Washington-based Weyerhaeuser has agreed to a merger with its close rival Plum Creek Timber to create the largest private owner of timberland in all the US. The two entities, once combined, will amount to a $23bn timber company and manage in excess of 13 million acres of timberland, which will allow the two, under the single name of Weyerhaeuser, to realise greater economies of scale.
The deal is expected by both companies to close early next year
“These two companies are already best-in-class timberland managers with a relentless focus on sustainable resource management,” said Plum Creek’s CEO Rick Holley in a company statement. “The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalise fully on the improving housing market, continue to capture Higher and Better Use land values across the combined portfolio, and create additional opportunities to build lasting value.”
The all-stock transaction is worth approximately $8.4bn in all, which represents a 21 percent premium on Plum Creek’s closing price as of November 6. Also contained in the deal is a $2.5bn post-closing share repurchase, which is slated for the first quarter of next year or early in the second.
The deal is expected by both companies to close early next year, and, once approved by shareholders, should save the two some $100m in cost synergies and deliver benefits to shareholders, customers and employees. “This new company will create tremendous benefit for shareholders as we drive value through shared best practices, economies of scale, cost synergies, operational excellence and disciplined capital allocation,” according to Weyerhaeuser’s CEO Doyle Simons.