Who’s No. 1? No, it’s not Weyerhaeuser

By Tim Raetzloff | Sep 23, 2010

“Times do change and there is now a new leader in the Northwest woods”

All my life (I am 63) the largest forest products’ company in the Northwest has been Weyerhaeuser. When I thought of wood products, sawmills, forests and tree farms, the name that came to mind was always Weyerhaeuser.

Times do change and there is now a new leader in the Northwest woods. Plum Creek Timber, headquartered on 3rd Avenue in Seattle, has a market capitalization of $5.75 billion.

Weyerhaeuser’s market capitalization is $3.45 billion. Market capitalization is calculated by multiplying the prices of one share of stock by the number of shares outstanding.

Plum Creek shares closed at $35.61 a share on Sept. 10, and Plum Creek had 161,601,841 shares outstanding as of July 30, according to the most recent 10-Q filing at www.sec.gov.

Weyerhaeuser shares closed at $16.28 on Sept. 10, and Weyerhaeuser had 211,612,907 shares outstanding as of July 31.

Market capitalization is one way to measure the size of a company. For a forest products company, another way would be to measure the amount of timberland the company owns.

According to the Plum Creek Timber web site at www.plumcreek.com/Home/tabid/36/Default.aspx:
“Plum Creek is the largest and most geographically diverse private landowner in the nation. Our primary business is to actively manage our timberlands to capture the most value from every acre we own. That means owning timberlands in the most robust markets, making prudent investments in the growth of our timberland assets, and harvesting trees at the best economically mature point in the life cycle of a tree.”

In July, Weyerhaeuser had a special dividend of $26.47 a share, a total of $5.6 billion. That money was transferred to shareholders and out of company ownership. It is that transfer of wealth that enabled Plum Creek to pass Weyerhaeuser in market capitalization.

Weyerhaeuser had been disposing of mills and other properties for some time in preparation for conversion from a corporation to a real estate investment trust (REIT). The cash generated from those sales made up the special dividend.

Plum Creek Timber is now the largest forest products’ company in the Northwest and, as I have jokingly said for the last 10 years, the biggest company in Washington that nobody has ever heard of.

Maybe that last designation will change now that Plum Creek has become the king of the forest.
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(Tim Raetzloff, who operates Abarim Business Computers at Five Corners in Edmonds, evaluates Puget Sound business activity in his regular column in the Beacon. In the interests of full disclosure he says, “Neither I nor Abarim have any interest in or conflict with any company mentioned in this column.”)

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