Weyerhaeuser to Sell Some Wholesalers
Weyerhaeuser wasn't required to disclose the value of the potential sales, but the effect on the company's finances would be relatively small, spokesman Frank Mendizabal said Friday.
Investors, however, may welcome the tightening amid slowdowns in the housing market and continued Wall Street speculation about restructuring to emphasize the company's timber holdings.
Weyerhaeuser has closed plants and made other moves aimed at pleasing shareholders in recent months, and is finalizing the split-off of its fine-paper business in a deal with the Canadian company Domtar Inc.
"Effectively, timber is becoming a greater portion of the company's asset base," McAdams Wright Ragen analyst Paul Latta said.
Executives have said they are evaluating various restructuring measures, but declined to elaborate during the company's most recent quarterly conference with analysts.
Weyerhaeuser shares rose 64 cents, or 0.8 percent, to close at $83.03 in Friday trading on the New York Stock Exchange--setting a new 52-week high.
In a statement, Weyerhaeuser said it was in final negotiations with Platinum Equity, a private Los Angeles firm, for the sale of wholesale building products distribution centers in Canada.
Weyerhaeuser said it expects the sale to close during the second quarter. All 16 distribution centers in Canada are affected.
Weyerhaeuser said it also is in preliminary talks with an unidentified buyer for 10 of its U.S. distribution sites, which deal in lumber, plywood, roofing and other building materials.
The U.S. centers are in Louisville, Kentucky; Memphis, Tennessee; Nashville, Tennessee; Green Bay, Wisconsin; Kansas City, Kansas.; Oklahoma City; Omaha, Nebraska.; Newton, Kansas.; Boston, and Buffalo, N.Y.
Weyerhaeuser will keep control of 40 such centers in larger markets, Mendizabal said.
"Even these centers that we are selling or we have for sale will continue to distribute Weyerhaeuser products," Mendizabal said. "But our own focus is going to be at those larger markets and with the bigger buyers."
The fine-paper deal with Domtar, expected to close in the first quarter, is valued at about $3.3 billion.
Weyerhaeuser will receive a $1.35 billion cash payment from Domtar, and Weyerhaeuser shareholders will receive 55 percent of the new company's stock. Domtar stockholders will own a 45 percent stake in the new company.
On Friday, Weyerhaeuser said its fine-paper business posted a 2006 loss of $613 million, or an estimated $2.18 per share, on revenue of $3.3 billion.
The fine paper business earned $105 million, or 37 cents per share, on $872 million in sales in the fourth quarter. The quarterly results included a gain of $65 million on a refund of duties on Canadian softwood lumber sold in the U.S.