Weyerhaeuser To Combine WRECO Unit With Tri Pointe Homes In $2.7 Bln Deal

(RTTNews) - Forest products company Weyerhaeuser Co. (WY) announced Monday that it has reached a definitive agreement pursuant to which Weyerhaeuser's homebuilding subsidiary, Weyerhaeuser Real Estate Company or WRECO, will combine with a subsidiary of TRI Pointe Homes Inc. (TPH) in a Reverse Morris Trust transaction. The transaction, which also includes a cash payment of about $700 million to Weyerhaeuser, is valued at about $2.7 billion based on TRI Pointe's November 1, 2013 closing stock price.

The combination will result in Weyerhaeuser shareholders receiving about 130 million shares, or 80.5 percent of the combined company on a fully diluted basis, with pre-transaction TRI Pointe shareholders owning the balance.

The transaction is anticipated to close during the second quarter of 2014.

As per the terms of the transaction agreement, Weyerhaeuser will distribute ownership of WRECO to Weyerhaeuser shareholders in either a spin-off or split-off transaction, which will be immediately followed by a merger of WRECO with a subsidiary of TRI Pointe, with WRECO surviving the merger and becoming a wholly owned subsidiary of TRI Pointe. If Weyerhaeuser elects a spin-off, all Weyerhaeuser shareholders will participate pro-rata. In a split-off, Weyerhaeuser will conduct an exchange offer pursuant to which its shareholders will elect whether to exchange Weyerhaeuser shares for WRECO shares. Weyerhaeuser will determine which approach it will take prior to closing the transaction and no decision has been made at this time.

Under the terms of the transaction agreement, certain assets of Weyerhaeuser's real estate business will be excluded from the transaction and retained by Weyerhaeuser.

Barry S. Sternlicht will continue as Chairman of the TRI Pointe Board of Directors, which will be expanded from seven to nine directors. Weyerhaeuser said it will select four directors for appointment to the Board, while TRI Pointe will select five.

Doug Bauer will continue to serve as chief executive officer of TRI Pointe. Tom Mitchell and Mike Grubbs will continue to serve as president and chief operating officer, and chief financial officer, respectively.