06/17/2013 07:19 EDT | Updated 08/17/2013 05:12 EDT

Brookfield divesting more forestry assets; Longview business units to be sold

TORONTO - Brookfield Asset Management Inc. (TSX:BAM.A), a major Canadian investor in the real estate, power and resource sectors, is selling its Longview forestry assets in the U.S. Pacific Northwest through deals totalling nearly $3.7 billion.

The Toronto-based company acquired the Longview assets in 2007 as one business and has since separated the timberlands from the manufacturing businesses.

Weyerhaeuser Co. (NYSE:WY), a major North American lumber producer based in the state of Washington, will acquire Brookfield's Longview Timber for $2.65 billion, including debt.

KapStone Paper and Packaging (NYSE:KS), headquartered north of Chicago area in Northbrook, Ill., will acquire Longview Fibre Paper and Packaging for $1.025 billion from Toronto-based Brookfield.

Brookfield said on Sunday it expects to get $250 million cash for Longview Fibre Paper and $600 million cash for Longview Timber after debt and investor payments.

In addition, its affiliate Brookfield Infrastructure (TSX:BIP.UN) will receive $470 million in net proceeds from the timberlands deal.

"While the timing of the sale transactions is coincidental, for investors in our funds these transactions represent monetization at excellent returns and puts each of these assets into the hands of strategic buyers who will be able to take them to the next level," Cyrus Madon, senior managing partner in Brookfield's private equity group, said in a statement issued Sunday.

Brookfield and its affiliates have also recently announced a number of other deals in the forestry sector, which is beginning to show signs of revival from a severe slump related to the downturn in U.S. housing and changing demand for pulp and paper because of the economic downturn and a switch to digital media.

The company announced on May 21 that Blue Wolf Capital Partners and Atlas Holdings would be buying Brookfield's controlling stake in Twin Rivers Paper Company Inc., which operates mills in New Brunswick and Maine. Financial terms of those deals weren't disclosed.

Brookfield Infrastructure announced Sunday that it had completed the sale of the remainder of its Canadian B.C. Coastal timberland operations for net proceeds of approximately $170 million on June 7.

"The sale of our timberland assets was an opportunity to further our strategy of monetizing lower yielding assets to recycle capital into our utilities, transport and energy businesses," said Sam Pollock, chief executive officer of Brookfield Infrastructure.

He said the timberlands were being sold at attractive prices, reflecting the most recent appraisals.

Pollock said Brookfield Infrastructurre will seek to seek to re-invest these proceeds to achieve a targeted after-tax annual return on equity of 12 per cent to 15 per cent.

Weyerhaeuser Co., one of the world's largest lumber companies, also said Sunday that its board has named Doyle Simons as its new CEO, effective Aug.1.

As part of the deal with Brookfield, Weyerhaeuser is acquiring 645,000 acres of high-quality timberlands in Washington and Oregon that are near the company's existing lands.

Weyerhaeuser said that the deal will expand its timber holdings in the Pacific Northwest by a third, to about 2.6 million acres, and increase the total amount of U.S. timberlands it owns or controls to about 6.6 million acres.

Weyerhaeuser says it intends to increases its quarterly dividend by 10 per cent to 22 cents per share from 20 cents per share, beginning with the third quarter dividend that's payable in September.

It also said that it's exploring strategic alternatives for its real estate company that could include a merger, a sale or spin-off of the business.