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As filed with the Securities and Exchange Commission on December 10, 2015

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

WEYERHAEUSER COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

Washington		6798		91-0470860
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

33663 Weyerhaeuser Way South, Federal Way, Washington 98003, (253) 924-2345

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Devin W. Stockfish

Senior Vice President, General Counsel and Corporate Secretary

33663 Weyerhaeuser Way South, Federal Way, Washington 98003, (253) 924-2345

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Richard Hall Erik R. Tavzel Cravath, Swaine & Moore LLP 825 Eighth Avenue New York, New York 10019 (212) 474-1000		James A. Kraft Senior Vice President, General Counsel and Secretary Plum Creek Timber Company, Inc. 601 Union Street, Suite 3100 Seattle, Washington 98101-1374 (206) 467-3600		Kenton J. King Leif B. King Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue Palo Alto, California 94301 (650) 470-4500

 

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed joint proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

 

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered (1)		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price (2)		Amount of Registration Fee (3)
Common Shares, par value $1.25 per share		287,700,118 Shares		$ 49.44		$8,889,034,595.69		$895,125.78

(1)

Represents the maximum number of common shares, par value $1.25 per share (referred to as “Weyerhaeuser common shares”), of Weyerhaeuser Company (referred to as “Weyerhaeuser”) estimated to be issued in connection with the merger described in the enclosed joint proxy statement/prospectus. The estimated maximum number of Weyerhaeuser common shares is based upon the product of (1) (a) the number of shares of common stock, par value $0.01 per share (referred to as “Plum Creek common stock”), of Plum Creek Timber Company, Inc. (referred to as “Plum Creek”) outstanding as of December 7, 2015, plus (b) the total number of shares of Plum Creek common stock reserved for issuance under various Plum Creek benefit and compensation plans as of December 7, 2015, and (2) 1.60, the exchange ratio set forth in the Agreement and Plan of Merger, dated as of November 6, 2015, between Plum Creek and Weyerhaeuser.

(2)

Estimated solely for purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated pursuant to Rule 457(f)(1) and Rule 457(c) under the Securities Act. The proposed maximum aggregate offering price is the product of (1) $49.44, the average of the high and low sales prices per share of Plum Creek common stock as reported on the New York Stock Exchange on December 9, 2015, and (2) 179,812,574, the estimated total number of shares of Plum Creek common stock that may be canceled and exchanged in the merger, including the estimated total number of shares of Plum Creek common stock reserved for issuance under various Plum Creek benefit and compensation plans.

(3)	Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $100.70 per $1,000,000 of the proposed maximum aggregate offering price.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

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Information contained in this joint proxy statement/prospectus is subject to completion or amendment. A registration statement relating to the securities described in this joint proxy statement/prospectus has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED DECEMBER 10, 2015

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Weyerhaeuser Company, referred to as Weyerhaeuser, and Plum Creek Timber Company, Inc., referred to as Plum Creek, have entered into an Agreement and Plan of Merger, dated as of November 6, 2015, referred to as the merger agreement. Pursuant to the terms of the merger agreement, Plum Creek will merge with and into Weyerhaeuser, referred to as the merger, with Weyerhaeuser continuing as the surviving corporation in the merger.

If the merger is completed, Plum Creek stockholders will have the right to receive 1.60 Weyerhaeuser common shares for each share of Plum Creek common stock, with cash paid in lieu of fractional shares. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the completion of the merger. Based on the closing price of Weyerhaeuser common shares on the New York Stock Exchange, on November 6, 2015, the last trading day before public announcement of the merger, the 1.60 exchange ratio represented approximately $48.64 in value for each share of Plum Creek common stock. Based on the closing price of Weyerhaeuser common shares on the New York Stock Exchange on [•], 2015, the latest practicable date before the date of this joint proxy statement/prospectus, the 1.60 exchange ratio represented approximately $[•] in value for each share of Plum Creek common stock. Weyerhaeuser shareholders will continue to own their existing Weyerhaeuser shares. Weyerhaeuser common shares are currently traded under the symbol “WY”, and shares of Plum Creek common stock are currently traded under the symbol “PCL”, in each case on the New York Stock Exchange. Following the completion of the merger, Weyerhaeuser common shares will continue to trade under the symbol “WY” on the New York Stock Exchange. We urge you to obtain current market quotations of Weyerhaeuser common shares and shares of Plum Creek common stock.

Based on the estimated number of Weyerhaeuser common shares and shares of Plum Creek common stock that will be outstanding immediately prior to the completion of the merger, we estimate that current Weyerhaeuser shareholders will own approximately 65% of the combined company and former Plum Creek stockholders will own approximately 35% of the combined company.

Weyerhaeuser and Plum Creek will each hold special meetings of their respective shareholders or stockholders, as applicable, in connection with the proposed merger.

At the special meeting of Weyerhaeuser shareholders, Weyerhaeuser shareholders will be asked to consider and vote on (1) a proposal to approve the issuance of Weyerhaeuser common shares to Plum Creek stockholders in connection with the merger, referred to as the share issuance proposal, and (2) a proposal to adjourn the Weyerhaeuser special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the issuance of Weyerhaeuser common shares to Plum Creek stockholders in connection with the merger, referred to as the Weyerhaeuser adjournment proposal. The Weyerhaeuser board of directors unanimously recommends that the Weyerhaeuser shareholders vote “FOR” each of the share issuance proposal and the Weyerhaeuser adjournment proposal.

At the special meeting of Plum Creek stockholders, Plum Creek stockholders will be asked to consider and vote on (1) a proposal to approve the adoption of the merger agreement, referred to as the merger proposal, (2) a proposal to adjourn the Plum Creek special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement, referred to as the Plum Creek adjournment proposal, and (3) a non-binding, advisory proposal to approve the compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger. The Plum Creek board of directors unanimously recommends that the Plum Creek stockholders vote “FOR” each of the merger proposal, the Plum Creek adjournment proposal and the compensation proposal.

We cannot complete the merger unless Weyerhaeuser shareholders approve the share issuance proposal and Plum Creek stockholders approve the merger proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend your special meeting in person, please vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card or (3) marking, signing, dating and returning all proxy cards that you receive in the postage-paid envelope provided, so that your shares may be represented and voted at the Weyerhaeuser or Plum Creek special meeting, as applicable.

The obligations of Weyerhaeuser and Plum Creek to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about Weyerhaeuser, Plum Creek and the merger is contained in this joint proxy statement/prospectus. Weyerhaeuser and Plum Creek encourage you to read this entire joint proxy statement/prospectus carefully before voting, including the section entitled “Risk Factors” beginning on page [•].

We look forward to the successful combination of Weyerhaeuser and Plum Creek.

 

Sincerely,
Doyle R. Simons President and Chief Executive Officer Weyerhaeuser Company		Rick R. Holley Chief Executive Officer Plum Creek Timber Company, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [•], 2015 and is first being mailed to the shareholders of Weyerhaeuser and stockholders of Plum Creek on or about [•], 2015.

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Weyerhaeuser Company

33663 Weyerhaeuser Way South

Federal Way, Washington 98003

(253) 924-2345

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On [•], 2016

Dear Shareholders of Weyerhaeuser Company:

We are pleased to invite you to attend the special meeting of shareholders of Weyerhaeuser Company, a Washington corporation (referred to as “Weyerhaeuser”), which will be held at [•], on [•], 2016, at [•], local time, for the following purposes:

 

•

to consider and vote on a proposal to approve the issuance of Weyerhaeuser common shares, par value $1.25 per share, in connection with the merger contemplated by the Agreement and Plan of Merger, dated as of November 6, 2015, between Weyerhaeuser and Plum Creek Timber Company, Inc., a Delaware corporation, a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice (referred to as the “share issuance proposal”); and

 

•

to consider and vote on a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal (referred to as the “Weyerhaeuser adjournment proposal”).

Weyerhaeuser will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement of the special meeting. Please refer to the joint proxy statement/prospectus accompanying this notice for further information with respect to the business to be transacted at the special meeting.

The Weyerhaeuser board of directors has fixed the close of business on [•] as the record date for determination of Weyerhaeuser shareholders entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. Only shareholders of record of Weyerhaeuser common shares as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. A list of shareholders of record entitled to vote at the special meeting will be available beginning 10 days prior to the special meeting, and continuing through the special meeting, at Weyerhaeuser’s executive offices and principal place of business at 33663 Weyerhaeuser Way South, Federal Way, Washington 98003 for inspection by shareholders during ordinary business hours for any purpose germane to the special meeting. The list will also be available at the special meeting for examination by any shareholder of record present at the special meeting.

Approval of the share issuance proposal requires the votes cast favoring the share issuance proposal exceed the votes cast opposing it. Approval of the Weyerhaeuser adjournment proposal requires that the votes cast favoring the Weyerhaeuser adjournment proposal exceed the votes cast opposing it.

Your vote is very important. Whether or not you expect to attend in person, we urge you to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card or (3) marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting. If your shares are held in the name of a bank, broker or other holder of record, please follow the instructions on the voting instruction card furnished by the bank, broker or other holder of record.

Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The joint proxy statement/prospectus accompanying this notice provides a detailed description of the merger and the merger agreement. We encourage you to read the accompanying joint proxy statement/prospectus,

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including any documents incorporated by reference and the annexes to the joint proxy statement/prospectus, carefully and in their entirety. If you have any questions concerning the merger or the joint proxy statement/prospectus, would like additional copies or need help voting your Weyerhaeuser common shares, please contact Weyerhaeuser’s proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

(877) 800-5185 (toll-free from the U.S. and Canada)

+1 (412) 232-3651 (from other locations)

+1 (212) 750-5833 (banks and brokers may call collect)

 

Federal Way, Washington

[•], 2015

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PLUM CREEK TIMBER COMPANY, INC.

601 Union Street, Suite 3100

Seattle, Washington 98101

(800) 858-5347

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On [•], 2016

Dear Stockholders of Plum Creek Timber Company, Inc.:

We are pleased to invite you to attend the special meeting of stockholders of Plum Creek Timber Company, Inc., a Delaware corporation (referred to as “Plum Creek”), which will be held at [•], on [•], 2016, at [•], local time, for the following purposes:

 

•

to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of November 6, 2015, between Plum Creek and Weyerhaeuser Company, a Washington corporation (referred to as “Weyerhaeuser”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice, pursuant to which Plum Creek will be merged with and into Weyerhaeuser and each outstanding share of Plum Creek common stock will be converted into the right to receive 1.60 Weyerhaeuser common shares (referred to as the “merger proposal”);

 

•

to consider and vote on a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger proposal (referred to as the “Plum Creek adjournment proposal”); and

 

•

to consider and vote on a non-binding, advisory proposal to approve the compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger (referred to as the “compensation proposal”).

Plum Creek will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement of the special meeting. Please refer to the joint proxy statement/prospectus accompanying this notice for further information with respect to the business to be transacted at the special meeting.

The Plum Creek board of directors has fixed the close of business on [•] as the record date for determination of Plum Creek stockholders entitled to receive notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. Only stockholders of record of shares of Plum Creek common stock as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting. A list of stockholders of record entitled to vote at the special meeting will be available for 10 days prior to the special meeting at Plum Creek’s executive offices and principal place of business at 601 Union Street, Suite 3100, Seattle, Washington 98101-1374 for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting. The list will also be available at the special meeting for examination by any stockholder of record present at the special meeting.

Approval of the merger proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Plum Creek common stock entitled to vote at the special meeting. Approval of the Plum Creek adjournment proposal and the compensation proposal each requires that votes cast “FOR” exceed the votes cast “AGAINST” each proposal (with abstentions and broker non-votes not considered votes cast).

Your vote is very important. Whether or not you expect to attend in person, we urge you to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card or (3) marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the special meeting. If your shares are held in the name of a bank, broker or other holder of record, please follow the instructions on the voting instruction card furnished by the bank, broker or other holder of record.

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Please note that if you hold shares in different accounts, it is important that you vote the shares represented by each account.

The joint proxy statement/prospectus accompanying this notice provides a detailed description of the merger and the merger agreement. We encourage you to read the accompanying joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes to the joint proxy statement/prospectus carefully and in their entirety. If you have any questions concerning the merger or the joint proxy statement/prospectus, would like additional copies or need help voting your shares of Plum Creek common stock, please contact Plum Creek’s proxy solicitor:

Georgeson Inc.

480 Washington Blvd., 26th Floor

Jersey City, New Jersey 07310

(888) 867-6963 (toll-free)

 

[•], 2015

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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Weyerhaeuser and Plum Creek from other documents that are not included in, or delivered with, this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

 

In order for you to receive timely delivery of the documents in advance of the Weyerhaeuser special meeting or the Plum Creek special meeting, as applicable, you must request the information no later than five business days prior to the date of the special meetings (i.e., by [•], 2016).

For more information, see the section entitled “Where You Can Find More Information” beginning on page [•].

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (referred to as the “SEC”) by Weyerhaeuser (File No. 333-[•]), constitutes a prospectus of Weyerhaeuser under Section 5 of the Securities Act of 1933, as amended (referred to as the “Securities Act”), with respect to the Weyerhaeuser common shares to be issued to Plum Creek stockholders pursuant to the merger agreement. This joint proxy statement/prospectus also constitutes a joint proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (referred to as the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of Weyerhaeuser shareholders and a notice of meeting with respect to the special meeting of Plum Creek stockholders.

Weyerhaeuser and Plum Creek have not authorized anyone to provide you with any information other than the information that is contained in, or incorporated by reference into, this joint proxy statement/prospectus. Weyerhaeuser and Plum Creek take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. This joint proxy statement/prospectus is dated [•], 2015. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date. Further, you should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this joint proxy statement/prospectus to Weyerhaeuser shareholders or Plum Creek stockholders, nor the issuance by Weyerhaeuser of common shares in connection with the merger, will create any implication to the contrary.

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This joint proxy statement/prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding Weyerhaeuser has been provided by Weyerhaeuser, and information contained in this joint proxy statement/prospectus regarding Plum Creek has been provided by Plum Creek.

