WY and PCL join merger movement

You've heard of the mergers of BLDR and ProBuild, and BMC and STCK. Now comes a multi-billion-dollar deal on the supplier side of the LBM industry: WY-PCL.

Weyerhaeuser Company and Plum Creek announced over the weekend that they have entered into a definitive agreement to create a timber, land and forest products company with an equity value of $23 billion and more than 13 million acres of timberland in the U.S.

The combined EBITDA for both companies in 2014 was $2.2 billion.

The deal, which requires approval of shareholders, was described as an all-stock transaction, in which Plum Creek shareholders will receive 1.6 shares of Weyerhaeuser for each share of Plum Creek held.

In describing the benefits of the deal, executives used some of the same bullet points used by lumberyard executives when they described the prospects for the mergers of Builders FirstSource and ProBuild Holdings, and Stock Building Supply and BMC. Among them:

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  An ability to capitalize on the housing recovery;


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  Best-in-class management team; and


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  Cost synergies, which in the case of WY-PCL should add up to $100 million per year.

Weyerhaeuser president and CEO Doyle Simons will be president and CEO of the combined company. "This new company will create tremendous benefit for shareholders as we drive value through shared best practices, economies of scale, cost synergies, operational excellence and disciplined capital allocation," he said.

Rick Holley, CEO of Plum Creek, will take on the role of non-executive chairman in the new company. "Doyle Simons and I share a commitment to disciplined capital allocation and sustained value creation, and I look forward to working together as we build a great new company," he said.

Weyerhaeuser also announced that its board of directors has authorized the exploration of strategic alternatives for its Cellulose Fibers business. Cathy Slater will continue to lead this business as senior VP Cellulose Fibers throughout the review process, the company said.