The company has struck a deal to buy Longview Timber, increasing its land holdings in Oregon and Washington by one-third, to 2.6 million acres, The Daily Astorian reported.
The transaction has the potential to increase timberland values in the region for other landowners and investors in the region, said Brooks Mendell, president of Forisk Consulting, which tracks timber finances.
"They're making a big statement about their confidence in log values and timberland assets," he said. "It makes people more confident in timberland values."
Weyerhaeuser paid more than $4,000 per acre. Nearly 70 percent of the inventory on the land is harvest-ready timber on flat, favorable terrain with a well-maintained road system.
The consolidation could be a concern for sawmills in areas where Weyerhaeuser is the predominant landowner, Mendell said. Those companies would have fewer competing suppliers.
"It's a market-by-market issue," he said.
The location is also desirable, particularly in light of the growing strength of California's housing market and the access to export markets in Asia.
Weyerhaeuser plans to raise about $2.45 billion to finance the transaction, half by taking on new debt and half by selling stock.
Patricia Bedient, the firm's chief financial officer, noted that Northwest holdings will represent about 40 percent of Weyerhaeuser's total land assets after the transaction.
"This geography is the most valuable on a per-acre basis," she said.
The company simultaneously announced that it would be evaluating the possible sale or spin-off of its real estate development division.
"This is a one-of-a-kind acquisition," said Tom Gideon, the firm's executive vice president of timberlands, during a conference call. "It is highly unlikely that the opportunity to purchase high value and high quality timberland of this magnitude in the Pacific Northwest will appear again."
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