Continuing its shift to a much smaller real estate investment trust, Weyerhaeuser is selling its 1,000-employee Northwest Hardwoods unit to a New York-based private equity firm.
Northwest Hardwoods has about 1,000 employees worldwide, including 400 in Western Washington, Weyerhaeuser spokesman Bruce Amundson said Wednesday. In addition to the headquarters in Federal Way, they work at mills in Arlington, Centralia and Longview.
The company has seven sawmills, four re-manufacturing plants and several other facilities. In a statement, the equity firm and Weyerhaeuser called Northwest Hardwoods “the leading manufacturer of high quality hardwood lumber in North America.”
The equity firm, American Industrial Partners, acquired half of its portfolio companies as corporate carve-outs similar to the Northwest Hardwood deal. The purchase price was not disclosed, and AIP says the sale is expected to close in August.
The Seattle Times reports that Deutsche Bank analyst Mark Wilde estimated in a note to clients that Federal Way-based Weyerhaeuser likely is getting between $100 million and $150 million.
“Weyerhaeuser shareholders aren’t likely to be thrilled about timing or price on the sale, but the portfolio streamlining is apt to be appreciated,” he wrote.
While Northwest Hardwoods “is one of the largest players in the hardwood market and had been viewed in the trade as a relatively well-run business,” it is not central to Weyerhaeuser’s strategy of focusing on its softwood forest business, Wilde wrote.
Northwest Hardwoods’s sales have fallen with the downturn in housing and real estate markets, shrinking from $398 million in 2006 to $222 million last year, according to Wilde.
AIP is betting that a housing recovery, when it happens, will benefit Northwest Hardwoods. Meantime, AIP will focus on making Northwest Hardwood a leaner operation, said AIP partner Ben De-Rosa, but that doesn’t necessarily mean fewer employees.
“I refer to lean more in terms of business processes as opposed to people. The plan is that all the active employees will be offered employment in the new entity,” DeRosa said.
Dow Jones reports that AIP invests $10 million to $70 million of equity per deal and targets manufacturing and industrial companies with acquisition values of $50 million to $500 million.
AIP is investing from the $405.5 million American Industrial Partners Capital Fund IV LP, which closed in 2008.
Northwest Hardwoods is the sixth company in that portfolio.
Kathleen Cooper: 253-597-8546 kathleen.cooper@thenewstribune.com
JOIN THE DISCUSSION | Register here
We welcome comments. Please keep them civil, short and to the point. ALL CAPS, spam, obscene, profane, abusive and off topic comments will be deleted. Repeat offenders will be blocked. Thanks for taking part — and abiding by these simple rules. A thorough explanation of rules of conduct can be found in our Terms of Service. If you have any questions, including why your comment may not be showing immediately after you submit it, be sure to visit the commenting FAQ.