Unless otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:

 

•

“combined company” refers collectively to Weyerhaeuser and Plum Creek, following completion of the merger;

 

•

“Weyerhaeuser” refers to Weyerhaeuser Company, a Washington corporation;

 

•

“merger agreement” refers to the Agreement and Plan of Merger, dated November 6, 2015, between Weyerhaeuser and Plum Creek, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference;

 

•

“Plum Creek” refers to Plum Creek Timber Company, Inc., a Delaware corporation; and

 

•

“we,” “our” and “us” refer to Weyerhaeuser and Plum Creek, collectively.

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		Page
QUESTIONS AND ANSWERS			1
SUMMARY			11
The Companies			11
The Merger and the Merger Agreement			12
Delisting and Deregistration of Plum Creek Common Stock			20
Comparison of Rights of Weyerhaeuser Shareholders and Plum Creek Stockholders			20
The Special Meetings			20
Share Repurchases			22
Selected Historical Financial Data of Weyerhaeuser			23
Selected Historical Financial Data of Plum Creek			25
Summary Unaudited Pro Forma Condensed Combined Financial Information			27
Equivalent and Comparative Per Share Information			28
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS			29
RISK FACTORS			31
Risk Factors Relating to the Merger			31
Risk Factors Relating to Weyerhaeuser Following the Merger			37
Other Risk Factors of Weyerhaeuser and Plum Creek			41
THE COMPANIES			42
The Companies			42
THE WEYERHAEUSER SPECIAL MEETING			43
Date, Time and Place			43
Purpose of the Weyerhaeuser Special Meeting			43
Recommendation of the Weyerhaeuser Board			43
Weyerhaeuser Record Date; Shareholders Entitled to Vote			43
Quorum			43
Required Vote			44
Abstentions and Broker Non-Votes			44
Voting Information			44
How Proxies Are Counted			45
Participants in Benefit Plans			45
Revocation of Proxies			45
Attending the Weyerhaeuser Special Meeting			45
Tabulation of Votes			46
Solicitation of Proxies			46
Voting by Weyerhaeuser Directors and Executive Officers			46
Adjournments			46
Assistance			47
THE PLUM CREEK SPECIAL MEETING			48
Date, Time and Place			48
Purpose of the Plum Creek Special Meeting			48
Recommendation of the Plum Creek Board			48
Plum Creek Record Date; Stockholders Entitled to Vote			48
Quorum			48
Required Vote			49
Abstentions and Broker Non-Votes			49
Voting Options			49
Voting in Person			49
Voting of Proxies			50
How Proxies Are Counted			50
Shares Held in “Street Name”			50

 

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Revocation of Proxies			50
Tabulation of Votes			51
Solicitation of Proxies			51
Voting by Plum Creek Directors and Executive Officers			51
Adjournments			51
Assistance			52
WEYERHAEUSER PROPOSAL 1 AND PLUM CREEK PROPOSAL 1: THE ISSUANCE OF WEYERHAEUSER SHARES AND THE ADOPTION OF THE MERGER AGREEMENT			53
Effects of the Merger			53
Background of the Merger			53
Weyerhaeuser’s Reasons for the Merger; Recommendation of the Weyerhaeuser Board			62
Plum Creek’s Reasons for the Merger; Recommendation of the Plum Creek Board			65
Opinion of Weyerhaeuser’s Financial Advisor			69
Opinion of Plum Creek’s Financial Advisor			84
Financial Interests of Weyerhaeuser Directors and Officers in the Merger			91
Financial Interests of Plum Creek Directors and Officers in the Merger			92
Board of Directors Following the Merger			99
U.S. Federal Income Tax Consequences of the Merger			99
U.S. Federal Income Taxation of Weyerhaeuser and its Shareholders			102
Accounting Treatment			112
Regulatory Clearances Required for the Merger			112
Exchange of Shares in the Merger			113
Treatment of Plum Creek Stock Options and Other Equity-Based Awards			114
Dividends and Share Repurchases			114
Listing of Weyerhaeuser Common Shares			115
Delisting and Deregistration of Plum Creek Common Stock			115
No Appraisal or Dissenters’ Rights			115
Certain Weyerhaeuser Forecasts			115
Certain Plum Creek Forecasts			117
Litigation Related to the Merger			119
The Merger Agreement			119
WEYERHAEUSER PROPOSAL 2 AND PLUM CREEK PROPOSAL 2: POSSIBLE ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY OR APPROPRIATE			140
PLUM CREEK PROPOSAL 3: NON-BINDING ADVISORY VOTE ON COMPENSATION			141
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			142
COMPARATIVE STOCK PRICES AND DIVIDENDS			157
DESCRIPTION OF WEYERHAEUSER CAPITAL STOCK			159
COMPARISON OF RIGHTS OF WEYERHAEUSER SHAREHOLDERS AND PLUM CREEK STOCKHOLDERS			162
NO APPRAISAL OR DISSENTERS’ RIGHTS			173
LEGAL MATTERS			174
EXPERTS			175
Weyerhaeuser			175
Plum Creek			175
SHAREHOLDER PROPOSALS			176
Weyerhaeuser			176
Plum Creek			177
OTHER MATTERS			178
HOUSEHOLDING			179
WHERE YOU CAN FIND MORE INFORMATION			180
Annex A Agreement and Plan of Merger			A-1
Annex B Opinion of Morgan Stanley & Co. LLC			B-1
Annex C Opinion of Goldman, Sachs & Co.			C-1

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a shareholder of Weyerhaeuser or stockholder of Plum Creek, may have regarding the merger and the other matters being considered at the special meetings and the answers to those questions. Weyerhaeuser and Plum Creek encourage you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special meetings. Additional important information is also contained in the annexes to this joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [•] for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

Q:	Why am I receiving this joint proxy statement/prospectus?

 

A:

You are receiving this joint proxy statement/prospectus because you were a shareholder of record of Weyerhaeuser or a stockholder of record of Plum Creek as of the close of business on the record date for the Weyerhaeuser special meeting or the Plum Creek special meeting, as applicable. Weyerhaeuser and Plum Creek have agreed to the merger of Plum Creek with and into Weyerhaeuser under the terms of a merger agreement that is described in this joint proxy statement/prospectus and a copy of which is attached to this joint proxy statement/prospectus as Annex A.

This joint proxy statement/prospectus serves as the proxy statement through which Weyerhaeuser and Plum Creek will solicit proxies to obtain the necessary shareholder or stockholder approval, as applicable, for the proposed merger. It also serves as the prospectus by which Weyerhaeuser will issue Weyerhaeuser common shares as the merger consideration.

In order to complete the merger, among other things, Weyerhaeuser shareholders must vote to approve the issuance of Weyerhaeuser common shares to Plum Creek stockholders in connection with the merger and Plum Creek stockholders must vote to adopt the merger agreement.

Weyerhaeuser and Plum Creek will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the Weyerhaeuser special meeting and Plum Creek special meeting, and you should read this joint proxy statement/prospectus carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending your respective special meeting.

Your vote is very important. We encourage you to vote as soon as possible.

 

Q:	What will I receive in the merger?

 

A:

If the merger is completed, holders of Plum Creek common stock will be entitled to receive 1.60 Weyerhaeuser common shares for each share of Plum Creek common stock they hold (other than shares of Plum Creek common stock owned by Plum Creek as treasury stock) at the effective time of the merger. Plum Creek stockholders will not receive any fractional Weyerhaeuser common shares in the merger. Instead, Weyerhaeuser will pay cash in lieu of any fractional Weyerhaeuser common shares that a Plum Creek stockholder would otherwise have been entitled to receive.

If the merger is completed, Weyerhaeuser shareholders will not receive any merger consideration and will continue to hold their Weyerhaeuser common shares.

 

Q:	If I am a Plum Creek stockholder, how will I receive the merger consideration to which I am entitled?

A: The exchange agent will, promptly after the completion of the merger (and in any event within two business days after such time), mail to each holder of record of Plum Creek common stock whose shares were converted into the right to receive the merger consideration a letter of transmittal, together with

 

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instructions thereto. Upon the surrender of a certificate for cancelation to the exchange agent, together with the letter of transmittal, duly completed and validly executed, the holder of this certificate will be entitled to receive the merger consideration. If you are a holder of book-entry shares, the Weyerhaeuser common shares will be deemed issued to you on the date of the completion of the merger.

 

Q:	What is the value of the merger consideration?

 

A:

Because Weyerhaeuser will issue 1.60 Weyerhaeuser common shares in exchange for each share of Plum Creek common stock, the value of the merger consideration that Plum Creek stockholders receive will depend on the price per Weyerhaeuser common share at the effective time of the merger. That price will not be known at the time of the special meetings and may be less than the current price or the price at the time of the special meetings. Based on the closing price of Weyerhaeuser common shares on the New York Stock Exchange (referred to as the “NYSE”) on [•], the latest practicable date before the date of this joint proxy statement/prospectus, the 1.60 exchange ratio represented approximately $[•] in value for each share of Plum Creek common stock. We encourage you to obtain current market quotations of Weyerhaeuser common shares and Plum Creek common stock.

 

Q:	When and where will the special meetings be held?

 

A:	The Weyerhaeuser special meeting will be held at [•] on [•], at [•], local time, unless adjourned or postponed to a later date or time.

The Plum Creek special meeting will be held at [•] on [•], at [•], local time, unless adjourned or postponed to a later date or time.

 

Q:	Who is entitled to vote at the special meeting?

 

A:

Only shareholders of record of Weyerhaeuser common shares as of the close of business on [•] are entitled to notice of, and to vote at, the Weyerhaeuser special meeting and any adjournment or postponement of the Weyerhaeuser special meeting. Only stockholders of record of Plum Creek as of the close of business on [•] are entitled to notice of, and to vote at, the Plum Creek special meeting and any adjournment or postponement of the Plum Creek special meeting.

 

Q:	What proposals will be considered at the special meeting?

 

A:	At the special meeting of Weyerhaeuser shareholders, Weyerhaeuser shareholders will be asked to consider and vote on:

 

•

a proposal to approve the issuance of Weyerhaeuser common shares, par value $1.25 per share, in connection with the merger contemplated by the merger agreement (referred to as the “share issuance proposal”); and

 

•

a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal (referred to as the “Weyerhaeuser adjournment proposal”).

Weyerhaeuser will transact no other business at its special meeting except such business as may properly be brought before the Weyerhaeuser special meeting or any adjournment or postponement thereof.

At the special meeting of Plum Creek stockholders, Plum Creek stockholders will be asked to consider and vote on:

 

•

a proposal to adopt the merger agreement, pursuant to which Plum Creek will be merged with and into Weyerhaeuser and each outstanding share of Plum Creek common stock will be converted into the right to receive 1.60 Weyerhaeuser common shares (referred to as the “merger proposal”);

 

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•

a proposal to adjourn the Plum Creek special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger proposal (referred to as the “Plum Creek adjournment proposal”); and

 

•

a non-binding, advisory proposal to approve the compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger (referred to as the “compensation proposal”).

Plum Creek will transact no other business at its special meeting except such business as may properly be brought before the Plum Creek special meeting or any adjournment or postponement thereof.

 

Q:	How does the Weyerhaeuser board of directors recommend that I vote?

 

A:

At its meeting on November 6, 2015, the Weyerhaeuser board of directors (referred to as the “Weyerhaeuser board”) unanimously (1) approved and adopted the merger agreement, (2) approved the merger upon the terms and subject to the conditions set forth in the merger agreement and (3) approved the issuance by Weyerhaeuser of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to and in accordance with the terms and conditions of the merger agreement. Accordingly, the Weyerhaeuser board unanimously recommends that the Weyerhaeuser shareholders vote “FOR” each of the share issuance proposal and the Weyerhaeuser adjournment proposal.

 

Q:	How does the Plum Creek board of directors recommend that I vote?

 

A:

The Plum Creek board of directors (referred to as the “Plum Creek board”) unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable, fair to and in the best interests of Plum Creek and its stockholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. Accordingly, the Plum Creek board unanimously recommends that the Plum Creek stockholders vote “FOR” each of the merger proposal, the Plum Creek adjournment proposal and the compensation proposal.

 

Q:	How do I vote as a Weyerhaeuser shareholder?

 

A:	If you are a shareholder of record of Weyerhaeuser as of the close of business on the record date for the Weyerhaeuser special meeting, you may vote in person by attending the Weyerhaeuser special meeting or, to ensure your shares are represented at the meeting, you may vote by:

 

•

accessing the Internet website specified on your proxy card;

 

•

calling the toll-free number specified on your proxy card; or

 

•

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If you hold Weyerhaeuser shares in the name of a bank, broker or other holder of record, please follow the instructions on the voting instruction card furnished by the bank, broker or other holder of record to ensure that your shares are represented at the Weyerhaeuser special meeting.

 

Q:	How do I vote as a Plum Creek stockholder?

 

A:	If you are a stockholder of record of Plum Creek as of the close of business on the record date for the Plum Creek special meeting, you may vote in person by attending the Plum Creek special meeting or, to ensure your shares are represented at the meeting, you may vote by:

 

•

accessing the Internet website specified on your proxy card;

 

•

calling the toll-free number specified on your proxy card; or

 

•

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

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If you hold shares of Plum Creek common stock in the name of a bank, broker or other holder of record, please follow the instructions on the voting instruction card furnished by the bank, broker or other holder of record to ensure that your shares are represented at the Plum Creek special meeting.

 

Q:	What vote is required to approve each proposal?

 

A:

Weyerhaeuser. Approval of the share issuance proposal requires that the votes cast favoring the share issuance proposal exceed the votes cast opposing it. Approval of the Weyerhaeuser adjournment proposal requires that the votes cast favoring the Weyerhaeuser adjournment proposal exceed the votes cast opposing it.

Plum Creek. Approval of the merger proposal requires the affirmative vote of holders of a majority of the outstanding shares of Plum Creek common stock entitled to vote on the proposal. Approval of the Plum Creek adjournment proposal and the compensation proposal each requires that the votes cast “FOR” such proposal exceed the votes cast “AGAINST” such proposal (with abstentions and broker non-votes not considered votes cast).

 

Q:	How many votes do I have?

