Weyerhaeuser Co (NYSE:WY) will buy Plum Creek Timber Co. Inc. (NYSE:PCL) to form a timber, land and forest products giant. The new company will manage over 13 million acres of timberland, which will enable it to boost economies of scale and take advantage of the U.S. housing recovery, the two companies reported.
The deal combines the two biggest owner of timberland in the U.S.
Chief Executive Officer at Plum Creek, Rick Holley said in an interview that the two companies have looked to expand their timberland resource asset base in the past, so here is an opportunity for both companies to achieve that.
According to the terms of deal, Plum Creek’s investors need to sanction the agreement. They will get 1.60 shares of Weyerhaeuser for every Plum Creek share. The deal could amount to roughly $8.4 billion on the basis of roughly 174 million outstanding shares of Plum Creek and the Weyerhaeuser stock’s closing price of $30.40 on Friday. The combined company will keep the name of Weyerhaeuser and its equity value would reach around $23 billion.
Joining both the companies will entice bigger investors both from home and across the globe, Holley said.
Holley and Weyerhaeuser’s CEO, Doyle Simons said in an interview that they didn’t expect any obstacles from regulators or investors regarding the merger, which they anticipate to close by the second quarter of 2016. The deal has been unanimously backed by the boards of both companies.
Weyerhaeuser is looking forward to spin off its cellulose fibers segment, though Simons said that process was still in the initial stages. He didn’t disclosed information about the total worth of the business.
Seattle-based Plum Creek holds roughly 6.2 million acres of timberlands in more than 19 states. Comparatively, Weyerhaeuser manages 6.9 million acres, mainly located in the Pacific Northwest.
