Weyerhaeuser's stock climbed Monday as the lumber company named Doyle Simons as its new CEO and announced a deal to buy Longview Timber LLC. for $2.65 billion. It also said that it was exploring strategic options for its real estate company that could include a merger, a sale or spin-off of the business and announced a quarterly dividend increase.
THE SPARK: Weyerhaeuser announced the news on Sunday. Simons' appointment is effective on Aug. 1. He's served as a director of the Federal Way, Wash. company since February 2012. Simons will succeed Dan Fulton, who turns 65 this year and will retire as planned.
Weyerhaeuser is purchasing Longview Timber from Brookfield Asset Management. The transaction, which includes the assumption of debt, is expected to close next month.
The company said that it plans to increases its quarterly dividend from 20 cents to 22 cents per share beginning with the third-quarter dividend, payable in September.
Weyerhaeuser Co. said it will look at a broad range of alternatives for its Weyerhaeuser Real Estate Co. as it seeks to capitalize on an improving home market. The business is one of the 20 largest homebuilders in the country.
THE ANALYSIS: Anthony Pettinari of Citi Investment Research said in a client note that dividend hike, CEO appointment and announcement that Weyerhaeuser is exploring strategic alternatives for its real estate company are all positives and would likely move the stock higher.
Pettinari said that Simons is considered very shareholder friendly and has a long history in the paper and forest products industry.
In regards to possibly selling or spinning off its real estate business, Pettinari said that "slimming the portfolio from four businesses to three would be well received and could unlock the value of (the company's) long land position."
The analyst maintained a "Buy" rating.
A representative for Weyerhaeuser did not immediately respond to an email seeking comment.
SHARE ACTION: Up 72 cents, or 2.6 percent, to $29.01 in afternoon trading. The stock has traded in a range of $20.12 to $33.24 over the last year. It's up 2 percent for the year to date.