Plum Creek-Timber Co merger gets green light

ATLANTA, Aug 15 (Reuters) - Shareholders on Wednesday approved Plum Creek Timber Co. Inc.'s (NYSE:PCL - news) nearly $4 billion acquisition of The Timber Co.(NYSE:TGP - news), to create America's largest pure timber company. The announcement came two months after Plum Creek said it would proceed with its year-old agreement to purchase The Timber Co. from larger rival Georgia-Pacific Corp. (NYSE:GP - news) after learning the merger would be tax-free to both companies and their shareholders. The transaction is valued at approximately $4 billion, based on Plum Creek's closing stock price of $29.99 on Tuesday and includes an estimated $715 million of Timber Co. debt that Plum Creek will re-finance at closing. Plum Creek stock was down 37 cents at $29.05, Georgia-Pacific stock was down 41 cents at $36.79 and Timber Co. stock was down 11 cents at $38.27 on the New York Stock Exchange after the announcement Wednesday afternoon. The acquisition of The Timber Co., which is a separate operating group of wood and paper giant Georgia-Pacific and currently manages about 4.7 million timberland acres in the United States, is expected to be completed on Oct. 1. ``This merger will make Plum Creek the largest pure timber company in the U.S., with over 7.8 million acres in 19 states,'' said Rick Holley, president and chief executive of Seattle-based Plum Creek. ``For investors, the new company will offer a highly advantageous way to own a well-managed and diversified portfolio of timber and lands.'' A. D. ``Pete'' Correll, chairman and chief executive of Georgia-Pacific said: ``This merger will provide the right structure to grow these two companies even further in the future, with shareholders receiving the benefits of investing in a literally coast-to-coast manager of diversified timber and land assets when they operate together as Plum Creek.'' ONE OF THE LARGEST LANDOWNERS IN UNITED STATES Addressing Plum Creek's shareholders, Holley said: "Plum Creek will own timber in every growing region of the United States, including substantial holdings in the South, where faster growth rates and strong long-term supply/demand dynamics make owning timberlands particularly attractive. ``In addition, the merger will allow for both short- and long-term increases in the company's sustainable harvest rates, while the land base will offer diverse opportunities for value creation and growth.'' Under terms of the deal, approved by shareholders of both companies on Wednesday, each outstanding share of Timber Co. common stock will be redeemed by Georgia-Pacific on Sept. 28, for a ``unit'' consisting of one outstanding share of common stock of each of the six Georgia-Pacific subsidiaries which collectively hold the assets and liabilities attributable to The Timber Co. No action on the part of Timber Co. shareholders will be necessary to effect the redemption. When the merger becomes effective, Timber Co. shareholders will be entitled to receive 1.37 shares of Plum Creek common stock for each unit they receive in the redemption. Plum Creek, a real estate investment trust, is one of the largest land owners in the United States, with timberlands in the Northwest, Southern, and Northeast regions and nine wood product mills in the Northwest. The Timber Co. was created in December 1997 by Georgia-Pacific, which is now selling off pure timber assets as it transforms itself from a traditional wood products company into a consumer giant, specializing in such products as Dixie brand disposable cups and plates, Northern Quilted toilet paper and Brawny kitchen rolls. In June, Plum Creek said in a joint statement with Georgia-Pacific that independent tax counsels to both companies had determined that the transaction could be accomplished without any adverse tax implications.