Weyerhaeuser stock climbs on bid rumors

Shares of Weyerhaeuser surged 5.2 percent Tuesday, the most in 15 months, on speculation the Federal Way company may be the target of an unsolicited bid, possibly by a buyout firm.

The stock of the world's biggest lumber company rose $2.98 to $60.03 in New York Stock Exchange composite trading, marking the biggest percentage gain since a 5.4 percent advance April 27, 2005.

In a report titled "Timber-r-r: Is WY Vulnerable to an Unsolicited Bid," Deutsche Bank analysts Mark Wilde and Christopher Chun said, "While Weyerhaeuser continues to restructure itself, we think the company could be vulnerable to an unsolicited offer that would bring larger and more rapid changes." Deutsche Bank owns Weyerhaeuser shares and has provided services to the company in the past year.

Before Tuesday's gain, Weyerhaeuser's stock — which trades under the ticker symbol WY — dropped 12 percent in the past year.

The company reported last month that second-quarter profit fell 25 percent from a year earlier as wood-product sales declined. Pretax earnings from real-estate development, excluding items, dropped to $278 million in the first half from $339 million a year earlier.

"Private equity firms have been raising large new funds," and companies such as Madison Dearborn Partners, Cerberus Capital Management, Apollo Management, Texas Pacific Group and Kohlberg & Co. have concluded forest-products transactions, the Deutsche Bank analysts said in the report, dated Monday.

Timber-investment managers also "report strong interest from clients," the analysts said.

Responding to the report, Weyerhaeuser spokesman Frank Mendizabal said, "We don't comment on rumors or speculation."