 

A:

Weyerhaeuser. You are entitled to one vote for each Weyerhaeuser common share that you owned as of the close of business on [•], the record date for the Weyerhaeuser special meeting. As of the close of business on the record date for the Weyerhaeuser special meeting, there were approximately [•] Weyerhaeuser common shares outstanding and entitled to vote at the Weyerhaeuser special meeting.

Plum Creek. You are entitled to one vote for each share of Plum Creek common stock that you owned as of the close of business on [•], the record date for the Plum Creek special meeting. As of the close of business on the record date for the Plum Creek special meeting, there were approximately [•] shares of Plum Creek common stock outstanding and entitled to vote at the Plum Creek special meeting.

 

Q:	What will happen if I fail to vote or I abstain from voting?

 

A:

Weyerhaeuser. If you fail to vote or fail to instruct your bank, broker or other holder of record to vote, it will not count towards the approval of the share issuance proposal or the Weyerhaeuser adjournment proposal. With respect to the share issuance proposal, if you mark your proxy or voting instructions to abstain, it will count as a vote against the approval of the share issuance proposal. With respect to the Weyerhaeuser adjournment proposal, if you mark your proxy or voting instructions to abstain, it will not count towards the approval of the Weyerhaeuser adjournment proposal.

Plum Creek. If you fail to vote, fail to instruct your bank, broker or other holder of record to vote or vote to abstain, it will have the same effect as a vote against the merger proposal. If you fail to vote or fail to instruct your bank, broker or other holder of record to vote, it will have no effect on the Plum Creek adjournment proposal or the compensation proposal, assuming a quorum is present. If you mark your proxy or voting instructions to abstain, it will have no effect on the Plum Creek adjournment proposal or the compensation proposal.

 

Q:	What constitutes a quorum?

 

A:

Weyerhaeuser. The presence, in person or by proxy, of holders of a majority of Weyerhaeuser’s outstanding common shares is required to constitute a quorum for the transaction of business at the Weyerhaeuser special meeting. Weyerhaeuser common shares represented at the Weyerhaeuser special meeting and entitled to vote but not voted, including shares for which a shareholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokers or other holders of record that are present, in person or by proxy, at the Weyerhaeuser special meeting but with respect to which the bank, broker or other holder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the bank, broker or other holder of record does not have discretionary voting power on such proposal), will be counted as present for purposes of establishing a quorum.

 

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Plum Creek. Stockholders who hold at least a majority of the outstanding shares of Plum Creek common stock as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum for the transaction of business at the Plum Creek special meeting. Shares of Plum Creek common stock represented at the Plum Creek special meeting but not voted, including shares for which a stockholder directs an “abstention” from voting and broker non-votes (shares held by banks, brokers or other holders of record that are present, in person or by proxy, at the Plum Creek special meeting but with respect to which the bank, broker or other holder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the bank, broker or other holder of record does not have discretionary voting power on such proposal), will be counted as present for purposes of establishing a quorum.

 

Q:	If my shares are held in “street name” by my bank, broker or other holder of record, will my bank, broker or other holder of record automatically vote my shares for me?

 

A:

No. If you are a beneficial owner of shares held in street name (that is, if you hold your shares through a bank, broker or other holder of record), you should follow the voting instructions you receive from the bank, broker or other holder of record to vote your shares. The bank, broker or other holder of record must receive explicit voting instructions from you to be able to vote on the share issuance proposal, the Weyerhaeuser adjournment proposal, the merger proposal, the Plum Creek adjournment proposal or the compensation proposal, each of which is considered to be non-routine under the applicable rules of the New York Stock Exchange. Banks, brokers and other holders of record do not have discretion to vote on non-routine matters unless the beneficial owner of the shares has given explicit voting instructions. Consequently, if you do not give your bank, broker or other holder of record explicit instructions, your shares will not be voted on the share issuance proposal, the Weyerhaeuser adjournment proposal, the merger proposal, the Plum Creek adjournment proposal or the compensation proposal and will be considered “broker non-votes” on these proposals. Please check the voting form used by your bank, broker or other holder of record.

If you are a Weyerhaeuser shareholder and you do not provide your bank, broker or other holder of record with instructions:

 

•

if your bank, broker or other holder of record submits an unvoted proxy, your Weyerhaeuser common shares will be counted for purposes of determining a quorum at the Weyerhaeuser special meeting, but will not be voted on any proposal on which your bank, broker or other holder of record does not have discretionary authority; and

 

•

your bank, broker or other holder of record may not vote your shares on the share issuance proposal or the Weyerhaeuser adjournment proposal, which will have no effect on the vote on these proposals.

If you are a Plum Creek stockholder and you do not provide your bank, broker or other holder of record with instructions:

 

•

if your bank, broker or other holder of record submits an unvoted proxy, your shares of Plum Creek common stock will be counted for purposes of determining a quorum at the Plum Creek special meeting and they will not be voted on any proposal at the Plum Creek special meeting on which your bank, broker or other holder of record does not have discretionary authority; and

 

•

your bank, broker or other holder of record may not vote your shares, which will have the same effect as a vote against the merger proposal and, assuming a quorum is present, will have no effect on the Plum Creek adjournment proposal or the compensation proposal.

Please note that you may not vote shares held in street name by returning a proxy card directly to Weyerhaeuser or Plum Creek or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your bank, broker or other holder of record.

 

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Q:	What will happen if I return my proxy card without indicating how to vote?

 

A:	If you return your proxy card without indicating how to vote on any particular proposal, the Weyerhaeuser common shares or shares of Plum Creek common stock represented by your proxy will be voted in favor of that proposal.

 

Q:	Can I change my vote after I have returned a proxy or voting instruction card?

 

A:	Yes. You can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:

 

•

you can send a signed notice of revocation;

 

•

you can grant a new, valid proxy bearing a later date (including by telephone or through the Internet); or

 

•

if you are a holder of record, you can attend your special meeting and vote in person, which will automatically cancel any proxy previously given, or you may revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If you choose either of the first two methods, you must submit your notice of revocation or your new proxy to the Corporate Secretary of Weyerhaeuser or Corporate Secretary of Plum Creek, as appropriate, no later than the beginning of the applicable special meeting. If your shares are held in street name by your bank, broker or other holder of record, you should contact your bank, broker or other holder of record to change your vote or revoke your proxy.

 

Q:	What happens if I transfer my shares of Weyerhaeuser or Plum Creek common stock before the special meeting?

 

A:

The record dates for the Weyerhaeuser and Plum Creek special meetings are earlier than both the date of the special meetings and the date that the merger is expected to be completed. If you transfer your Weyerhaeuser or Plum Creek shares after the applicable record date but before the applicable special meeting, you will retain your right to vote at the applicable special meeting. However, if you are a Plum Creek stockholder, you will have transferred the right to receive the merger consideration in the merger. In order to receive the merger consideration, you must hold your shares through the completion of the merger.

 

Q:	What if I hold shares in both Weyerhaeuser and Plum Creek?

 

A:

If you are both a shareholder of Weyerhaeuser and a stockholder of Plum Creek, you will receive two separate packages of proxy materials. A vote cast as a Weyerhaeuser shareholder will not count as a vote cast as a Plum Creek stockholder, and a vote cast as a Plum Creek stockholder will not count as a vote cast as a Weyerhaeuser shareholder. Therefore, please separately submit a proxy for each of your Weyerhaeuser and Plum Creek shares.

 

Q:	Where can I find the voting results of the special meeting?

 

A:

The preliminary voting results for each special meeting will be announced at the Weyerhaeuser and Plum Creek special meetings, respectively. In addition, within four business days following certification of the final voting results, each of Weyerhaeuser and Plum Creek intends to file the final voting results of its special meeting with the SEC on a Current Report on Form 8-K.

 

Q:	What will happen if all of the proposals to be considered at the special meeting are not approved?

 

A:

As a condition to completion of the merger, Weyerhaeuser’s shareholders must approve the share issuance proposal and Plum Creek’s stockholders must approve the merger proposal. Completion of the merger is not conditioned or dependent on approval of any of the other proposals to be considered at the special meetings.

 

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Q:	What happens if the merger is not completed?

 

A:	If the merger is not completed for any reason, Plum Creek stockholders will not receive any consideration for their shares of Plum Creek common stock, and Plum Creek will remain an independent public company with Plum Creek common stock being traded on the NYSE.

 

Q:	Are Weyerhaeuser shareholders or Plum Creek stockholders entitled to appraisal or dissenters’ rights?

 

A:

No. Under the General Corporation Law of the State of Delaware (referred to as the “DGCL”), the holders of Plum Creek common stock are not entitled to appraisal rights in connection with the merger. Under Washington law, since approval by Weyerhaeuser shareholders of the merger is not required, Weyerhaeuser shareholders do not have dissenters’ rights in connection with the merger. For more information, see the section entitled “No Appraisal or Dissenters’ Rights” beginning on page [•].

 

Q:	Why are Plum Creek stockholders being asked to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger?

 

A:

The rules promulgated by the SEC under Section 14A of the Exchange Act require Plum Creek to seek a non-binding, advisory vote with respect to certain compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger. For more information regarding such payments, see the section entitled “Non-Binding Advisory Vote on Compensation” beginning on page [•].

 

Q:	What will happen if Plum Creek stockholders do not approve, on a non-binding advisory basis, the payments to Plum Creek’s named executive officers in connection with the completion of the merger?

 

A:

The vote on the compensation proposal is a vote separate and apart from the vote on the merger proposal. Accordingly, Plum Creek stockholders may vote in favor of the merger proposal and not in favor of the compensation proposal, or vice versa. Approval of the compensation proposal is not a condition to completion of the merger with Weyerhaeuser, and it is advisory in nature only, meaning it will not be binding on either Weyerhaeuser or Plum Creek. Accordingly, because Plum Creek is contractually obligated to make these payments, if the proposed merger with Weyerhaeuser is completed, the compensation will be payable, subject only to the conditions applicable to these payments, regardless of the outcome of the advisory vote.

 

Q:	What are the material U.S. federal income tax consequences of the merger to U.S. holders of Plum Creek common shares?

 

A:

Plum Creek and Weyerhaeuser intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (referred to as the “Code”). It is a condition to Weyerhaeuser’s obligation to complete the merger that Weyerhaeuser receive an opinion from Covington & Burling LLP (referred to as “Covington”), tax counsel to Weyerhaeuser, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Plum Creek’s obligation to complete the merger that Plum Creek receive an opinion from Skadden, Arps, Slate, Meagher & Flom LLP (referred to as “Skadden”), tax counsel to Plum Creek, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, and on the basis of the opinions expected to be received in connection herewith, a U.S. Holder (as defined on page [•]) of Plum Creek common stock will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of shares of Plum Creek common stock for Weyerhaeuser common shares in the merger, except with respect to cash received in lieu of fractional shares.

 

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Please carefully review the information set forth in the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—U.S. Federal Income Tax Consequences of the Merger” beginning on page [•] for a summary of U.S. federal income tax consequences of the merger. The tax consequences to you of the merger will depend on your own situation. Please consult your own tax advisors as to the specific tax consequences to you of the merger.

 

Q:	What are the conditions to completion of the merger?

 

A:

In addition to the approval of the share issuance proposal by Weyerhaeuser’s shareholders and the approval of the merger proposal by Plum Creek’s stockholders, completion of the merger is subject to the satisfaction of a number of other conditions. For additional information on the conditions to completion of the merger, see the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—The Merger Agreement—Conditions to Completion of the Merger” beginning on page [•].

 

Q:	Will I still be paid dividends prior to the merger?

 

A:

Weyerhaeuser has recently paid quarterly dividends of $0.31 per share to its shareholders. Weyerhaeuser may continue to declare and pay its regular quarterly cash dividend with declaration, record and payment dates consistent with past practice and in accordance with its current dividend policy without Plum Creek’s consent. Plum Creek has historically paid quarterly dividends of $0.44 per share to its stockholders. Plum Creek may continue to declare and pay its regular quarterly cash dividend with declaration, record and payment dates consistent with past practice and in accordance with its current dividend policy without Weyerhaeuser’s consent.

Under the merger agreement, Weyerhaeuser and Plum Creek are required to coordinate with each other to designate the same record and payment dates for any quarterly dividends or distributions declared in accordance with the merger agreement in any calendar quarter in which the closing of the merger might reasonably be expected to occur so that (1) no holder of Weyerhaeuser common shares or shares of Plum Creek common stock will receive two dividends, or fail to receive one dividend, for any single calendar quarter and (2) the quarterly payments of dividends to holders of Weyerhaeuser common shares (and any necessary adjustments to Plum Creek’s schedule for quarterly dividends) will be made substantially in accordance with Weyerhaeuser’s historical quarterly dividend payment schedule.

 

Q:	When do you expect the merger to be completed?

 

A:

Weyerhaeuser and Plum Creek expect the merger to close in late first quarter or early second quarter of 2016. However, the obligations of Weyerhaeuser and Plum Creek to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement, and it is possible that factors outside the control of both companies could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the respective Weyerhaeuser and Plum Creek special meetings and the completion of the merger.

 

Q:	What will happen to outstanding Plum Creek equity awards in the merger?

 

A:

Upon completion of the merger, each outstanding stock option to purchase shares of Plum Creek common stock will be converted into an option, on the same terms as were applicable prior to the merger, to purchase a corresponding number of Weyerhaeuser common shares, after giving effect to the 1.60 exchange ratio. Upon completion of the merger, each outstanding Plum Creek restricted stock unit (referred to as a “RSU”) and deferred stock unit (referred to as a “DSU”) will be converted into a Weyerhaeuser RSU or DSU, as applicable, on the same terms as were applicable prior to the merger, with respect to a corresponding number of Weyerhaeuser common shares, after giving effect to the 1.60 exchange ratio.

Upon completion of the merger, each outstanding Plum Creek value management award (“VMA”) granted on or before December 31, 2014 will be canceled with the holder thereof receiving an amount in cash

 

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determined assuming satisfaction of the applicable performance goals at the greater of target and actual performance through completion of the merger. Upon completion of the merger, each outstanding Plum Creek VMA granted after December 31, 2014 will be converted into a Weyerhaeuser restricted unit, on the same terms as were applicable to the Plum Creek VMA prior to the merger; provided that the applicable performance goals will be deemed satisfied as of completion of the merger at the greater of target and actual performance through completion of the merger.

