Weyerhaeuser Sells Gna Unit To Ge Capital
Weyerhaeuser Co. said today it is selling its annuity business, GNA Corp., to GE Capital in a deal that will net the forest products giant $300 million in cash.
GE Capital will pay $525 million for 100 percent ownership of GNA Corp., but Weyerhaeuser will assume $225 million of outstanding GNA debt.
The move fits with Weyerhaeuser's strategy, announced three years ago, of refocusing on its core forest products businesses.
Founded in 1980, GNA Corp. has reaped healthy operating profits for Weyerhaeuser, which is now cashing in significant appreciation on its original investment in the annuity subsidiary.
"They're getting a substantial return on their investment," said Dan Nelson, wood products analyst at Ragen MacKenzie Inc. "They have a need for cash in their core businesses, and rather than stretch out the balance sheet, it makes sense to raise cash, especially if you can get a good price."
Weyerhaeuser recently closed a deal to acquire two wood products mills from Procter & Gamble Co. for $600 million.
Moreover, the company is about to start two major pulp mill modernization projects, together costing $800 million, in Longview and in Plymouth, N.C.
John Creighton Jr., president and chief executive officer of Weyerhaeuser, called the deal a "win-win for both companies."
"GE Capital is getting a well-run, consistently profitable business, operating in a carefully thought-out and successful market niche," Creighton said.