Forest product manufacturer and supplier Weyerhaeuser Company (NYSE:WY) announced that it has completed divesting its liquid packaging board business to Nippon Paper Industries Co., Ltd. The assets sold were part of the company’s previous business segment, Cellulose Fibers, now treated as a discontinued item.
As revealed, the sold-off assets included Weyerhaeuser’s Longview, WA-based mill, which has an annual capacity of 280,000 tons. The company intends to use the divestment-proceeds of approximately $285 million in cash or $225 million after-tax for repaying debts.
The disposition is part of Weyerhaeuser’s strategic decision to help it concentrate on its core timber, land, and forest products business. In addition, in May, the company agreed to sell its Cellulose Fibers pulp mills for approximately $2.2 billion cash to International Paper Company (NYSE:IP) . However, the company is still working on finding a suitable alternative for its publishing papers joint venture facility. Also, the company is in the process of permanently shutting down its lumber and plywood mill in Columbia Falls, MT.
We believe such strategic decisions will enable Weyerhaeuser to boost its profitability in the quarters ahead. Currently, the Zacks Consensus Estimate for the stock is pegged at 81 cents per share for 2016 and $1.18 per share for 2017.
Zacks Rank & Other Stocks to Consider
Weyerhaeuser, with a market capitalization of $23.9 billion, currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the building products industry include Potlatch Corporation (NASDAQ:PCH) and Universal Forest Products Inc. (NASDAQ:UFPI) , both sporting a Zacks Rank #1 (Strong Buy).
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