 

Q:	What do I need to do now?

 

A:	Carefully read and consider the information contained in, and incorporated by reference into, this joint proxy statement/prospectus, including its annexes.

If you are a holder of record, in order for your shares to be represented at your special meeting:

 

•

you can attend your special meeting in person;

 

•

you can vote through the Internet or by telephone by following the instructions included on your proxy card; or

 

•

you can indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope.

If you hold your shares in street name, in order for your shares to be represented at your special meeting, you should instruct your bank, broker or other holder of record as to how to vote your shares, following the directions from your bank, broker or other holder of record provided to you.

 

Q:	Do I need to do anything with my shares of Plum Creek common stock now?

 

A:

If you are a Plum Creek stockholder, after the merger is completed, your shares of Plum Creek common stock will be automatically converted into Weyerhaeuser common shares. You will receive instructions at that time regarding exchanging your shares for Weyerhaeuser common shares. You do not need to take any action at this time. Please do not send your Plum Creek stock certificates with your proxy card.

 

Q:	Do I need to do anything with my Weyerhaeuser common shares now?

 

A:	If you are a Weyerhaeuser shareholder, you are not required to take any action with respect to your Weyerhaeuser stock certificates. You will continue to hold your Weyerhaeuser common shares.

 

Q:	Are there any risks in the merger or the Weyerhaeuser share issuance that I should consider?

 

A:	Yes. There are risks associated with all business combinations, including the merger, and with the related Weyerhaeuser share issuance. These risks are discussed in more detail in the section entitled “Risk Factors” beginning on page [•].

 

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Q:	Who can help answer my questions?

 

A:	Weyerhaeuser shareholders or Plum Creek stockholders who have questions about the merger, the Weyerhaeuser share issuance or the other matters to be voted on at the special meetings or desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:

 

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including with respect to future results and performance, the expected benefits of the merger such as efficiencies, cost savings and growth potential and the expected timing of the merger. Factors listed below, as well as other factors, may cause actual results to differ significantly from these forward-looking statements. There is no guarantee that any of these events anticipated by these forward-looking statements will occur. If any of these events occur, there is no guarantee what effect they will have on operations or financial condition.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often use words such as “expects,” may,” “will,” “believes,” “should,” “approximately,” “anticipates,” “estimates,” “projects,” intends,” plans,” targets” or “approximately.” In addition, these words may use the positive or negative or other variations of those and similar words.

Major risks, uncertainties and assumptions that affect Weyerhaeuser’s and Plum Creek’s businesses and may cause actual results to differ materially from those expressed or implied in these forward-looking statements include those set forth in Weyerhaeuser’s and Plum Creek’s filings with the SEC, including their respective Annual Reports on Form 10-K for the fiscal years ended December 31, 2014, those set forth in the section entitled “Risk Factors” beginning on page [•], as well as, among others, risks, uncertainties and assumptions relating to:

 

•

the failure to receive, on a timely basis or otherwise, the required approval of Weyerhaeuser’s shareholders or Plum Creek’s stockholders with respect to the merger;

 

•

the risk that any of the conditions to closing of the merger may not be satisfied;

 

•

uncertainties as to the timing of the completion of the merger and the ability of Weyerhaeuser and Plum Creek to complete the merger;

 

•

the risk that the proposed merger disrupts the plans, operations or existing business relationships of Weyerhaeuser or Plum Creek;

 

•

the combined company’s ability to achieve the anticipated financial performance or synergies expected from the merger;

 

•

the risk that the business of Weyerhaeuser and Plum Creek will not be integrated successfully or in a timely manner;

 

•

unexpected costs or expenses resulting from the merger;

 

•

the risk that the announced $2.5 billion share repurchase will not be completed;

 

•

the effect of general economic conditions, including employment rates, interest rate levels, housing starts, availability of financing for home mortgages and strength of the U.S. dollar;

 

•

market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;

 

•

performance of our manufacturing operations, including maintenance requirements;

 

•

the level of competition from domestic and foreign producers;

 

•

raw material availability and prices;

 

•

energy prices;

 

•

the effect of weather;

 

•

the risk of loss from fires, floods, windstorms, hurricanes, pest infestations and other natural disasters;

 

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•

the successful execution of our internal plans and strategic initiatives;

 

•

transportation availability and costs;

 

•

federal tax policies;

 

•

the effect of forestry, land use, environmental and other governmental regulations;

 

•

legal proceedings;

 

•

performance of pension fund investments and related derivatives;

 

•

the effect of timing of retirements and changes in the market price of our common shares on charges for share-based compensation; and

 

•

changes in accounting principles.

Weyerhaeuser and Plum Creek undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. In the event that Weyerhaeuser or Plum Creek does update any forward-looking statement, no inference should be made that Weyerhaeuser or Plum Creek will make additional updates with respect to that statement, related matters or any other forward-looking statements.

 

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RISK FACTORS

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•], you should carefully consider the following risks before deciding whether to vote for the merger proposal, in the case of Plum Creek stockholders, or for the share issuance proposal, in the case of Weyerhaeuser shareholders. In addition, you should read and consider the risks associated with each of the businesses of Weyerhaeuser and Plum Creek because these risks will also affect the combined company. Descriptions of some of these risks can be found in Weyerhaeuser’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and Plum Creek’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as, in each case, updated by any subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [•].

Risk Factors Relating to the Merger

The exchange ratio is fixed and will not be adjusted in the event of any change in either Weyerhaeuser’s or Plum Creek’s stock price.

Under the terms of the merger agreement, at the effective time of the merger, each outstanding share of Plum Creek common stock (other than shares of Plum Creek common stock owned by Plum Creek as treasury stock, which will be canceled) will be converted into the right to receive 1.60 Weyerhaeuser common shares. This exchange ratio of 1.60 was fixed in the merger agreement and will not be adjusted for changes in the market price of either Weyerhaeuser common shares or shares of Plum Creek common stock. Changes in the price of Weyerhaeuser common shares prior to the merger will affect the market value that Plum Creek stockholders will receive upon completion of the merger.

The price of Weyerhaeuser common shares at the closing of the merger may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus and on the date of the special meetings of Weyerhaeuser and Plum Creek. As a result, the market value represented by the exchange ratio will also vary. For example, based on the range of closing prices of Weyerhaeuser common shares during the period from November 6, 2015, the last trading day before public announcement of the merger, through [•], 2015, the latest practicable date before the date of this joint proxy statement/prospectus, the exchange ratio represented a market value ranging from a low of $[•] to a high of $[•] for each share of Plum Creek common stock. Accordingly, at the time of the Plum Creek special meeting, Plum Creek stockholders will not know or be able to determine the market value of the consideration they will receive upon completion of the merger.

Stock price changes may result from a variety of factors (many of which are beyond our control), including, among others, changes in our respective businesses, operations and prospects; changes in market assessments of the business, operations and prospects of either company; investor behavior and strategies; interest rates, general market and economic conditions and other factors generally affecting the price of Weyerhaeuser’s common shares and shares of Plum Creek common stock; and federal, state and local legislation, governmental regulation and legal developments in the businesses in which Plum Creek and Weyerhaeuser operate.

Weyerhaeuser’s stock price may be negatively impacted by risks and conditions that apply to Weyerhaeuser, which are different from the risks and conditions applicable to Plum Creek.

Upon completion of the merger, holders of Plum Creek common stock will become holders of Weyerhaeuser common shares. The businesses of Weyerhaeuser differ from those of Plum Creek in important respects and, accordingly, the results of operations of Weyerhaeuser after the merger, as well as the market price

 

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of Weyerhaeuser common shares, may be affected by factors different from those currently affecting or that have historically affected the independent results of operations of Plum Creek. Please see Weyerhaeuser’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by any subsequent Quarterly Reports on Form 10-Q, all of which are incorporated by reference in this joint proxy statement/prospectus (see the section entitled “Where You Can Find More Information” beginning on page [•] for the location of information incorporated by reference in this joint proxy statement/prospectus), and the section entitled “Cautionary Statements Regarding Forward-Looking Statements” beginning on page [•] for a summary of some of the key factors that might affect Weyerhaeuser and the prices at which Weyerhaeuser’s common shares may trade from time to time.

Failure to complete the merger could negatively impact the stock prices and the future business and financial results of Weyerhaeuser and Plum Creek.

If the merger is not completed, the ongoing businesses of Weyerhaeuser or Plum Creek may be adversely affected and Weyerhaeuser and Plum Creek will be subject to several risks without realizing any of the benefits of having the merger completed, including the following:

 

•

being required, under certain circumstances, to pay a termination fee of $250 million;

 

•

being required to reimburse the other party for all of the reasonable documented out-of-pocket fees and expenses incurred by the other party or its subsidiaries in connection with the merger agreement, the merger and the other transactions contemplated by the merger agreement up to a maximum of $40 million;

 

•

being subject to certain restrictions on the conduct of its business, which may adversely affect its ability to execute certain business strategies; and

 

•

the focus of management of each of the companies on the merger instead of on pursuing other opportunities that could be beneficial to the companies.

In addition, if the merger is not completed, Weyerhaeuser or Plum Creek may experience negative reactions from the financial markets or from their respective customers or employees. Weyerhaeuser or Plum Creek could also be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against Weyerhaeuser or Plum Creek to perform their respective obligations under the merger agreement.

Any delay in completing the merger, which is subject to a number of conditions, some of which are outside of the parties’ control, may reduce or eliminate the expected benefits from the transaction.

In addition to the required shareholder and stockholder approvals, the merger is subject to a number of other conditions beyond Weyerhaeuser’s and Plum Creek’s control that may prevent, delay or otherwise materially adversely affect its completion. Weyerhaeuser and Plum Creek cannot predict whether and when these other conditions will be satisfied. Furthermore, the requirements for obtaining the required approvals could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay in completing the merger could cause the combined company not to realize some or all of the synergies and other benefits that it expects to achieve if the merger is successfully completed within its expected time frame. See the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—The Merger Agreement—Conditions to Completion of the Merger” beginning on page [•].

In addition, if the merger is not completed by September 30, 2016, either Plum Creek or Weyerhaeuser may choose to terminate the merger agreement. Plum Creek or Weyerhaeuser may also choose to terminate the merger agreement in certain other circumstances, and the parties can mutually decide to terminate the merger agreement at any time prior to the completion of the merger, before or after stockholder or shareholder approval, as applicable. See the sections entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page [•] and “— Expenses and Termination Fees” beginning on page [•].

 

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The merger agreement contains provisions that could discourage a potential competing acquiror of either Weyerhaeuser or Plum Creek or could result in any competing proposal being at a lower price than it might otherwise be.

The merger agreement contains “no shop” provisions that, subject to limited exceptions, restrict Weyerhaeuser’s and Plum Creek’s ability to solicit, initiate, knowingly encourage or facilitate, discuss or negotiate competing third-party proposals to acquire all or a significant part of Weyerhaeuser or Plum Creek. Further, even if the Weyerhaeuser board or Plum Creek board withdraws (or modifies in any manner adverse to the other party) or proposes publicly to withdraw (or modify in any manner adverse to the other party) its recommendation of the share issuance proposal or the merger proposal, as applicable, they will still be required to submit the matter to a vote of their respective shareholders or stockholders, as applicable, at their respective special meetings unless the merger agreement is terminated in accordance with its terms. In addition, the other party generally has an opportunity to offer to modify the terms of the merger and the merger agreement in response to any takeover proposals that may be made before such board of directors may withdraw or modify its recommendation. In some circumstances, upon termination of the merger agreement, one of the parties may be required to pay a termination fee to the other party. For additional information, see the sections entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—The Merger Agreement—No Solicitation of Alternative Proposals” beginning on page [•], “—Changes in Board Recommendations” beginning on page [•], “—Termination of the Merger Agreement” beginning on page [•] and “— Expenses and Termination Fees” beginning on page [•].

These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Weyerhaeuser or Plum Creek from considering or proposing an acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than that market value proposed to be received or realized in the merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

The merger will involve substantial costs.

Weyerhaeuser and Plum Creek have incurred and expect to continue to incur substantial costs and expenses relating directly to the merger and the Weyerhaeuser share issuance, including fees and expenses payable to financial advisors, other professional fees and expenses, insurance premium costs, SEC filing fees, printing and mailing costs and other transaction-related costs, fees and expenses. Weyerhaeuser also will incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. Weyerhaeuser continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses.

Uncertainty due to the pendency of the merger could adversely affect the business and operations of Weyerhaeuser or Plum Creek.

In connection with the pendency of the merger, some customers, suppliers or other entities with whom Weyerhaeuser or Plum Creek have a business relationship may delay or defer decisions, which could negatively impact revenues, earnings and cash flows of Weyerhaeuser or Plum Creek, as well as the market price of Weyerhaeuser common shares or shares of Plum Creek common stock, regardless of whether the merger is completed. In addition, customers or suppliers may cease doing business with Weyerhaeuser, Plum Creek or the combined company in anticipation of or following the merger or may change the terms and conditions upon which they are willing to continue to do business. In addition, current or prospective competitors of Weyerhaeuser, Plum Creek or the combined company may seek to take advantage of potential uncertainty or disruption resulting from the merger to interfere with relationships with customers, suppliers or employees.

 

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Until the completion of the merger or the termination of the merger agreement in accordance with its terms, in consideration of the agreements made by the parties in the merger agreement, Weyerhaeuser and Plum Creek are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Weyerhaeuser or Plum Creek and their respective shareholders and stockholders.

Until the merger is completed, the merger agreement restricts Weyerhaeuser and Plum Creek from taking specified actions without the consent of the other party, and requires each of Weyerhaeuser and Plum Creek to operate in the ordinary course in all material respects. These restrictions may prevent Weyerhaeuser or Plum Creek from making appropriate changes to their respective businesses or pursuing attractive business opportunities that may arise prior to the completion of the merger. See the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—The Merger Agreement—Conduct of Business” beginning on page [•].

