Through TheFLY's Eyes: Weyerhaeuser

from Joseph Lazzaro of Theflyonthewall.com













Franklin Asks Weyerhaeuser To Reorganize

Franklin Mutual Advisors has put Weyerhaeuser’s (WY) management on notice: Franklin continues to believe that WY’s share price reflects a substantial discount to the intrinsic value of its underlying assets and core businesses. [Translation: the stock is not meeting Franklin's appreciation expectations.]

Franklin owns a 7.6% stake in Weyerhauser and its letter to WY’s board of directors, Franklin argued that it appears the tax law will continue to favor holding timber properties in entities such as timber investment management organizations or real estate investment trusts, and it cited several structural disadvantages for WY.

Franklin also noted an analyst’s report that projected a destruction of $24 per share in shareholder value, or nearly 35% of current equity value, and Franklin underscored that “Weyerhaeuser must immediately take steps to eliminate this disadvantage, including possibly converting the current corporate structure to a REIT.”

Weyerhaeuser (WY) shares were up $4.23 to $73.85 in morning trading Friday. WY has been a major advocate of legislation that would decrease its tax burden, but that legislation has yet to pass.

Further, control of the U.S. Congress has shifted to the Democratic Party from the Republican Party, which many believe further clouds WY’s ability to lower its current-status tax payments via legislation alone.