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Weyerhaeuser to buy Plum Creek for $8.4B

November 9, 2015 - Weyerhaeuser Co. agreed to buy Plum Creek Timber Co. for about $8.4 billion to create a real estate investment trust that will be the largest private owner of timberland in the U.S.

Plum Creek stockholders will get 1.6 shares of Weyerhaeuser for each share they own, the companies recently stated. The deal carries a 21 per cent premium to Plum Creek’s closing price on Friday. Federal Way, Washington-based Weyerhaeuser plans a $2.5-billion stock buyback shortly after the completion of the deal, which is expected late in the first quarter of next year or early in the second quarter.

The new company will own more than 13 million acres (5.3 million hectares) of timberland across the U.S. and produce lumber and wood-fibre boards used in construction. The companies said the merger will save $100 million of costs each year. Weyerhaeuser CEO Doyle Simons will retain the title in the combined company while Plum Creek CEO Rick Holley will be non-executive chairman.

“We saw a unique opportunity to combine the two industry leaders,” Simons said.

The new combined company will have “a strong balance sheet, which is going to position us to continue to grow this company,” he said.

Trust helped
Holley said his trust in Simons helped finalize the deal. “The timing is right, and it makes sense to do this,” Holley said.

Weyerhaeuser said in a separate statement that it will review alternatives for its cellulose fibres business that include holding on to it, a sale or a spinoff. The unit, which accounted for 26 per cent of company revenues last year, makes raw materials used in textiles, paper and diapers.

The acquisition of Seattle-based Plum Creek needs the approval of both companies’ shareholders. Weyerhaeuser expects to maintain the current dividend, representing a 13 per cent increase to the payout now enjoyed by Plum Creek shareholders, the companies said.

Weyerhaeuser’s financial adviser on the takeover is Morgan Stanley and its legal counsel is Cravath, Swaine & Moore LLP. Plum Creek’s financial advisers are Goldman Sachs Group Inc. and Bank of America Corp., while legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP.

November 9, 2015  By Bloomberg/Simon Casey & Mark Niquette

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