The fairness opinion obtained by the boards of directors of Weyerhaeuser and Plum Creek from their respective financial advisors will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.

Neither the Weyerhaeuser board nor the Plum Creek board has obtained an updated fairness opinion as of the date of this joint proxy statement/prospectus from Morgan Stanley & Co. LLC, Weyerhaeuser’s financial advisor, or Goldman, Sachs & Co., Plum Creek’s financial advisor.

Changes in the operations and prospects of Weyerhaeuser or Plum Creek, general market and economic conditions and other factors that may be beyond the control of Weyerhaeuser and Plum Creek, and on which the fairness opinions were based, may alter the value of Weyerhaeuser or Plum Creek or the price of Weyerhaeuser common shares or shares of Plum Creek common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the dates of such opinions. The opinions are included as Annexes B and C to this joint proxy statement/prospectus. For a description of the opinion that the Weyerhaeuser board received from its financial advisor, see the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Opinion of Weyerhaeuser’s Financial Advisor” beginning on page [•]. For a description of the opinion that the Plum Creek board received from its financial advisor, see the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Opinion of Plum Creek’s Financial Advisor” beginning on page [•]. For a description of the factors considered by the Weyerhaeuser board in determining to approve the merger agreement and the merger, see the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Weyerhaeuser’s Reasons for the Merger; Recommendation of the Weyerhaeuser Board” beginning on page [•]. For a description of the factors considered by the Plum Creek board in determining to approve the merger agreement and the merger, see the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Plum Creek’s Reasons for the Merger; Recommendation of the Plum Creek Board” beginning on page [•].

Weyerhaeuser’s executive officers and directors and Plum Creek’s executive officers and directors have interests in the merger that may be different from, or in addition to, the interests of Weyerhaeuser’s shareholders and Plum Creek’s stockholders generally.

Executive officers of Weyerhaeuser and Plum Creek negotiated the terms of the merger agreement. The Weyerhaeuser board approved and adopted the merger agreement and approved the issuance of Weyerhaeuser common shares to Plum Creek stockholders in connection with the merger and determined that the merger agreement and the transactions contemplated thereby, including the merger and the issuance of Weyerhaeuser common shares to Plum Creek stockholders in connection with the merger, are in the best interests of Weyerhaeuser and its shareholders. The Plum Creek board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable, fair to and in the best interests of Plum Creek and its stockholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger. In considering these facts and the other information contained in this

 

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joint proxy statement/prospectus, you should be aware that Weyerhaeuser’s executive officers and directors and Plum Creek’s executive officers and directors may have financial interests in the merger that may be different from, or in addition to, the interests of Weyerhaeuser’s shareholders or Plum Creek’s stockholders. See the sections entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Financial Interests of Weyerhaeuser Directors and Officers in the Merger” beginning on page [•] and “—Financial Interests of Plum Creek Directors and Officers in the Merger” beginning on page [•].

The combined company may incur adverse tax consequences if Weyerhaeuser or Plum Creek has failed or fails to qualify as a REIT for U.S. federal income tax purposes.

Each of Weyerhaeuser and Plum Creek has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to do so through the time of the merger. Weyerhaeuser intends to operate in a manner that it believes allows it to qualify as a REIT after the merger. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of Weyerhaeuser or Plum Creek may affect its ability to qualify as a REIT. In order to qualify as a REIT, each of Weyerhaeuser and Plum Creek must satisfy a number of requirements, particularly relating to the nature of its assets and its income. A REIT must also make distributions to stockholders aggregating annually at least 90% of its net taxable income, excluding any capital gains.

If Weyerhaeuser or Plum Creek has failed or fails to qualify as a REIT for U.S. federal income tax purposes and the merger is completed, the combined company may inherit significant tax liabilities and could lose its REIT status.

If Weyerhaeuser loses its REIT status, or is determined to have lost its REIT status in a prior year, Weyerhaeuser will face serious tax consequences that could substantially reduce its cash available for distribution to its shareholders because:

 

•

Weyerhaeuser would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for these years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income);

 

•

unless Weyerhaeuser is entitled to relief under applicable statutory provisions, neither it nor any “successor” corporation, trust or association could elect to be subject to tax as a REIT until the fifth taxable year following the year during which it was disqualified; and

 

•

even if Weyerhaeuser could re-elect REIT status or obtain relief to re-elect REIT status, (1) for up to 10 years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, it would be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election and (2) it would have to distribute all earnings and profits from non-REIT years before the end of the first new REIT taxable year.

Even if Weyerhaeuser retains its REIT status, if Plum Creek loses its REIT status for a taxable year before the merger or that includes the merger, Weyerhaeuser will face serious tax consequences that could substantially reduce its cash available for distribution to its shareholders because:

 

•

Weyerhaeuser, as the successor by merger to Plum Creek, would generally inherit any corporate income tax liabilities of Plum Creek, including penalties and interest;

 

•

Weyerhaeuser would be subject to tax on the built-in gain on each asset of Plum Creek existing at the time of the merger if Weyerhaeuser were to dispose of a Plum Creek asset during a specified period (generally 10 years) following the merger; and

 

•

Weyerhaeuser could be required to pay a special distribution or employ applicable deficiency dividend procedures (including penalties and interest payments to the IRS) to eliminate any earnings and profits accumulated by Plum Creek for taxable periods that it did not qualify as a REIT.

 

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As a result of these factors, Weyerhaeuser’s failure (before or after the merger) or Plum Creek’s failure (before the merger) to qualify as a REIT could impair Weyerhaeuser’s ability after the merger to expand its business and raise capital, and could materially adversely affect the value of Weyerhaeuser’s common shares.

Plum Creek stockholders will not be entitled to appraisal rights in the merger.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, at the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon the merger or consolidation, are either (1) listed on a national securities exchange or (2) held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)-(c).

Because Weyerhaeuser common shares are listed on the NYSE, a national securities exchange, and are expected to continue to be so listed on the record date, and because the merger otherwise satisfies the foregoing requirements, holders of Plum Creek common stock will not be entitled to appraisal rights in the merger with respect to their shares of Plum Creek common stock.

Lawsuits have been filed and other lawsuits may be filed against Plum Creek, the Plum Creek board and Weyerhaeuser challenging the merger. An adverse ruling in any such lawsuit may prevent the merger from being completed.

Following announcement of the merger, three putative class action complaints, which we collectively refer to as the “complaints” in this joint proxy statement/prospectus, were filed by purported Plum Creek stockholders on behalf of a purported class of Plum Creek stockholders. The complaints, Ida v. Plum Creek Timber Co., Inc., et al., No. 15-2-27420-1 SEA, Farber v. Plum Creek Timber Co., Inc., et al., No. 15-2-27622-1 SEA and Raul v. Morgan, Sr., et al., No. 15-2-28058-9 SEA were filed in the Superior Court of the State of Washington for King County.

The complaints name as defendants various combinations of Plum Creek, members of the Plum Creek board and Weyerhaeuser. The complaints generally assert that the members of the Plum Creek board breached their fiduciary duties to the Plum Creek stockholders during merger negotiations and by entering into the merger agreement and approving the merger, and that Plum Creek and Weyerhaeuser aided and abetted such breaches of fiduciary duties. The complaints further allege that, among other things, (1) the merger consideration undervalues Plum Creek, (2) the sales process leading up to the merger was flawed due to purported conflicts of interest of members of the Plum Creek board and (3) certain provisions of the merger agreement inappropriately favor Weyerhaeuser and inhibit competing bids. The complaints seek, among other things, (a) injunctive relief enjoining the merger, (b) rescission of the merger agreement to the extent already implemented and (c) costs and damages.

The defendants believe that the claims asserted against them in the complaints are without merit and intend to defend the litigation vigorously. Additional lawsuits arising out of or relating to the merger agreement or the merger may be filed in the future.

See the section entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Litigation Relating to the Merger” beginning on page [•] of this joint proxy statement/prospectus for more information about the lawsuits related to the merger that have been filed prior to the date of this joint proxy statement/prospectus. Lawsuits challenging the merger could prevent the merger from being completed, or could result in a material delay in, or the abandonment of, the merger.

 

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One of the conditions to completion of the merger is the absence of any law or judgment issued by any court or tribunal of competent jurisdiction that prevents, makes illegal or prohibits the closing of the merger. Accordingly, if a plaintiff is successful in obtaining a judgment prohibiting completion of the merger, then such judgment may prevent the merger from being completed, or from being completed within the expected time frame.

Risk Factors Relating to Weyerhaeuser Following the Merger

Weyerhaeuser is expected to incur substantial expenses related to the integration of Plum Creek.

Weyerhaeuser is expected to incur substantial expenses in connection with the integration of the business, policies, procedures, operations, technologies and systems of Plum Creek with those of Weyerhaeuser. There are a large number of systems that must be integrated, including management information, purchasing, accounting and finance, sales, billing, payroll and benefits, fixed asset and lease administration systems and regulatory compliance. While Weyerhaeuser has assumed that a certain level of expenses would be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of all of the expected integration expenses. Moreover, many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. These expenses could, particularly in the near term, exceed the savings that Weyerhaeuser expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings and synergies related to the integration of the businesses following the completion of the merger. These integration expenses likely will result in Weyerhaeuser taking significant charges against earnings following the completion of the merger, but the amount and timing of such charges are uncertain at present.

Following the merger, the combined company may be unable to integrate successfully the businesses of Weyerhaeuser and Plum Creek and realize the anticipated benefits of the merger.

The merger involves the combination of two companies which currently operate as independent public companies. The combined company will be required to devote significant management attention and resources to integrating its business practices and operations. The combined company may fail to realize some or all of the anticipated benefits of the merger if the integration process takes longer than expected or is more costly than expected. Potential difficulties the combined company may encounter in the integration process include the following:

 

•

the inability to successfully combine the businesses of Weyerhaeuser and Plum Creek in a manner that permits the combined company to achieve the cost savings and synergies anticipated to result from the merger, which would result in the anticipated benefits of the merger not being realized partly or wholly in the time frame currently anticipated or at all;

 

•

lost sales and customers as a result of certain customers of either of the two companies deciding not to do business with the combined company;

 

•

complexities associated with managing the combined businesses;

 

•

integrating personnel from the two companies;

 

•

creation of uniform standards, controls, procedures, policies and information systems;

 

•

potential unknown liabilities and unforeseen increased expenses or delays associated with the merger; and

 

•

performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention caused by completing the merger and integrating the companies’ operations.

In addition, Weyerhaeuser and Plum Creek have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the diversion of each company’s management’s attention, the disruption or interruption of, or the loss of momentum in, each

 

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company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, suppliers and employees or our ability to achieve the anticipated benefits of the merger, or could reduce the earnings or otherwise adversely affect the business and financial results of the combined company.

The market price of Weyerhaeuser’s common shares may decline in the future as a result of the merger.

The market price of Weyerhaeuser’s common shares may decline in the future as a result of the merger for a number of reasons, including the unsuccessful integration of Weyerhaeuser and Plum Creek or the failure of Weyerhaeuser to achieve the perceived benefits of the merger, including financial results, as rapidly as or to the extent anticipated by financial or industry analysts.

Uncertainties associated with the merger may cause a loss of management personnel and other key employees of Weyerhaeuser or Plum Creek which could adversely affect the future business and operations of the combined company following the merger.

Weyerhaeuser and Plum Creek are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans and conduct operations. The combined company’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees of Weyerhaeuser and Plum Creek. Current and prospective employees of Weyerhaeuser and Plum Creek may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely affect the ability of each of Weyerhaeuser and Plum Creek to attract and retain key personnel during the pendency of the merger. Accordingly, no assurance can be given that the combined company will be able to retain key management personnel and other key employees of Weyerhaeuser and Plum Creek.

The merger may not be accretive and may cause dilution to Weyerhaeuser’s funds available for distribution per share, which may negatively affect the market price of Weyerhaeuser common shares.

Weyerhaeuser currently anticipates that the merger will be accretive to funds available for distribution per share in the first full year following completion of the merger, assuming full synergies of $100 million are achieved within one year of closing of the merger and completion of a $2.5 billion share repurchase. This expectation is based on preliminary estimates which may materially change, including the currently expected timing of the merger. Weyerhaeuser could also encounter additional transaction-related costs or other factors such as a delay in the closing of the merger or the failure to realize all of the benefits anticipated in the merger. Any of these factors could cause dilution to Weyerhaeuser’s funds available for distribution per share or decrease or delay the expected accretive effect of the merger and cause a decrease in the market price of Weyerhaeuser common shares.

Current Weyerhaeuser shareholders and current Plum Creek stockholders will have a reduced ownership and voting interest in the combined company after the merger and will exercise less influence over the combined company’s management.

Current Weyerhaeuser shareholders currently have the right to vote in the election of the Weyerhaeuser board and other matters affecting Weyerhaeuser. Current Plum Creek stockholders currently have the right to vote in the election of the Plum Creek board and on other matters affecting Plum Creek. Immediately after the merger is completed, it is expected that current Weyerhaeuser shareholders will own approximately 65% of the outstanding Weyerhaeuser common shares and current Plum Creek stockholders will own approximately 35% of the outstanding Weyerhaeuser common shares.

As a result of the merger, current Weyerhaeuser shareholders and current Plum Creek stockholders will have less influence on the combined company’s management and policies than they now have on the management and policies of Weyerhaeuser and Plum Creek, respectively.

 

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The unaudited pro forma financial data for Weyerhaeuser included in this joint proxy statement/prospectus are preliminary, and Weyerhaeuser’s actual financial position and operations after the merger may differ materially from the unaudited pro forma financial data included in this joint proxy statement/prospectus.

The unaudited pro forma financial data for Weyerhaeuser included in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Weyerhaeuser’s actual financial position or operations would have been had the merger been completed on the dates indicated. Weyerhaeuser’s actual results and financial position after the merger may differ materially and adversely from the unaudited pro forma financial data included in this joint proxy statement/prospectus. Further, the combined company may recognize goodwill in the merger as part of acquisition accounting. Any goodwill would be subject to annual impairment assessments and a non-cash charge may be necessary if the results of operations and cash flows are unable to support the goodwill subsequent to the merger. For more information see the sections entitled “Summary—Summary Unaudited Pro Forma Combined Condensed Financial Information” beginning on page [•] and “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [•].

