BTG Pactual buys Weyerhaeuser Uruguay timber assets

The $402.5m deal includes more than 300,000 acres of timberland and a plywood and veneer manufacturing business in the South American nation.

Timber REIT Weyerhaeuser Company has sold its timberland and wood product manufacturing business in Uruguay to BTG Pactual’s Timberland Investment Group and other unidentified institutional investors for $402.5 million.

A Weyerhaeuser representative declined to provide further details.

The deal is expected to close during the fourth quarter and includes 120,000 hectares of timberland in Uruguay and a plywood and veneer manufacturing business in the country, according to a statement from the investor.

Weyerhaeuser’s assets in Uruguay are located in the northeastern and north central regions of the country and have been used to harvest fast-growing eucalyptus and pine species since 2005, according to the company’s website. The site also says that the plywood and veneer operation in the central Tacuarembo region of Uruguay launched in 2006 and now includes a bioenergy facility and seedling nursery.

BTG Pactual already manages about 32,000 hectares of timberland in Uruguay as a result of its in September 2013 acquisition of Regions Timberland Group (formerly RMK Timberland Group), according to an August 2014 document posted on the firm’s website. The document describes how the sparsely populated region where the assets are located has transitioned from cattle grazing to forest production gradually since the 1990s.

“Uruguay forestlands are mainly used for producing timber products from tree plantations, while managing conservation areas formed by native forests, permanent watercourses, wetlands, buffer zones, biological corridors and other significant natural or heritage areas,” the document said.

In May 2015 BTG Pactual closed its first timberland investment fund on $860 million, after surpassing its $750 million target for the Brazil-focused vehicle. Later that month, Gerrity Lansing, the firm’s head of timberland merchant banking, told Agri Investor that Uruguay would be among the countries outside of Brazil where the fund would look to invest.

Forest Research Group economist Frank Lutz told Agri Investor that Uruguay’s timber industry has benefited from the country’s use of the US dollar, which eliminates investors’ fear of currency risk, and government programs encouraging timberland industry development to reduce reliance on beef exports.

“It’s a fairly small timberland economy, but it’s been interesting for investors,” he said, citing previous acquisitions in the country by Phaunos Timber Fund and others.

BTG Pactual is a Latin America-focused investment bank and asset manager founded in 1983. Headquartered in Sao Paulo and New York, the firm’s TIG unit has nearly $3 billion in assets and manages more than 1.8 million acres of timberland in the US, Latin America, Eastern Europe and South Africa.