N/ov 09, 2015. /Lesprom Network/. Weyerhaeuser Company and Plum Creek 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 $23 billion based on current share prices. The combined EBITDA for both companies in 2014 was $2.2 billion.

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 $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 $1.24 per common share, representing a 13% dividend increase to the dividend currently received by Plum Creek shareholders.

"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," said Rick R. Holley, CEO for Plum Creek. "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."

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 and five directors will be from Plum Creek. Doyle Simons will serve as president and CEO of the combined company.

The transaction is expected to close in late 1Q or early 2Q 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.

Weyerhaeuser Company began operations in 1900 and is one of the world's largest private owners of timberlands.

Plum Creek is among the largest and most geographically diverse private landowners in the nation with more than 6 million acres of timberlands in 19 states. The company also operates wood products mills in the Northwest.