Weyerhaeuser to buy Plum Creek, creating $23 billion timber company
By Edward Krudy
NEW YORK (Reuters) - Weyerhaeuser Co WY.N will purchase Plum Creek Timber Co Inc PCL.N 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.
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.
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. Continued...