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Weyerhaeuser (WY) to Divest North Pacific to One Rock

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Forest product manufacturer and supplier Weyerhaeuser Company (WY - Free Report) announced that it has agreed to sell its printing papers company, North Pacific Paper Company to One Rock Capital Partners, LLC. Financial terms of the deal were not disclosed.

As revealed, Weyerhaeuser’s to be divested assets include its Longview, WA-based papers mill, which it operated in collaboration with Nippon Paper Industries Co., Ltd. The company owned a 50% interest in this joint venture, which is primarily engaged in producing high-brightness publication papers and newsprint.

Subject to customary closing conditions, Weyerhaeuser anticipates the transaction to close in fourth-quarter 2016. The company intends to use majority of the after-tax proceeds to repay its debts.

Weyerhaeuser’s agreement to sell-off its printing papers business marks the end of the strategic review of its previous business segment, Cellulose Fibers, now treated as a discontinued item. In August, Weyerhaeuser completed divesting its liquid packaging board business to Nippon Paper Industries Co., Ltd. for $285 million in cash while in May, it agreed to sell its Cellulose Fibers pulp mills for approximately $2.2 billion in cash to International Paper Company (IP - Free Report) . Subject to closing conditions, the divestment of Cellulose Fibers pulp mills will be completed in fourth-quarter 2016.

We believe that the above-mentioned dispositions will enable Weyerhaeuser to concentrate on its core timber, land, and forest products business and hence, improve its profitability in the quarters ahead. The company, with a market capitalization of $22.9 billion, currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the building products industry include Louisiana-Pacific Corp. (LPX - Free Report) and Rayonier Inc. (RYN - Free Report) . While Louisiana-Pacific Corp. sports a Zacks Rank #1 (Strong Buy), Rayonier Inc. carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific Corp.’s financial performance has been impressive, with an average positive earnings surprise of 53% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.

Rayonier Inc. reported better-than-expected results in the last four quarters, with a positive average earnings surprise of 63.49%. Also, earnings estimates for 2016 have improved over the past 60 days.

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