Weyerhaeuser to sell Tacoma-based Northwest Hardwoods unit
Weyerhaeuser has agreed to sell its 1,000-employee Northwest Hardwoods unit to a private equity firm that says it will keep the operation's...
By Seattle Times business staff
Weyerhaeuser has agreed to sell its 1,000-employee Northwest Hardwoods unit to a private equity firm that says it will keep the operation's headquarters in Tacoma.
Northwest Hardwoods has seven sawmills, four remanufacturing plants and several other facilities, the companies said in a statement that called it "the leading manufacturer of high quality hardwood lumber in North America."
Terms were not disclosed, but analyst Mark Wilde of Deutsche Bank 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.
The buyer, American Industrial Partners, said that "as these depressed markets improve in the years ahead, the company is well positioned to meet the demand with its excellent hardwood timber supply relationships and extensive, modern and low cost manufacturing footprint."
Northwest Hardwoods produces 15 species of hardwood lumber, specializing in alder, oak, maple, cherry, walnut, ash, and hickory, according to Weyerhaeuser. In addition to the U.S., it has operations in Canada, China, Japan and Hong Kong.
The transaction is expected to close in August.