Weyerhaeuser to buy Longview Timber for $2.65 billion

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NEW YORK — Weyerhaeuser, a U.S. real-estate investment trust that owns timberland, agreed to buy Longview Timber for $2.65 billion including debt from affiliates of Brookfield Asset Management, in the third-largest forestry acquisition in North America.

The deal will close in July and immediately add to Weyerhaeuser's funds for distribution, the Federal Way-based company said Sunday in a statement. It plans to boost its quarterly cash dividend to 22 cents a share in September from 20 cents.

Weyerhaeuser, which also said Sunday that former Temple-Inland Chief Executive Officer Doyle Simons will take over as its CEO in August, will get about 645,000 acres of timberlands in Washington and Oregon from the purchase of Longview. The deal will boost the acreage in the U.S. that it owns or controls to about 6.6 million.

"It's a pretty big price, what they're paying for it, but it's indicative of the quality of timber they bought," Paul Quinn, a Vancouver, Canada-based analyst at RBC Capital Markets who has a buy rating on Weyerhaeuser, said in a telephone interview. "It allows them to increase the harvest level in the short term. They'll have more cash flow to pay the dividend."

Sharon Stern, an external Weyerhaeuser spokeswoman, declined to comment on how much debt the company is assuming in the acquisition. Weyerhaeuser said it plans to finance the deal by raising about $2.45 billion through selling debt and equity, and has a committed senior unsecured bridge loan facility with Morgan Stanley.

The takeover is the largest forestry acquisition in North America after Resource Management Service's $5 billion purchase of International Paper assets in 2006 and Plum Creek Timber's $3.34 billion acquisition of a timber business from Georgia-Pacific in 2001, according to data compiled by Bloomberg.

Weyerhaeuser said in a separate statement that Simons will take over Aug. 1 from Dan Fulton, who will retire this year. Simons was chairman and CEO of cardboard packaging company Temple-Inland for four years until its acquisition by International Paper in 2012.

Weyerhaeuser said Sunday in another statement that it's looking at options including a sale or spinoff for its Weyerhaeuser Real Estate homebuilding and real estate development business.

Last week, Toronto-based Brookfield agreed to sell its Longview Fibre Paper and Packaging unit to KapStone Paper and Packaging for $1.03 billion in cash. The timing of the sale of the Longview timber and packaging units, which Brookfield acquired together in 2007, was coincidental, the investment company said Sunday in a statement.

Weyerhaeuser closed at $28.29 in New York on Friday. The shares have risen 1.7 percent this year. The Dow Jones U.S. Real Estate Industry Group Index has climbed 4.8 percent in the same period.

Weyerhaeuser will hold a live conference call at 8:30 a.m. EDT Monday to discuss the announcement.