Temple-Inland shares surge on sale, spinoff plan

By Euan Rocha

NEW YORK (Reuters) - U.S. Forest products company Temple-Inland Inc. (TIN.N), which is under pressure from billionaire investor Carl Icahn, said on Monday it would spin off two businesses and sell its timberland operations, sending its shares up more than 14 percent.

The company said the spinoffs would include its financial services operations in Guaranty Bank and more than 236,000 acres of real estate operations.

"We are surprised by both the magnitude and timing of the announcement but pleased to see Temple looking to aggressively unlock the value of it parts." said JPMorgan analyst Claudia Shank in a research note.

Temple-Inland's timber holdings consist of about 1.8 million acres in Texas, Louisiana, Alabama and Georgia, as well as the mineral rights to nearly 740,000 acres in those states.

The Austin, Texas-based company expects to begin the sales process of its timberland unit immediately and added that a majority of the proceeds from the sale will be returned to shareholders.

Temple-Inland said the proposed separations of Financial Services and Real Estate are intended to be tax-free distributions to shareholders.

Until the separations of the two divisions are completed, the company expects to continue to pay a quarterly dividend of 28 cents a share.

The plan would leave Temple-Inland with its corrugated packaging and building products businesses.

Earlier this month, Icahn said he would nominate four new directors to the board of Temple-Inland. He could not immediately be reached for comment on Monday.

Icahn funds hold about 7.2 million shares in Temple-Inland, or 6.7 percent of the total, according to regulatory filings.

The company said earlier in February it had hired Goldman Sachs & Co. and Citigroup Global Markets Inc. as its financial advisers.

Shares of Temple-Inland, which had rallied as high as $63.61 earlier today, were at $62.81 a share in afternoon trading on the New York Stock Exchange.

(Additional reporting by Matt Daily)