real estate company, WRECO to
TRI Pointe Homes, Inc.
). The split-off resulted in WRECO becoming a wholly owned
subsidiary of TRI Pointe Homes.
As part of the transaction, each share of Weyerhaeuser was
converted into 1.7003 common shares of WRECO, which, in turn, were
converted into 1.297 shares of TRI Pointe Homes. Effectively, each
share of Weyerhaeuser was exchanged for 2.2053 common shares of Tri
Pointe (i.e., shareholders with $1.00 worth of Weyerhaeuser's
shares received $1.05 worth of Tri Pointe's shares).
In addition, Weyerhaeuser received $700 million in cash and reduced
its shares outstanding by 58.8 million. The whole transaction will
stimulate the company's growth prospects, as freed up resources can
be utilized for the core forest products business. Moreover, the
transaction will be tax-free for the participating shareholders.
Results from the divested business will be recorded as discontinued
operations starting the quarter ending Jun 30, 2014, while a net
gain from the transaction is expected to be recorded in the quarter
ending Sep 30.
Weyerhaeuser's share price has risen by 10.9% since Nov 4, 2013,
the day on which WRECO's divestiture to TRI Pointe Homes was first
announced. Currently, the Zacks Consensus Estimate is pegged at
$1.35 for 2014 and $1.66 for 2015. Earnings are anticipated to grow
by 5.0% over the next five years.
With a $19.4 billion market capitalization, Weyerhaeuser presently
carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the
building products industry include
Lennox International, Inc.
United Rentals, Inc.
), each holding a Zacks Rank #2 (Buy).
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WEYERHAEUSER CO (WY): Free Stock Analysis
LENNOX INTL INC (LII): Free Stock Analysis
UTD RENTALS INC (URI): Free Stock Analysis
TRI POINTE HOME (TPH): Free Stock Analysis
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