The internal financial forecasts for Weyerhaeuser and Plum Creek included in this joint proxy statement/prospectus reflect management estimates and Weyerhaeuser’s and Plum Creek’s actual performance may differ materially from the internal financial forecasts included in this joint proxy statement/prospectus.

The internal financial forecasts for Weyerhaeuser and Plum Creek included in this joint proxy statement/prospectus were prepared based on information Weyerhaeuser and Plum Creek, as applicable, had at the time of preparation and reflect factors and assumptions that are subject to change and do not necessarily reflect current factors and assumptions that Weyerhaeuser’s or Plum Creek’s, as applicable, management may have about their respective businesses. As a result, actual results may differ materially from these internal financial forecasts. The inclusion of these internal forecasts in this joint proxy statement/prospectus should not be regarded as an indication that Weyerhaeuser, Plum Creek or any other recipient of the financial forecasts considered, or now considers, these forecasts to be material or predictive of future results.

While presented with numeric specificity, these internal financial forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Weyerhaeuser and Plum Creek. Important factors that may affect actual results and cause the internal financial forecasts to not be achieved include risks and uncertainties relating to Weyerhaeuser’s and Plum Creek’s businesses, industry performance, commodity price trends, the regulatory environment, general business and economic conditions and other factors described under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•] and “Risk Factors” beginning on page [•] and in Weyerhaeuser’s and Plum Creek’s respective Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by any subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and are incorporated by reference into this joint proxy statement/prospectus. Since the forecasts cover multiple years, this information by its nature becomes less meaningful and predictive with each successive year.

The internal financial forecasts were not prepared for the purpose of public disclosure, nor were they prepared in compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to these internal financial forecasts. The reports of the independent registered public accounting firms incorporated by reference into this joint proxy statement/prospectus relate to Weyerhaeuser’s and Plum Creek’s historical financial information and do not extend to these internal financial forecasts and should not be read to do so. These internal financial forecasts were based on internal management reporting that may differ from Weyerhaeuser’s and Plum Creek’s external public reporting.

None of Weyerhaeuser, Plum Creek or their respective affiliates, advisors, officers, directors or other representatives can provide any assurance that actual results will not differ from these internal financial forecasts, and none of them undertakes any obligation to update, or otherwise revise or reconcile, these internal financial

 

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forecasts to reflect circumstances existing after the time of preparation or to reflect the occurrence of subsequent events even in the event that any or all of the factors or assumptions underlying the forecasts are shown to be in error. For more information see the sections entitled “The Issuance of Weyerhaeuser Shares and the Adoption of the Merger Agreement—Certain Weyerhaeuser Forecasts” beginning on page [•] and “—Certain Plum Creek Forecasts” beginning on page [•].

Weyerhaeuser’s future results will suffer if the combined company does not effectively manage its expanded operations following the merger.

Following the merger, the size of the business of the combined company will increase significantly beyond the current size of either Weyerhaeuser’s or Plum Creek’s current businesses. In addition, the combined company may continue to expand its operations through additional acquisitions or other strategic transactions. Weyerhaeuser’s future success depends, in part, upon its ability to manage its expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances that the combined company will be successful or that it will realize the expected economies of scale, synergies and other benefits currently anticipated from the merger or anticipated from any additional acquisitions or strategic transactions.

Weyerhaeuser cannot assure you that it will be able to continue paying dividends at the current rate.

As noted elsewhere in this joint proxy statement/prospectus, Weyerhaeuser plans to continue its current dividend practices following the merger. However, you should be aware that Weyerhaeuser shareholders may not receive the same dividends following the merger for reasons that may include any of the following factors:

 

•

the combined company may not have enough cash to pay such dividends due to changes in Weyerhaeuser’s cash requirements, capital spending plans, cash flow or financial position;

 

•

while the dividend practices of Weyerhaeuser involve the distribution of a portion of Weyerhaeuser’s cash available to pay dividends, the Weyerhaeuser board could change its practices at any time;

 

•

the actual amount of dividends distributed and the decision to make any distribution will remain at all times entirely at the discretion of the Weyerhaeuser board; and

 

•

the amount of dividends that Weyerhaeuser may distribute is subject to restrictions under Washington law.

Weyerhaeuser’s shareholders should be aware that they have no contractual or other legal right to dividends.

The Weyerhaeuser common shares to be received by Plum Creek stockholders as a result of the merger will have different rights from the shares of Plum Creek common stock currently held by Plum Creek stockholders.

Upon completion of the merger, Plum Creek stockholders will become Weyerhaeuser shareholders and their rights as shareholders will be governed by the WBCA and Weyerhaeuser’s Restated Articles of Incorporation (referred to as the “Weyerhaeuser articles of incorporation”) and Weyerhaeuser’s Bylaws (referred to as the “Weyerhaeuser bylaws”). The rights associated with Weyerhaeuser common shares are different from the rights associated with shares of Plum Creek common stock. See the section entitled “Comparison of Rights of Weyerhaeuser Shareholders and Plum Creek Stockholders” beginning on page [•] for a discussion of the different rights associated with Weyerhaeuser common shares.

The credit ratings of the combined company or its subsidiaries may be different from what the companies currently expect.

Weyerhaeuser has evaluated the expected credit rating of the combined company and anticipates that the combined company will continue to maintain an investment grade long-term credit rating, including following

 

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any incurrence of new indebtedness in connection with the previously announced $2.5 billion share repurchase program. Weyerhaeuser’s credit ratings impact the cost and availability of future borrowings, and, as a result, Weyerhaeuser’s cost of capital. Weyerhaeuser’s ratings reflect each rating organization’s opinion of Weyerhaeuser’s financial strength, operating performance and ability to meet Weyerhaeuser’s debt obligations. Each of the ratings organizations reviews Weyerhaeuser’s ratings periodically, and there can be no assurance that Weyerhaeuser’s current ratings will be maintained in the future. Any future downgrades in Weyerhaeuser’s ratings could adversely affect Weyerhaeuser’s businesses, cash flows, financial condition and operating results.

Weyerhaeuser faces intense competition in its markets, and the failure to compete effectively could have a material adverse effect on its business, financial condition and results of operations.

Weyerhaeuser competes with North American and, for many of Weyerhaeuser’s product lines, global producers, some of which may have greater financial resources and lower production costs than Weyerhaeuser does. The principal basis for competition for many of Weyerhaeuser’s products is selling price. Weyerhaeuser’s ability to maintain satisfactory margins depends in large part on Weyerhaeuser’s ability to control its costs. Weyerhaeuser’s industries also are particularly sensitive to other factors, including innovation, design, quality and service, with varying emphasis on these factors depending on the product line. To the extent that one or more of Weyerhaeuser’s competitors become more successful with respect to any key competitive factor, Weyerhaeuser’s ability to attract and retain customers could be materially adversely affected. If Weyerhaeuser is unable to compete effectively, such failure could have a material adverse effect on its business, financial condition and results of operations.

Historically, Canada has been a significant source of lumber for the U.S. market, particularly in the new home construction market. After years of trade disputes over Canadian lumber imports, the U.S. and Canada executed a definitive agreement establishing a system of tiered taxes and/or volume restrictions relating to Canadian lumber imports to the U.S. However, this agreement expired in October 2015, and it is uncertain when or if a new agreement will be reached, and if reached what the terms of a new agreement would be. Moreover, even if a new agreement is reached, there can be no assurance that it will at all times, or at any time, effectively create a fair trade environment. Therefore, downward pressure on domestic timber and lumber prices caused by Canadian imports could continue or increase.

Other Risk Factors of Weyerhaeuser and Plum Creek

Weyerhaeuser’s and Plum Creek’s businesses are and will be subject to the risks described above. In addition, Weyerhaeuser and Plum Creek are, and will continue to be, subject to the risks described in Weyerhaeuser’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and Plum Creek’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, respectively, in each case, as updated by any subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and are incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [•] for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

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THE COMPANIES

The Companies

Weyerhaeuser Company

Weyerhaeuser Company

33663 Weyerhaeuser Way South

Federal Way, Washington 98003

Telephone: (253) 924-2345

Weyerhaeuser Company began operations in 1900 and is one of the world’s largest private owners of timberlands. It owns or controls nearly 7 million acres of timberlands, primarily in the U.S., and manages additional timberlands under long-term licenses in Canada. Weyerhaeuser manages these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. Weyerhaeuser is also one of the largest manufacturers of wood and cellulose fibers products. Weyerhaeuser is a real estate investment trust. In 2014, its continuing operations generated $7.4 billion in sales and employed approximately 12,800 people who serve customers worldwide. Weyerhaeuser is listed on the Dow Jones World Sustainability Index.

Weyerhaeuser’s common shares are listed on the NYSE under the symbol “WY”.

Additional information about Weyerhaeuser and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [•].

Plum Creek Timber Company, Inc.

Plum Creek Timber Company, Inc.

601 Union Street, Suite 3100

Seattle, Washington 98101

Telephone: (800) 858-5347

Plum Creek is among the largest and most geographically diverse private landowners in the U.S. As of September 30, 2015, Plum Creek owned and managed approximately 6.3 million acres of timberlands in the Northwest, Southern and Northeast United States. Plum Creek also operates wood products mills in the Northwest. Plum Creek manages its working forests using sustainable practices to benefit its many stakeholders. Plum Creek seeks to maximize the long-term value of its timberland assets in many different ways, including harvesting the trees, selling the timberland or converting its trees to lumber, plywood or other wood products. Plum Creek is a real estate investment trust. In 2014, Plum Creek had total revenues of $1.48 billion and, as of December 31, 2014, approximately 1,325 employees.

Plum Creek’s common stock is listed on the NYSE under the symbol “PCL”.

Additional information about Plum Creek and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [•].

 

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THE WEYERHAEUSER SPECIAL MEETING

Date, Time and Place

The special meeting of Weyerhaeuser shareholders will be held at [•], on [•], 2016 at [•], local time, unless adjourned or postponed to a later date or time.

Purpose of the Weyerhaeuser Special Meeting

At the Weyerhaeuser special meeting, Weyerhaeuser shareholders will be asked:

 

•

to consider and vote on a proposal to approve the issuance of Weyerhaeuser common shares, par value $1.25 per share, in connection with the merger contemplated by the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus (referred to as the “share issuance proposal”); and

 

•

to consider and vote on a proposal to adjourn the Weyerhaeuser special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the share issuance proposal (referred to as the “Weyerhaeuser adjournment proposal”).

Recommendation of the Weyerhaeuser Board

At its meeting on November 6, 2015, the Weyerhaeuser board unanimously (1) approved and adopted the merger agreement, (2) approved the merger upon the terms and subject to the conditions set forth in the merger agreement and (3) approved the issuance by Weyerhaeuser of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to and in accordance with the terms and conditions of the merger agreement.

Accordingly, the Weyerhaeuser board unanimously recommends that the Weyerhaeuser shareholders vote “FOR” each of the share issuance proposal and the Weyerhaeuser adjournment proposal.

Weyerhaeuser Record Date; Shareholders Entitled to Vote

Only holders of record of Weyerhaeuser common shares as of the close of business on [•], the record date for the Weyerhaeuser special meeting, will be entitled to notice of, and to vote at, the Weyerhaeuser special meeting and any adjournments or postponements of the Weyerhaeuser special meeting. A list of shareholders of record entitled to vote at the Weyerhaeuser special meeting will be available beginning 10 days prior to the Weyerhaeuser special meeting, and continuing through the Weyerhaeuser special meeting, at Weyerhaeuser’s executive offices and principal place of business at 33663 Weyerhaeuser Way South, Federal Way, Washington 98003 for inspection by shareholders during ordinary business hours for any purpose germane to the Weyerhaeuser special meeting. The list will also be available at the Weyerhaeuser special meeting for examination by any shareholder of record present at the Weyerhaeuser special meeting.

As of the close of business on the record date for the Weyerhaeuser special meeting, there were outstanding a total of approximately [•] Weyerhaeuser common shares entitled to vote at the Weyerhaeuser special meeting.

Quorum

A quorum is necessary to transact business at the Weyerhaeuser special meeting. The presence, in person or by proxy, of holders of a majority of Weyerhaeuser’s outstanding common shares is required to constitute a quorum for the transaction of business at the Weyerhaeuser special meeting. Abstentions and “broker non-votes” (shares held by banks, brokers or other holders of record that are present, in person or by proxy, at the Weyerhaeuser special meeting but with respect to which the bank, broker or other holder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the bank, broker or other holder of record does not have discretionary voting power on such proposal) will be counted as present for purposes of determining the presence of a quorum.

 

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Required Vote

Approval of the share issuance proposal requires the votes cast favoring the share issuance exceed the votes cast opposing it. Approval of the Weyerhaeuser adjournment proposal requires that the votes cast favoring the Weyerhaeuser adjournment proposal exceed the votes cast opposing it.

Abstentions and Broker Non-Votes

The following will not be considered votes cast and will not count towards the approval of the share issuance proposal or the Weyerhaeuser adjournment proposal:

 

•

broker non-votes; and

 

•

a share otherwise present at the Weyerhaeuser special meeting as to which a shareholder gives no authority or direction.

Under the current rules and guidance of the NYSE, “votes cast” on the share issuance proposal consist of votes cast favoring the share issuance proposal, votes cast opposing the share issuance proposal and abstentions. As a result, if you mark your proxy or voting instructions to abstain, it will count as a vote against the approval of the share issuance proposal. Abstentions will not be considered votes cast and will not count towards the approval of the Weyerhaeuser adjournment proposal.

Voting Information

You may vote your shares in one of several ways, depending how you own your common shares.

If you are a Weyerhaeuser shareholder of record (that is, if your shares are registered in your own name with Weyerhaeuser’s transfer agent), you can vote any one of four ways:

 

•

Voting on the Internet: Go to the Internet website specified on your proxy card and follow the instructions. You will need to have your control number (from your notice or proxy card) with you when you go to the website.

 

•

Voting by Telephone: Call the toll-free number specified on your proxy card and follow the instructions. You will need to have your control number (from your notice or proxy card) with you when you call.

