Weyerhaeuser
to buy Plum Creek, creating $23 billion timber company
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[November 09, 2015]
By Edward Krudy
NEW YORK (Reuters) - Weyerhaeuser Co will
purchase Plum Creek Timber Co Inc in a deal announced on Sunday that the
two companies said would create a $23 billion timber, land and forest
products company, the largest in the United States.
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The new company, which will keep the Weyerhaeuser name, will manage
more than 13 million acres of timberland that will allow it to drive
economies of scale and capitalize on the U.S. housing recovery, the
companies said.
The merger combines the two largest owners of timberland in the
United States.
"Both companies have historically looked to grow their timberland
resource asset base, in others words to acquire more timberlands, so
here's an opportunity for both of us to accomplish that," Plum Creek
Chief Executive Officer Rick Holley said in a telephone interview.
Under the terms of the merger, Plum Creek's shareholders, who will
need to approve the deal, will receive 1.60 shares of Weyerhaeuser
for each Plum Creek share. The companies said the exchange implies a
premium of 13.8 percent to a weighted average price ratio of Plum
Creek shares to Weyerhaeuser shares.
![](http://archives.lincolndailynews.com/2015/Nov/09/images/ads/current/clarksag_sda_022614.png)
The transaction could amount to about $8.4 billion based on about
174 million Plum Creek shares outstanding and Weyerhaeuser's closing
price of $30.40 on Friday. The joint company's equity value would
amount to $23 billion. Plum Creek was not able to confirm that
figure.
Holley said that combining the two companies, which operate as real
estate investment trusts and are popular with asset managers seeking
to hold timber in their portfolios, will be able to attract larger
investors both at home and globally.
"If you want to invest in this asset class - and many, many do -
this is where you go, to this new company,' said Holley.
Holley and Weyerhaeuser's chief executive, Doyle Simons, said in a
phone interview that they did not foresee any regulatory or
shareholder obstacles to the deal, which they expect to close late
in the first quarter or earlier in the second quarter of 2016. The
boards of both companies have unanimously backed the merger.
Holley will serve as non-executive chairman of Weyerhaeuser's board.
Simons said cost synergies would amount to $100 million but that
there would be "many synergies above and beyond that".
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Weyerhaeuser plans to spin off its cellulose fibers business, but
Simons said that process was still in its early stages. He declined
to say how much the business was worth.
Seattle-based Plum Creek owns approximately 6.2 million acres of
timberlands located in over 19 states. Weyerhaeuser, based in nearby
Federal Way, Washington, manages 6.9 million acres, primarily in the
Pacific Northwest.
Weyerhaeuser said it intends to execute a $2.5 billion share
repurchase program shortly after closing the deal. The company said
the net financial impact would be as if the deal had been structured
with about 70 percent stock and 30 percent cash.
The combined company expects to maintain Weyerhaeuser's current
annual dividend of $1.24 per common share, which would be a 13
percent increase on the dividend currently received by Plum Creek
shareholders, the companies said.
Morgan Stanley is serving as financial adviser and Cravath, Swaine &
Moore is serving as legal counsel for Weyerhaeuser .
Goldman Sachs is lead financial adviser to Plum Creek. BofA Merrill
Lynch is also a financial advisor to the company. Skadden, Arps,
Slate, Meagher & Flom LLP is legal counsel.
![](http://archives.lincolndailynews.com/2015/Nov/09/images/ads/current/graue_2014_Silverado_060315.png)
(Reporting by Edward Krudy; Editing by Jonathan Oatis)
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