Two of the largest timber companies in the United States, Weyerhaeuser and Plum Creek, announced plans Monday to merge under the Weyerhaeuser name.
The combined company will be the largest private timberland owner in the South and the Pacific Northwest, with stock worth $23 billion and a portfolio of more than 13 million acres.
That includes 7.3 million acres of Southern yellow pine forests in the Southern U.S., 3 million acres of Douglas fir forest in Oregon and Washington, and 2.6 million acres of mixed hardwoods in Michigan and the Northeast.
The companies plan to execute the merger in early 2016. Plum Creek shareholders will receive 1.6 shares of Weyerhaeuser stock for each Plum Creek share they hold.
CEOs for the two companies said they expected the merger to result in at least $100 million in cost savings. Some of that savings will come from increased efficiency in the way logging trucks and other parts of their operation are put to use.
"You think about logistics and hauling costs, where we pass each other on the road right now, we're not going to have so many empty back-hauls," said Plum Creek CEO Rick Holley, in a conference call early Monday.
The executives said that combining their staff and portfolios will allow the company to take advantage of Weyerhaeuser's expertise in silviculture and wood products and Plum Creek's strength in real estate development.
Greg Frohn, an industry analyst with Forest2Market, said the merger gives Weyerhaeuser a wide variety of tree species to cut, from fir in the northwest to pine in the south.
"Now you have a company that is managing land under one umbrella that encompasses basically from the state of Maine clear over to the southwest coast of Oregon, and everything in between," Frohn said.
A significant percentage of Plum Creek's revenue has come from non-timber business including real estate development, oil, gas and mineral leases, and wind.
"One of the things we're really excited about is the ability to leverage Plum Creek expertise on the real estate side," said Weyerhaeuser CEO Doyle Simmons.
The effort to look for opportunities to develop land owned by the combined company will be led by Tom Lindquist of Plum Creek, who will become Executive Vice President of Real Estate, Energy, and & Natural Resources under the merger.