 

•

Voting by Mail: Mark, sign, date and return your proxy card in the postage-paid envelope provided in advance of the Weyerhaeuser special meeting.

 

•

Voting at the Weyerhaeuser Special Meeting: If you decide to attend the Weyerhaeuser special meeting and vote in person, you may deposit your proxy card in the ballot box at the registration desk at the Weyerhaeuser special meeting or you may complete a ballot that will be distributed at the Weyerhaeuser special meeting.

If a proxy is returned without an indication as to how the Weyerhaeuser common shares represented are to be voted with regard to a particular proposal, the Weyerhaeuser common shares represented by the proxy will be voted in favor of each such proposal. As of the date of this joint proxy statement/prospectus, Weyerhaeuser management has no knowledge of any business that will be presented for consideration at the Weyerhaeuser special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related Weyerhaeuser proxy card other than the matters set forth in Weyerhaeuser’s Notice of Special Meeting of Shareholders. If any other matter is properly presented at the Weyerhaeuser special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

 

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If you are a beneficial owner of shares held in street name (that is, if you hold your shares through a bank, broker or other holder of record), you should follow the voting instructions you receive from the holder of record to vote your shares. The bank, broker or other holder of record must receive explicit voting instructions from you to be able to vote on the share issuance proposal and the Weyerhaeuser adjournment proposal, each of which is considered to be non-routine under the applicable rules of the New York Stock Exchange. Banks, brokers and other holders of record do not have discretion to vote on non-routine matters unless the beneficial owner of the shares has given explicit voting instructions. Consequently, if you do not give your bank, broker or other holder of record explicit instructions, your shares will not be voted on the share issuance proposal or the Weyerhaeuser adjournment proposal and will be considered “broker non-votes” on these proposals.

Please note that if your shares are held in street name, and you wish to vote in person at the Weyerhaeuser special meeting, you must bring to the special meeting a “legal proxy” executed in your favor from the record holder (your bank, broker or other holder of record) of the shares authorizing you to vote at the Weyerhaeuser special meeting.

Your vote is very important. Accordingly, whether or not you expect to attend the Weyerhaeuser special meeting in person, we urge you to vote your shares as promptly as possible.

How Proxies Are Counted

All shares represented by properly executed proxies received in time for the Weyerhaeuser special meeting will be voted at the special meeting in the manner specified by the shareholder giving those proxies. Properly executed proxies that do not contain voting instructions with respect to the share issuance proposal or the Weyerhaeuser adjournment proposal will be voted “FOR” that proposal.

Participants in Benefit Plans

If you hold Weyerhaeuser common shares in the Weyerhaeuser Company 401(k) or Weyerhaeuser Company Ltd. Investment Growth Plans (referred to as the “Plans”), such shares will be voted by the Trustee as you indicated on your proxy card. If the proxy card is signed and returned without specific instructions for voting, such shares will be voted in accordance with the recommendations of the Weyerhaeuser board. If the proxy card received by the Trustee is not signed or if the proxy card is not received by the Trustee, you will be treated as directing the Trustee to vote your Weyerhaeuser common shares held in the Plans in the same proportion as the Weyerhaeuser common shares for which the Trustee has received timely instructions from other participants in the Plans, unless to do so would be inconsistent with Title I of the Employee Retirement Income Security Act of 1974.

Revocation of Proxies

You have the right to revoke your proxy at any time before your shares are voted by proxy at the Weyerhaeuser special meeting. You may revoke your proxy by delivering a signed statement to Weyerhaeuser’s Corporate Secretary at or prior to the Weyerhaeuser special meeting or by timely executing and delivering, by Internet, telephone, mail or in person at the Weyerhaeuser special meeting, another proxy dated as of a later date.

If your shares are held in “street name” by your bank, broker or other holder of record, you should contact your bank, broker or other holder of record to change your vote or revoke your proxy.

Attending the Weyerhaeuser Special Meeting

Attendance at the Weyerhaeuser special meeting is limited to holders of Weyerhaeuser common shares. Holders of Weyerhaeuser’s 6.375% Mandatory Convertible Preference Shares, Series A, are not entitled to vote at the Weyerhaeuser special meeting. If you are a shareholder of record and you plan to attend the Weyerhaeuser

 

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special meeting, please be prepared to provide proper photo identification, such as a driver’s license. If you are a street name shareholder and you plan to attend the Weyerhaeuser special meeting, you must present proof of your ownership of Weyerhaeuser common shares as of the record date for the Weyerhaeuser special meeting. Acceptable proof would be an original bank or brokerage account statement as of the record date. You also must present photo identification to be admitted. If you arrive at the meeting without proof of your ownership of Weyerhaeuser common shares as of the record date or without proper photo identification, you will not be admitted to the meeting.

If you are a street name shareholder and you wish to vote in person at the Weyerhaeuser special meeting, you must also bring to the Weyerhaeuser special meeting a “legal proxy” executed in your favor from the record holder (your bank, broker or other holder of record) of the shares authorizing you to vote at the Weyerhaeuser special meeting.

If you are hearing impaired or require other special accommodations due to disability, please contact Weyerhaeuser’s Corporate Secretary prior to the meeting to indicate the accommodations that you will need. No banners, placards, signs, literature for distribution, cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Weyerhaeuser special meeting.

Tabulation of Votes

Weyerhaeuser has appointed one or more representatives of Computershare Inc. to serve as the inspector of election for the Weyerhaeuser special meeting. The inspector of election will, among other matters, determine the number of shares represented at the Weyerhaeuser special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to Weyerhaeuser shareholders.

Solicitation of Proxies

In accordance with the merger agreement, the cost of proxy solicitation for the Weyerhaeuser special meeting will be borne by Weyerhaeuser. In addition to the use of the mail, proxies may be solicited by officers and directors and other employees of Weyerhaeuser, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Weyerhaeuser will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. Weyerhaeuser has retained Innisfree M&A Incorporated to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $25,000, plus reasonable expenses, for these services.

Voting by Weyerhaeuser Directors and Executive Officers

As of the close of business on the record date for the Weyerhaeuser special meeting, approximately [•]% of the outstanding Weyerhaeuser common shares were held by Weyerhaeuser directors and executive officers and their affiliates. We currently expect that Weyerhaeuser’s directors and executive officers will vote their shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Adjournments

If a quorum is not present or represented, the shareholders entitled to vote at the Weyerhaeuser special meeting, present in person or represented by proxy, shall have power to adjourn the Weyerhaeuser special meeting from time to time, without notice other than announcement at the Weyerhaeuser special meeting, until a quorum is present or represented. If a quorum is present at the Weyerhaeuser special meeting but there are not

 

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sufficient votes at the time of the Weyerhaeuser special meeting to approve the share issuance proposal, then Weyerhaeuser shareholders may be asked to vote on the Weyerhaeuser adjournment proposal. If the Weyerhaeuser special meeting is adjourned for more than 120 days, the Weyerhaeuser board must fix a new record date for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each Weyerhaeuser shareholder of record entitled to vote at the Weyerhaeuser special meeting. At any subsequent reconvening of the Weyerhaeuser special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the Weyerhaeuser special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Weyerhaeuser special meeting, please contact Innisfree M&A Incorporated at 510 Madison Avenue, 20th Floor, New York, NY 10022, toll-free from the U.S. and Canada at (877) 800-5185, +1 (412) 232-3651 from other locations, banks and brokers may call collect at +1 (212) 750-5833.

 

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THE PLUM CREEK SPECIAL MEETING

Date, Time and Place

The special meeting of Plum Creek stockholders will be held at [•], on [•], 2016 at [•], local time, unless adjourned or postponed to a later date or time.

Purpose of the Plum Creek Special Meeting

At the Plum Creek special meeting, Plum Creek stockholders will be asked:

 

•

to consider and vote on a proposal to adopt the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus, pursuant to which Plum Creek will be merged with and into Weyerhaeuser and each outstanding share of Plum Creek common stock will be converted into the right to receive 1.60 Weyerhaeuser common shares (referred to as the “merger proposal”);

 

•

to consider and vote on a proposal to adjourn the Plum Creek special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the merger proposal (referred to as the “Plum Creek adjournment proposal”); and

 

•

to consider and vote on a non-binding, advisory proposal to approve the compensation that may be paid or become payable to Plum Creek’s named executive officers in connection with the completion of the merger (referred to as the “compensation proposal”).

Recommendation of the Plum Creek Board

After careful consideration, the Plum Creek board, on November 6, 2015, unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable, fair to and in the best interests of Plum Creek and its stockholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger.

Accordingly, the Plum Creek board unanimously recommends that Plum Creek stockholders vote “FOR” each of the merger proposal, the Plum Creek adjournment proposal and the compensation proposal.

Plum Creek Record Date; Stockholders Entitled to Vote

Only holders of record of shares of Plum Creek common stock as of the close of business on [•], the record date for the Plum Creek special meeting, will be entitled to notice of, and to vote at, the Plum Creek special meeting and any adjournments or postponements of the Plum Creek special meeting. A list of stockholders of record of Plum Creek entitled to vote at the Plum Creek special meeting will be available for 10 days before the Plum Creek special meeting at Plum Creek’s executive offices and principal place of business at 601 Union Street, Suite 3100, Seattle, Washington 98101-1374 for inspection by stockholders during ordinary business hours for any purpose germane to the Plum Creek special meeting. The list will also be available at the Plum Creek special meeting for examination by any stockholder of record present at the special meeting.

As of the close of business on the record date for the Plum Creek special meeting, there were outstanding a total of approximately [•] shares of Plum Creek common stock entitled to vote at the Plum Creek special meeting.

Quorum

A quorum is necessary to transact business at the Plum Creek special meeting. Stockholders who hold at least a majority of the issued and outstanding shares of Plum Creek common stock as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a

 

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quorum for the transaction of business at the Plum Creek special meeting. Shares of Plum Creek common stock represented at the Plum Creek special meeting but not voted, including shares for which a stockholder directs an “abstention” from voting, will be counted as present for purposes of establishing a quorum. Broker non-votes (shares held by banks, brokers or other holders of record that are present, in person or by proxy, at the Plum Creek special meeting but with respect to which the bank, broker or other holder of record is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the bank, broker or other holder of record does not have discretionary voting power on such proposal) will be counted as present for purposes of determining the presence of a quorum.

Required Vote

Approval of the merger proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Plum Creek common stock entitled to vote at the Plum Creek special meeting. Approval of the Plum Creek adjournment proposal and the compensation proposal each requires that votes cast “FOR” exceed the votes cast “AGAINST” each proposal (with abstentions and broker non-votes not considered votes cast).

Abstentions and Broker Non-Votes

If you fail to vote, fail to instruct your bank, broker or other holder of record to vote, or vote to abstain, it will have the same effect as a vote against the merger proposal. If you fail to vote, fail to instruct your bank, broker or older of record to vote, or mark your proxy or voting instructions to abstain, it will have no effect on the Plum Creek adjournment proposal or the compensation proposal, assuming that a quorum is present.

Voting Options

If you are a Plum Creek stockholder of record (that is, if your shares are registered in your own name with Plum Creek’s transfer agent), you can vote any one of four ways:

 

•

Voting on the Internet: Go to the Internet website specified on your proxy card and follow the instructions. You will need to have your control number (from your notice or proxy card) with you when you go to the website.

 

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Voting by Telephone: Call the toll-free number specified on your proxy card and follow the instructions. You will need to have your control number (from your notice or proxy card) with you when you call.

 

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Voting by Mail: Mark, sign, date and return your proxy card in the postage-paid envelope provided in advance of the Plum Creek special meeting.

 

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Voting at the Plum Creek Special Meeting: If you decide to attend the Plum Creek special meeting and vote in person, you may deposit your proxy card in the ballot box at the registration desk at the Plum Creek special meeting or you may complete a ballot that will be distributed at the Plum Creek special meeting.

Voting in Person

If you plan to attend the Plum Creek special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note, however, that if your shares are held in “street name”, and you wish to vote at the special meeting, you must bring to the special meeting a “legal proxy” executed in your favor from the record holder (your bank, broker or other holder of record) of the shares authorizing you to vote at the special meeting. In addition, if you are a registered stockholder, please be prepared to provide proper identification, such as a driver’s license or passport. If you hold your shares in “street name”, you will need to provide proof of ownership, such as a recent account statement or letter from your bank, broker or other holder of record proving ownership on the Plum Creek record date, along with proper identification. Stockholders will not be allowed to use cameras, recording devices and other similar electronic devices at the meeting.

 

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Voting of Proxies

A proxy card is enclosed for your use. Plum Creek requests that you mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope. When the accompanying proxy is returned properly executed, the shares of Plum Creek common stock represented by it will be voted at the Plum Creek special meeting or any adjournment thereof in accordance with the instructions contained in the proxy.

If a proxy is returned without an indication as to how the shares of Plum Creek common stock represented are to be voted with regard to a particular proposal, the Plum Creek common stock represented by the proxy will be voted in favor of each such proposal. As of the date of this joint proxy statement/prospectus, Plum Creek management has no knowledge of any business that will be presented for consideration at the Plum Creek special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related Plum Creek proxy card other than the matters set forth in Plum Creek’s Notice of Special Meeting of Stockholders. If any other matter is properly presented at the Plum Creek special meeting for consideration, it is intended that the persons named in the enclosed form of proxy and acting thereunder will vote in accordance with their best judgment on such matter.

Your vote is very important. Accordingly, whether or not you plan to attend the Plum Creek special meeting in person, we urge you to vote your shares as promptly as possible.

How Proxies Are Counted

All shares represented by properly executed proxies received in time for the Plum Creek special meeting will be voted at the meeting in the manner specified by the stockholder giving those proxies. Properly executed proxies that do not contain voting instructions with respect to the merger proposal, the Plum Creek adjournment proposal or the compensation proposal will be voted “FOR” that proposal.

