Weyerhaeuser to buy Plum Creek for $8.4 billion
File pHOTo / James McCarthy
Benjamin Dow, senior resources manager, and Mark Doty, community affairs manager for Plum Creek's Northern Hardwood Region, stand next to harvested timber at a staging area in one of it woodlots in Concord Township, west of Bingham, in a 2014 file photo.
Weyerhaeuser Co. (NYSE: WY) announced Sunday it is buying Plum Creek Timber Co. (NYSE: PCL) for $8.4 billion, an acquisition that will create the largest timber, land and forest products company in the United States with more than 13 million acres combined.
Seattle-based Plum Creek, one of the top-five landowners in Maine with 861,000 acres of timberland, owns and manages about 6 million acres in 19 states.
The joint equity value for the combined companies would amount to $23 billion. The combined earnings before income taxes, depreciation and amortization, or EBITDA, for the two companies in 2014 was $2.2 billion, according to a joint news release announcing the merger.
Under terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Weyerhaeuser shareholders will own approximately 65% of the combined company’s common stock and Plum Creek shareholders 35%. Weyerhaeuser, also based in Washington state, owns and manages about 7 million acres.
The transaction, which requires the approval of shareholders of both companies, is expected to close in late first quarter or early second quarter 2016. The combined company will carry the Weyerhaeuser name and continue to be traded under the “WY” ticker symbol on the New York Stock Exchange. Weyerhaeuser intends to move its headquarters to Seattle, where Plum Creek has been based, in mid-2016.
Mark Doty, community affairs manager for Plum Creek’s Northern Hardwood Region, which includes Maine, told Mainebiz in a telephone interview Monday morning that it was too early in the process for him to comment on how the merger might affect Plum Creek’s operations in Maine, if at all. The company has 40 employees in Maine.
“Weyerhaeuser has a great reputation and we are excited to join forces with a company that has a long history of practicing sustainable forestry and a commitment to supporting local communities,” he said.
There’s no question, though, the announced merger is big news for Maine’s $8 billion forest products industry, which is tied to one in 20 jobs in Maine and has a total payroll of $1.9 billion, according to a 2013 report of the Maine Forest Products Council.
Plum Creek has big footprint in Maine
Plum Creek’s geographic footprint covers six Maine counties, with vast chunks of Somerset and Piscataquis counties, and, to a lesser extent, Franklin, being its primary timberland. Economically, its pulpwood and sawlogs for end users include Sappi Fine Paper’s Somerset Mill in Skowhegan and Kennebec Lumber Co. in Solon, as well as wood chips for pellet manufacturers in Strong, Athens and Corinth.
More than 50 contractors — each typically employing five or more loggers in a crew — harvest the maple, birch, ash, beech, pine, spruce, fir and hemlock trees in Plum Creek’s Maine timberlands that will be used for lumber, plywood, fiberboard, pulp and paper. More than 40 mills in Maine — sawmills, pulp and paper and biomass, employing thousands of workers — use wood harvested on Plum Creek’s land.
A publicly traded real estate investment trust company that arrived in Maine with its 1998 purchase of 905,000 acres from Sappi Fine Paper for $180 million, Plum Creek has been a leader in sustainable forestry practices both in Maine and nationwide. In 1999 it became the first company in the nation to be certified for managing all of its lands according to standards set by the Sustainable Forestry Initiative.
More than a decade ago, Plum Creek introduced its Moosehead Lake Concept Plan, a long-term 30-year plan that immediately triggered strong opposition from the Natural Resources Council of Maine and other groups who felt the plan’s scale and number of proposed resorts and housing units would have a negative effect on the Moosehead region. A scaled-back plan to develop two resorts and up to 975 housing units in the Moosehead Lake region remains on hold.
At the same time, Plum Creek has worked closely with The Nature Conservancy, the Appalachian Mountain Club, Forest Society of Maine and the Maine Department of Agriculture, Conservation and Forestry, among others, on several conservation and recreation initiatives. Most notable is the conservation easement placed on 363,000 acres in the Moosehead Lake region, which guarantees permanent public recreational access on that property.
Judy Berk, communications director of the Natural Resources Council of Maine, declined to comment on what the Weyerhaeuser-Plum Creek merger might mean for Maine. “[We] don’t really know enough at this time to speculate,” she wrote in an email reply to Mainebiz.
Doty said Plum Creek CEO Rick Holley will become non-executive chairman of the combined company and several Plum Creek executives will be part of the new leadership team. Until the transaction closes in early 2016, he said, “Plum Creek will operate business as usual in Maine.”
In trading Monday morning, Plum Creek shares opened at $45.26, up from Friday’s closing price of $40.29. Weyerhaeuser’s stock price opened at $28.76, down from Friday’s closing of $30.40.
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