Weyerhaeuser Co and Plum Creek Timber Co Inc have entered into a merger agreement, the two companies announced on Sunday.
The deal is set to create a $23 billion forest, land, and timber giant.
The new company will use the Weyerhaeuser name and manage over 13 million acres of timberland, allowing it to capitalize on the housing recovery in the US.
The president and chief executive of Weyerhaeuser, Doyle R. Simons, will be president and CEO of the combined company and Plum Creek CEO Rick R. Holley will serve as a non-executive chairman.
Rick Holley said in a telephone interview:
“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,”
Shareholders of Plum Creek will receive 1.60 shares of Weyerhaeuser for each Plum Creek share, with Weyerhaeuser holders owning about 65% of the combined company’s common stock. The transaction could amount to as much as $8.4 billion.
A $2.5 billion share repurchase program is planned shortly after closing the deal.
Goldman Sachs is serving as lead financial adviser to Plum Creek, with BofA Merrill Lynch as an additional financial advisor. Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel.
Morgan Stanley is serving as financial adviser of Weyerhaeuser, while Cravath, Swaine & Moore serve as legal counsel.
