Weyerhaeuser And Plum Creek To Merge In All-stock Deal

(RTTNews) - Weyerhaeuser Company (WY) and Plum Creek (PCL) announced Sunday that they agreed to merge, creating the world's premier timber, land and forest products company with more than 13 million acres of the most productive and diverse timberland in the U.S. At closing, the combined company is expected to have an equity value of $23 billion based on current share prices. Separately, Weyerhaeuser announced that its board has authorized the exploration of strategic alternatives for its Cellulose Fibers business.

As per the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Plum Creek shareholders will receive 1.60 shares of Weyerhaeuser for each share of Plum Creek held. This fixed exchange ratio represents an implied premium of 13.8% to the 30-trading-day Volume Weighted Average Price ratio of Plum Creek shares to Weyerhaeuser shares. Weyerhaeuser intends to execute a $2.5 billion share repurchase shortly after closing the all-stock transaction.

Following closing, Weyerhaeuser and Plum Creek shareholders will own approximately 65% and 35%, respectively, of the combined company's common stock.

The transaction is Anticipated annual cost synergies of $100 million. The merger is expected to be accretive to per-share funds available for distribution in the first full year following closing.

Weyerhaeuser intends to execute a $2.5 billion share repurchase shortly after closing the all-stock transaction.

The repurchase will result in a net financial impact on the company that is as if the deal were structured with approximately 70% stock and 30% cash. The combined company expects to maintain Weyerhaeuser's current annual dividend of $1.24 per common share, representing a 13% dividend increase to the dividend currently received by Plum Creek shareholders.

Rick Holley, chief executive officer for Plum Creek, will serve as non-executive chairman of Weyerhaeuser's board, which will be expanded to 13 directors. Eight directors will be from Weyerhaeuser (including Simons) and five directors will be from Plum Creek (including Holley).

Doyle Simons, Chief Executive Officer and President of Weyerhaeuser, will serve as president and CEO of the combined company.

The transaction requires the approval of shareholders of both Weyerhaeuser and Plum Creek and is subject to customary closing conditions. The transaction is expected to close in late first quarter or early second quarter of 2016. The combined company will retain the Weyerhaeuser name and continue to be traded under the WY ticker symbol on the New York Stock Exchange. As previously announced, Weyerhaeuser intends to move its headquarters to Seattle in mid-2016.

In a separate press release, Weyerhaeuser Company announced that its board has authorized the exploration of strategic alternatives for its Cellulose Fibers business. The board intends to consider a broad range of alternatives, including continuing to hold and operate the business or a sale or spin-off of the business. Cathy Slater will continue to lead this business as senior vice president of Cellulose Fibers throughout the review process.

The company's Cellulose Fibers business includes five pulp mills, two modified fiber mills, one liquid packaging board facility, and one publishing papers joint-venture facility.

The company noted that there can be no assurance that the board's evaluation process will result in any transaction or that any transaction, if pursued, will be consummated. The company does not intend to provide any additional information unless or until the evaluation process is completed or terminated.

WY closed Friday's trading at $30.40, down $0.68 or 2.19%.

PCL closed Friday trading at $40.29, down $0.78 or 1.90%.