Forest and timber giant Weyerhaeuser has been handed a huge tax break hidden inside the government farm bill. However, analysts believe the company could still be forced into a major restructuring favoured by stock markets.
Investors want Weyerhaeuser to sell off its mills and get out of wood and forest products, and concentrate on increasing logging on its extensive forest lands. The company owns more than 6.4 million acres in the US and vast timberlands in Canada and South America. By converting timberlands into real estate investments, shareholders gain directly from huge tax advantages, however, to do that the company would have to divest all other operations.
Tucked into the farm bill was a lifeline measure to reduce Weyerhaeuser’s tax rate from 35% to 17% – worth about US$182m – to help it fend off restructuring and remain an integrated company milling its own harvest at 26 lumber, ply and other product mills. Company officials said there was no guarantee it would be enough.
One financial analyst said: “The world has changed and Weyerhaeuser has to change with it.”
