U.S. merger creates lumber and paper giant

Weyerhaeuser is buying Plum Creek Timber Co. for $8.44 billion to form what is expected to be one of the world’s biggest timberland and forest products companies.

The company will keep the Weyerhaeuser name and have 13 million acres of timberland. It will be worth $23 billion based on current share prices.

Recovery of the housing market has spurred construction of new homes. That has increased demand for lumber and wood products used in home interiors, which benefits companies such as Weyerhaeuser and Plum Creek.

“The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalize fully on the improving housing market,” said Plum Creek CEO Rick Holley.

Plum Creek shareholders will receive 1.60 shares of Weyerhaeuser for each Plum Creek share. Weyerhaeuser shares closed at $30.40 Friday. Weyerhaeuser also said it will buy $2.5 billion of company shares after the deal closes.

Doyle Simons, the president and CEO of Weyerhaeuser, will be president and CEO of the new company. Holley will be nonexecutive chairman.

The merger must be approved by the two companies’ shareholders. It is expected to close late in the first quarter of next year or early in the second quarter.

Weyerhaeuser, based in Federal Way, Washington, said that it may spin off its cellulose fibers business, which includes five pulp mills.