Boston, MA 05/27/2014 (wallstreetpr) – Weyerhaeuser Company (NYSE:WY) is splitting off its homebuilding business – Weyerhaeuser Real Estate Company (WRECO) to TRI Pointe Homes as per the agreement made under the “Reverse Morris Trust” transaction during November 2013. After a transaction, WRECO will be a fully owned subsidiary of TRI Pointe. The exchange expects to be a tax-free transaction for the participating shareholders.
The Transaction
According to the split off transaction, Weyerhaeuser Company (NYSE:WY) shareholders can exchange all or some or none of their shares for WRECO common shares, which will convert automatically to TRI Pointe common stock after the merger. The exchange offer is designed to permit a discount of 10% to the share value of TRI Pointe common shares. It means Weyerhaeuser shareholders will receive approximately $1.11 of TRI Pointe common shares for every $1.00 of Weyerhaeuser common shares, and subject to the upper price limit. The upper limit will be in between 1.7003 WRECO shares or 2.2053 shares of TRI Pointe. The exchange offer would subject to an extension of additional two days if the upper limit reached the initial expiration (June 30, 2014).
The number of Weyerhaeuser common shares will avail for the exchange depending upon the final exchange ratio and the Company expects to issue 100 million WRECO common shares for the exchange that will convert into 129.7 million common shares of TRI Pointe. The exchange number of shares represents 79.6% of TRI Pointe common stock and becomes the outstanding after the association between WRECO and TRI Pointe.
Looking Forward
According the Weyerhaeuser Company (NYSE:WY), the exchange offer is also subject to proration if the offer oversubscribes and the accepted number shares may be fewer than the originally tendered. On the other end, if shares are not fully subscribed then, the remaining WRECO shares will distribute among Weyerhaeuser shareholders on a pro rata basis.
