Weyerhaeuser To Split Off Home-building Unit

(RTTNews) - Forest products company Weyerhaeuser Co. (WY) said Monday that its board of directors plans to split off its home-building unit in connection with its previously-announced plan to merge the unit with a subsidiary of TRI Pointe Homes, Inc. (TPH).

In a split-off transaction, Weyerhaeuser intends to distribute all of the issued and outstanding shares of its indirect wholly-owned subsidiary Weyerhaeuser Real Estate Co. or WRECO.

In November 2013, Weyerhaeuser said it entered into a definitive agreement for WRECO to combine with a wholly-owned subsidiary of TRI Pointe Homes in a "Reverse Morris Trust" transaction. The deal, which includes a cash payment of $700 million to Weyerhaeuser, is valued at $2.7 billion based on TRI Pointe's November 1 closing stock price.

At that time, Weyerhaeuser said it will distribute the ownership of WRECO to Weyerhaeuser shareholders in a spin-off or a split-off transaction, which will be followed by a merger of WRECO with the subsidiary of TRI Pointe.

WRECO will survive the merger and become a wholly-owned subsidiary of TRI Pointe. According to Weyerhaeuser, the separation of the home-building division will allow it to focus on driving performance in its forest products businesses.

Under a split-off transaction, Weyerhaeuser shareholders can opt whether to exchange their shares for WRECO common shares. In a spin off, all shareholders would participate in the exchange.

Weyerhaeuser said Monday that its shareholders will have the option to exchange some or all of their Weyerhaeuser common shares for WRECO common shares, which will immediately be converted into the right to receive shares of TRI Pointe common stock upon the consummation of the transaction. As a result of the exchange offer, the number of Weyerhaeuser's own outstanding shares will be reduced.

The company noted that all of the 100 million issued and outstanding WRECO common shares, which will be converted into the right to receive 129.70 million newly issued shares of TRI Pointe common stock, will be offered in exchange for Weyerhaeuser common shares in the offer.

The exchange offer will be subject to proration if the offer is over-subscribed, and the number of shares accepted by Weyerhaeuser in the exchange offer may be less than the number of shares tendered. If the exchange offer is consummated but not fully subscribed, then the additional WRECO common shares owned by Weyerhaeuser will be distributed as a pro rata dividend to Weyerhaeuser shareholders.

Weyerhaeuser expects the exchange to be tax-free to its participating shareholders for U.S. federal income tax purposes. The company will announce the commencement of the exchange offer at a later date, at which time it will disclose the full terms of the exchange.

The transaction, subject to customary closing conditions that includes approval by TRI Pointe shareholders, is expected to close following the expiration date of the exchange offer.

WY closed Monday's regular trading session at $30.33, up $0.03 or 0.10 percent on a volume of 2.26 million shares. In after-hours, the stock further gained $0.22 or 0.73 percent to $30.55.