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Weyerhaeuser’s (WY) Twin Creeks Deals to Boost Core Business


Forest product manufacturer and supplier, Weyerhaeuser Company WY yesterday announced that it has sold its 21% equity interest in Twin Creeks Timber LLC (Twin Creeks). The company also communicated the signing of an agreement to dispose 100,000 acres of Southern Timberlands to Twin Creeks. Net cash proceeds from the both transactions are estimated to be $310 million.

We believe the deals are in sync with the company’s strategic initiatives to concentrate on its core timber, land and forest products business.

Quarter to date, Weyerhaeuser’s shares have yielded 1.6% return, marginally outperforming 1.4% gain of the industry it belongs to.

Details of the Transactions

Twin Creeks was formed in 2015 as a joint venture between Plum Creek Timber Company, Inc., Silver Creek Capital Management and other institutional investors. This association gives institutions an option to invest in high quality timber assets.

When Weyerhaeuser merged with Plum Creek Timber Company (Plum Creek) in February 2016, it attained the controlling ownership stake of 21% in Twin Creeks from Plum Creek. Additionally, the company became the manager of timberland assets owned by Twin Creeks.

Now, Weyerhaeuser has exited as the stakeholder in Twin Creeks for $107.5 million in cash and has agreed on selling 100,000 acres of Southern Timberlands to the latter for $202.5 million cash. The to-be-disposed timberland includes 80,000 acres in Mississippi and 20,000 acres in Georgia. The company anticipates closing its timberland disposition deal by the end of 2017. Also, the company will stop managing Twin Creeks’ timberland assets effective Dec 31.

No material gain or loss is anticipated from Weyerhaeuser’s aforementioned transactions.

Zacks Rank & Other Stocks to Consider

With a market capitalization of $26 billion, Weyerhaeuser currently carries a Zacks Rank #2 (Buy). The company is scheduled to report its third-quarter 2017 results on Oct 27, before the market opens.

Over the last 60 days, the Zacks Consensus Estimate for the stock increased roughly 1% to $1.05 for 2017 and 2.5% to $1.24 for 2018. Estimates for the third quarter is currently pegged at 31 cents.

Weyerhaeuser Company Price and Consensus

Weyerhaeuser Company Price and Consensus | Weyerhaeuser Company Quote

Other stocks worth considering in the building products industry include KB Home KBH, Potlatch Corporation PCH and Rayonier Inc. RYN. All these carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

KB Home pulled off an average positive earnings surprise of 12.67% for the last four quarters. Also, its earnings estimates for fiscal 2017 and fiscal 2018 improved in the last 60 days.

Potlatch Corporation’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company delivered an average positive earnings surprise of 41.16% in the last four quarters.

Rayonier’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company’s average earnings surprise for the last four quarters was a positive 59.94%.

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