Weyerhaeuser Co., a U.S. real-estate investment trust that owns timberland, agreed to buy Longview Timber LLC for $2.65 billion including debt from affiliates of Brookfield Asset Management Inc. in the third-largest forestry acquisition in North America.

The deal will close in July and immediately add to Weyerhaeuser’s funds for distribution, the Federal Way, Wash.-based company said yesterday in a statement. It plans to boost its quarterly cash dividend to 22 cents a share in September from 20 cents.

Weyerhaeuser, which also said that former Temple-Inland Inc. chief executive officer Doyle Simons will take over as its CEO in August, will get about 645,000 acres (261,000 hectares) of timberlands in Washington and Oregon from buying Longview. The deal will boost the acreage in the U.S. that it owns or controls to about 6.6 million.

“It’s a pretty big price what they’re paying for it, but it’s indicative of the quality of timber they bought,” Paul Quinn, a Vancouver-based analyst at RBC Capital Markets who has a buy rating on Weyerhaeuser, said yesterday in a telephone interview. “It allows them to increase the harvest level in the short term. They’ll have more cash flow to pay the dividend.”

Deal Financing

Weyerhaeuser said it plans to finance the deal by raising about $2.45 billion through selling debt and equity and has a committed senior unsecured bridge loan facility with Morgan Stanley. It will offer 28 million common shares in a public offering, it said in a statement today.

The company will also offer 10 million mandatory convertible preference shares at a price of $50 per share, which will automatically convert into a variable number of common shares on July 1, 2016, it said. Morgan Stanley, Deutsche Bank AG. and Citigroup Inc. are managing the offerings, Weyerhaeuser said.

Weyerhaeuser shares rose 0.8 percent to $29.13 at 9:51 a.m. in New York. They have gained 4.7 percent this year while the Dow Jones U.S Real Estate Industry Group Index has climbed 5.7 percent. Sharon Stern, an external Weyerhaeuser spokeswoman, declined to comment on how much debt the company is assuming in the acquisition.

Forestry Takeovers

The takeover is the largest forestry acquisition in North America after Resource Management Service LLC’s $5 billion purchase of International Paper Co. assets in 2006 and Plum Creek Timber Co.’s $3.34 billion acquisition of a timber business from Georgia-Pacific LLC in 2001, according to data compiled by Bloomberg.

Weyerhaeuser said yesterday in a separate statement that Simons will take over Aug. 1 from Dan Fulton, who will retire this year. Simons was chairman and CEO of cardboard packaging company Temple-Inland for four years until its acquisition by International Paper Co. in 2012.

Weyerhaeuser said yesterday in another statement that it’s looking at options including a sale or spinoff for its Weyerhaeuser Real Estate Co. homebuilding and real estate development business.

Brookfield agreed to sell its Longview Fibre Paper and Packaging Inc. unit to KapStone Paper and Packaging Corp. for $1.03 billion in cash, the Toronto-based investment company said yesterday in a statement.

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