Weyerhaeuser and Plum Creek merge

Weyerhaeuser and Plum Creek merge creating USD 23 billion company in sales

Posted on November 8, 2015

Weyerhaeuser and Plum Creek announced they have entered into a definitive agreement to create 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 USD 23 billion based on current share prices. The combined EBITDA for both companies in 2014 was USD2.2 billion.

It was disclosed that under the terms of the 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.

Following closing, Weyerhaeuser and Plum Creek shareholders will own approximately 65% and 35%, respectively, of the combined company’s common stock. Weyerhaeuser intends to execute a USD  2.5 billion share repurchase shortly after closing. 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 USD1.24 per common share, representing a 13% dividend increase to the dividend currently received by Plum Creek shareholders.

Rick Holley 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 will serve as president and CEO of the combined company. Upon closing, the executive team will include:

▪Rhonda Hunter, Senior Vice President, Timberlands

▪Tom Lindquist, Executive Vice President, Real Estate, Energy & Natural Resources

▪Adrian Blocker, Senior Vice President, Wood Products

▪Russell Hagen, Senior Vice President, Chief Financial Officer

▪Devin Stockfish, Senior Vice President, General Counsel & Corporate Secretary

▪Denise Merle, Senior Vice President, Human Resources

▪Tim Punke, Senior Vice President, Corporate Affairs

Rick R. Holley, chief executive officer for Plum Creek, commented:

“With an extraordinary set of combined assets and the proven value creation records of both Weyerhaeuser and Plum Creek, the combined company will offer a compelling opportunity for shareholders. These two companies are already best-in-class timberland managers with a relentless focus on sustainable resource management. The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalize 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. Doyle Simons and I share a commitment to disciplined capital allocation and sustained value creation, and I look forward to working together as we build a great new company.”

Doyle R. Simons, President and CEO of Weyerhaeuser, commented:

“We’re excited to combine the two leaders in our industry to create the world’s premier timber, land and forest products company. 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. Our customers and employees will also benefit as we form a winning team with common values and unparalleled expertise in timber, land and manufacturing. I have the utmost respect for Rick Holley and the Plum Creek team and look forward to working together to successfully integrate these two outstanding companies.”

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.

Earlier Weyerhaeuser informed about consideration of strategic alternatives for Cellulose Fibers business.

About Plum Creek Timber Company:

The companyis among the largest and most geographically diverse private landowners in the nation with more than 6 million acres of timberlands in 19 states of the U.S. It is trades at NYSE with PCL ticker.

About Weyerhaeuser:

The company is one of the world’s largest private owners of timberlands, began operations in 1900. The company owns or control nearly 7 million acres of timberlands, primarily in the U.S., and manages another 14 million acres under long-term licenses in Canada. Weyerhaeuser manages these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. It is also one of the largest manufacturers of wood and cellulose fibers products. In 2014, Weyerhaeuser’s  continuing operations generated USD 7.4 billion in sales and employed approximately 12,800 people who serve customers worldwide.