Weyerhaeuser will purchase Plum Creek Timber in a deal that the two companies said would create a US$23 billion timber, land and forest products company, the largest in the United States. Source: CNBC
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 US 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.
Under the terms of the merger, Plum Creek’s shareholders, who will need to approve the deal.
The joint company’s equity value would amount to US$23 billion.
Mr 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, would 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 Mr Holley.
Mr Holley and Weyerhaeuser’s chief executive, Doyle Simons, said 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.
Mr Holley will serve as non-executive chairman of Weyerhaeuser’s board.
Mr Simons said cost synergies would amount to US$100 million but that there would be “many synergies above and beyond that.”
Weyerhaeuser plans to spin off its cellulose fibers business, but Mr Simons said that process was still in its early stages.
