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(Reuters) - Weyerhaeuser Co (WY.N) is selling its homebuilding division to Tri Pointe Homes Inc (TPH.N) in a $2.7 billion deal that will leave Weyerhaeuser shareholders in control of one of the 10 largest homebuilders in the United States.
Tri Pointe said the deal would give it control of about 27,000 lots in high-growth markets where there are shortages of land ready to build on.
Under the terms of the transaction, Weyerhaeuser shareholders will receive about $2 billion in Tri Pointe's stock, based on Tri Pointe's Friday close of $15.38.
The Weyerhaeuser unit, Weyerhaeuser Real Estate Co (WRECO), will also pay $700 million in cash to its parent.
Weyerhaeuser shareholders will own 80.5 percent of the combined company after the deal is completed.
Shares of Tri Pointe, which is backed by Barry Sternlicht's Starwood Capital Group LLC, have risen 9 percent since Reuters first reported on October 21 that it was in advanced talks to buy the Weyerhaeuser unit.
The unit's biggest brand is Pardee Homes, which builds houses in Southern California and Las Vegas. Its other brands include Trendmaker Homes in Texas and Maracay Homes in Arizona.
Doug Bauer will continue to serve as Tri Pointe's chief executive upon closing of the transaction.
Weyerhaeuser said some assets of WRECO are excluded from the deal, which is expected to close by the end of the second quarter of 2014.
Deutsche Bank Securities is the financial adviser to Tri Pointe and Gibson, Dunn & Crutcher LLP is the legal adviser.
Sources close to the matter told Reuters on Sunday that Tri Pointe was nearing a deal to buy WRECO for about $2.7 billion.
Reporting by Sagarika Jaisinghani in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty