Federal Way-based timber giant Weyerhaeuser has agreed to sell off its struggling Northwest Hardwoods Inc. unit to the private equity firm American Industrial Partners (AIP).
Terms of the sale, which is expected to close in August, were not disclosed Monday. However, Weyerhaeuser will receive between $100 million and $150 million for the sale, according to a Seattle Times report. AIP has also said that it will keep Northwest Hardwoods’ company headquarters in Tacoma.
Northwest Hardwoods has approximately 1,000 employees and is the leading manufacturer of high-quality hardwood lumber in North America. It manufactures and sells 15 species of hardwood, specializing in alder, oak, maple, cherry, walnut, ash and hickory. It operates through a network of seven primary sawmills, four concentration yards, four remanufacturing plants and one merchandizing log yard, all in the United States.
“Our customers have been extremely loyal to us over many decades and we very much appreciate that,” said David Weyerhaeuser, vice president of sales and marketing for Northwest Hardoods. “As a standalone company, we expect to offer our customers flexibility, fast market response times, continuity of supply and an entrepreneurial ‘can do’ attitude.”
Northwest Hardwoods’ sales have taken a downturn in the poor housing and real estate markets during the past few years. According to Deutsche Bank, a leading global investment bank, Northwest Hardwoods’ sales have shrunk from $398 million in 2006 to $222 million last year.
“The company’s revenues are related to housing starts and general repair and remodeling in the housing sector,” said Joel Stanwood of AIP. “As these depressed markets improve in the years ahead, the company is well positioned to meet the demand with its excellent hardwood timber supply relationships and extensive, modern and low-cost manufacturing footprint.”
Founded in 1989, American Industrial Partners is an operationally-focused private equity firm that makes control investments in North American-based industrial businesses. AIP has managed three prior investment funds that total more than $1 billion of equity capital and is currently investing its $405.5 million American Industrial Partners Capital Fund, IV, LP.
“We very much look forward to partnering with the American Industrial Partners team,” said Nancy Arend, vice president of Northwest Hardwoods. “We have developed a go-forward operating agenda focused on expanding our customer base and geographic sales regions, implementing manufacturing best practices and continuing to enhance our market leading cost position on a global basis.”