Shares Held in “Street Name”

If you hold your shares in a stock brokerage account or if your shares are held by a bank, broker or other holder of record (that is, in street name), you must provide the bank, broker or other holder of record of your shares with instructions on how to vote your shares if you wish them to be counted. Please follow the voting instructions provided by your bank, broker or other holder of record. Please note that you may not vote shares held in street name by returning a proxy card directly to Plum Creek or by voting in person at your special meeting unless you provide a “legal proxy”, which you must obtain from your bank, broker or other holder of record. Further, banks, brokers or other holders of record who hold shares of Plum Creek common stock on behalf of their customers may not give a proxy to Plum Creek to vote those shares without specific instructions from their customers.

If you do not instruct your broker on how to vote your shares of Plum Creek common stock, your bank, broker or other holder of record may not vote your shares, which will have the same effect as a vote against the merger proposal. If you do not instruct your broker on how to vote your shares of Plum Creek common stock, it will have no effect on the Plum Creek adjournment proposal and the compensation proposal, assuming that a quorum is present.

Revocation of Proxies

You have the power to revoke your proxy at any time before your proxy is voted at the Plum Creek special meeting. You can revoke your proxy in one of four ways:

 

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by sending a signed notice of revocation to Plum Creek’s Corporate Secretary at 601 Union Street, Suite 3100, Seattle, Washington 98101-1374 no later than the beginning of the Plum Creek special meeting;

 

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by properly submitting a new, valid proxy bearing a later date, which must be received before your votes are counted at the Plum Creek special meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked);

 

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by submitting a proxy via Internet or by telephone no later than 11:59 p.m. Eastern Time on the day before the Plum Creek special meeting (in which case only the later-dated proxy is counted and the earlier proxy is revoked); or

 

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if you are a holder of record, you can attend the Plum Creek special meeting and vote in person, which will automatically cancel any proxy previously given, or you can revoke your proxy in person, but your attendance alone will not revoke any proxy that you have previously given.

If your shares are held in “street name” by your bank, broker or other holder of record, you should contact your bank, broker or other holder of record to change your vote or revoke your proxy.

Tabulation of Votes

Plum Creek has appointed one or more representatives of Broadridge Financial Services, Inc. to serve as the inspector of election for the Plum Creek special meeting. The inspector of election will, among other matters, determine the number of shares represented at the Plum Creek special meeting to confirm the existence of a quorum, determine the validity of all proxies and ballots and certify the results of voting on all proposals submitted to the Plum Creek stockholders.

Solicitation of Proxies

In accordance with the merger agreement, the cost of proxy solicitation for the Plum Creek special meeting will be borne by Plum Creek. In addition to the use of the mail, proxies may be solicited by officers and directors and other employees of Plum Creek, some of whom may be considered participants in the solicitation, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Plum Creek will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. Plum Creek has retained Georgeson Inc. to assist in its solicitation of proxies for a fee of approximately $17,500, plus reasonable out-of-pocket expenses.

Voting by Plum Creek Directors and Executive Officers

As of the close of business on the record date for the Plum Creek special meeting, approximately [•]% of the outstanding shares of Plum Creek common stock were held by Plum Creek directors and executive officers and their affiliates. We currently expect that Plum Creek’s directors and executive officers will vote their shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Adjournments

If a quorum is not present or represented, the stockholders entitled to vote at the Plum Creek special meeting, present in person or represented by proxy, shall have power to adjourn the Plum Creek special meeting from time to time, without notice other than announcement at the Plum Creek special meeting, until a quorum is present or represented. If a quorum is present at the Plum Creek special meeting but there are not sufficient votes at the time of the Plum Creek special meeting to approve the merger proposal, then Plum Creek stockholders may be asked to vote on the Plum Creek adjournment proposal. No notices of an adjourned meeting need be given unless the adjournment is for more than 30 days or, if after the adjournment, a new record date is fixed for the adjourned meeting, in which case a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the Plum Creek special meeting. At any subsequent reconvening of the Plum Creek

 

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special meeting at which a quorum is present, any business may be transacted that might have been transacted at the original meeting and all proxies will be voted in the same manner as they would have been voted at the original convening of the Plum Creek special meeting, except for any proxies that have been effectively revoked or withdrawn prior to the time the proxy is voted at the reconvened meeting.

Assistance

If you need assistance in completing your proxy card or have questions regarding the Plum Creek special meeting, please contact Plum Creek’s investor relations department:

Plum Creek Timber Company, Inc.

601 Union Street, Suite 3100

Seattle, Washington 98101-1374

(800) 858-5347 (within the United States and Canada)

(206) 467-3600 (outside the United States and Canada, call collect)

Attn: Investor Relations

or

Georgeson Inc.

480 Washington Blvd., 26th Floor

Jersey City, New Jersey 07310

(888) 867-6963 (toll-free)

 

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WEYERHAEUSER PROPOSAL 1 AND PLUM CREEK PROPOSAL 1: THE ISSUANCE OF WEYERHAEUSER SHARES AND THE ADOPTION OF THE MERGER AGREEMENT

Effects of the Merger

On the closing date, Plum Creek will merge with and into Weyerhaeuser. At the effective time of the merger, the separate corporate existence of Plum Creek will cease and Weyerhaeuser will continue as the surviving entity in the merger. Subject to the terms and conditions of the merger agreement, upon completion of the merger, each share of Plum Creek common stock issued and outstanding immediately prior to the completion of the merger (other than shares of Plum Creek common stock owned by Plum Creek as treasury stock) will be converted into the right to receive 1.60 Weyerhaeuser common shares with cash paid in lieu of fractional shares. This exchange ratio is fixed and will not be adjusted for changes in the market price of either Weyerhaeuser common shares or shares of Plum Creek common stock prior to the merger.

Background of the Merger

The Plum Creek board and management regularly review Plum Creek’s performance, prospects and strategy in light of the current business and economic environment, as well as developments in the timber industry and opportunities and challenges facing participants in that industry. These reviews have included consideration, from time to time, of potential strategic alternatives, including strategic acquisitions and divestitures, a sale of the company and remaining an independent, standalone entity.

The Weyerhaeuser board and management regularly review Weyerhaeuser’s performance, prospects and strategy in light of the current business and economic environment, as well as developments in the timber industry and opportunities and challenges facing participants in that industry. These reviews have included consideration, from time to time, of potential strategic alternatives, including strategic acquisitions and divestitures, business combination transactions and remaining an independent, standalone entity.

During the second half of 2012, Weyerhaeuser’s chief executive officer at the time and Rick R. Holley, chief executive officer of Plum Creek, engaged in a series of preliminary discussions about a possible business combination transaction. Charles R. Williamson, chairman of the Weyerhaeuser board, and John F. Morgan, chairman of the Plum Creek board, also engaged in a series of discussions about a possible business combination transaction. As part of these discussions Weyerhaeuser and Plum Creek executed a reciprocal non-disclosure agreement in August 2012. After a series of discussions, the parties were unable to come to an agreement on transaction structure to move forward, and these discussions terminated towards the end of 2012.

On October 2, 2014, at the request of an institutional investor (referred to as “Party A”), Mr. Holley and Russell Hagen, Plum Creek’s senior vice president of Business Development, met with representatives of Party A. Party A expressed an interest in learning more about Plum Creek and potentially investing in or acquiring some or all of Plum Creek.

On October 15, 2014, the Weyerhaeuser board held a regular meeting. Members of Weyerhaeuser management also attended the meeting. At this meeting, which was unrelated to Plum Creek’s discussions with Party A, Doyle R. Simons, president and chief executive officer of Weyerhaeuser, discussed the growth opportunities for Weyerhaeuser generally, including with respect to the timberlands business. Mr. Simons also discussed a potential combination with Plum Creek and outlined the rationale for approaching Plum Creek. Members of Weyerhaeuser management provided background materials on Plum Creek. After discussion, members of the Weyerhaeuser board authorized Mr. Simons to contact Mr. Holley to explore the possibility of a transaction.

On October 22, 2014, at the request of Mr. Simons, Mr. Holley met with Mr. Simons. At this meeting, Mr. Simons indicated that Weyerhaeuser was interested in acquiring Plum Creek at a premium of 10% to 15%

 

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per share of Plum Creek common stock (reflecting an implied share price of $45 to $47 per share), payable in a mix of cash and Weyerhaeuser common shares. Mr. Simons indicated that Weyerhaeuser would be willing to give Plum Creek board representation consistent with this valuation and management would be based on the principle of “best person for the job”. Mr. Holley indicated that he did not believe the Plum Creek board would be interested in engaging in discussions on a potential transaction with Weyerhaeuser unless the acquisition price was in excess of $50.

On October 24, 2014, the Plum Creek board held a special meeting, at which members of Plum Creek management were present. At this meeting, Mr. Holley updated the Plum Creek board on the discussions Mr. Holley had with Mr. Simons, as well as Mr. Holley’s discussions with Party A. The Plum Creek board concurred with Mr. Holley’s assessment that the acquisition price in Weyerhaeuser’s proposal was not acceptable and not a basis to commence discussions.

On October 29, 2014, Mr. Holley called Mr. Simons and conveyed that the Plum Creek board had met to discuss Weyerhaeuser’s proposal and that the Plum Creek board was planning to discuss Weyerhaeuser’s proposal further at a regularly scheduled meeting of the Plum Creek board on November 4, 2014.

On November 4, 2014, the Plum Creek board held a regular meeting, at which Plum Creek management was present. At this meeting, Mr. Holley discussed Weyerhaeuser’s proposal with the Plum Creek board. The Plum Creek board directed Mr. Holley to reject Weyerhaeuser’s proposal for a number of reasons, including that Plum Creek’s internal valuations for Plum Creek were higher than the value reflected in Weyerhaeuser’s proposal and the cash portion of Weyerhaeuser’s proposal reduced the after-tax value of the proposal to Plum Creek’s stockholders. Following this meeting, Mr. Holley telephoned Mr. Simons and communicated to Mr. Simons that Weyerhaeuser’s verbal proposal was not acceptable. Mr. Holley further noted that any offer would have to involve a premium over Plum Creek’s 52-week high at the time (which was $46.99 per share on December 23, 2013), in order to be considered by Plum Creek.

On November 10, 2014, the Weyerhaeuser board held a special meeting. Members of Weyerhaeuser management and representatives of Morgan Stanley & Co. LLC (referred to as “Morgan Stanley”) also attended the meeting. At this meeting, Mr. Simons provided an update on his recent discussions with Mr. Holley, and the Weyerhaeuser board discussed the key messages from these recent discussions, including with respect to Plum Creek’s general expectations regarding price. Mr. Simons summarized the strategic rationale for a transaction with Plum Creek and the proposed terms for a transaction with Plum Creek. At this meeting, representatives of Morgan Stanley discussed certain financial aspects of a potential transaction with Plum Creek. The Weyerhaeuser board engaged in discussions regarding the potential transaction, discussing, among other things, the rationale for the transaction, purchase price, synergies, transaction structure and post-closing dividend plans. Mr. Simons then described the proposed next steps in relation to a transaction with Plum Creek, noting that he would like to approach Mr. Holley with a written proposal with terms consistent with the terms discussed with the Weyerhaeuser board. After further discussion, the Weyerhaeuser board authorized the management team to proceed with negotiations with Plum Creek on terms consistent with those discussed.

Following this meeting, at the request of Mr. Simons, Mr. Simons and Mr. Holley spoke by telephone. During this telephone conversation, Mr. Simons outlined the terms of Weyerhaeuser’s refined proposal, which Mr. Simons indicated would be confirmed with a written proposal later that day. Shortly following this telephone call, Weyerhaeuser delivered a letter to Mr. Holley setting forth a non-binding proposal for Weyerhaeuser to acquire all of Plum Creek’s outstanding shares of common stock for a price of $48 per share, with the consideration consisting of approximately 50% cash and 50% Weyerhaeuser common shares. The letter stated that this represented a 19% premium to the Plum Creek common stock’s 30-day volume weighted average price, a 16% premium to the closing price on November 7, 2014 and an unstated premium to Plum Creek common stock’s 52-week high trading price (which was $46.99 per share on December 23, 2013). The letter stated that: (1) the post-transaction board of directors of the combined company would consist of three to four current members of the Plum Creek board, (2) Weyerhaeuser’s non-executive chairman would remain chairman of the

 

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post-transaction board of directors, (3) Mr. Simons would remain chief executive officer of the combined company following the potential transaction and (4) the other senior executives of the combined company would be determined between signing and closing of the transaction.

On November 13, 2014, the Plum Creek board held a special meeting. At this meeting, Mr. Holley reported to the Plum Creek board about Weyerhaeuser’s November 10, 2014 proposal. Representatives from Skadden, Arps, Slate, Meagher & Flom LLP (referred to as “Skadden Arps”), Plum Creek’s outside legal counsel, attended the meeting. Representatives from Goldman, Sachs & Co. (referred to as “Goldman Sachs”) were also in attendance and reviewed the proposal and the Plum Creek board’s range of response options. Plum Creek involved Goldman Sachs in considering a potential transaction with Weyerhaeuser due to Plum Creek’s prior relationship with Goldman Sachs and the expertise provided by Goldman Sachs. After discussion, the Plum Creek board determined unanimously to not proceed on the basis of Weyerhaeuser’s proposal for a number of reasons, including that Plum Creek’s internal valuations for Plum Creek were higher than the value reflected in Weyerhaeuser’s proposal and the cash portion of Weyerhaeuser’s proposal reduced the after-tax value of the proposal to Plum Creek’s stockholders. The Plum Creek board instructed Mr. Holley to convey to Mr. Simons that Plum Creek had determined to not proceed on the basis of Weyerhaeuser’s proposal.

On November 14, 2014, Mr. Holley telephoned Mr. Simons and informed him of the Plum Creek board’s response to Weyerhaeuser’s proposal. Mr. Holley noted to Mr. Simons that an offer of $48 per share of Plum Creek common stock was not sufficient and not a basis upon which to commence discussions, and that in order to be considered, any proposal would need to reflect a sufficient premium over Plum Creek’s common stock’s 52-week high and be in excess of $50 per share of Plum Creek common stock.

On November 21, 2014, the Plum Creek board held a special meeting, which was attended by representatives from Skadden Arps and Goldman Sachs. Mr. Holley updated the Plum Creek board on the status of discussions with Weyerhaeuser. Goldman Sachs provided a preliminary overview of the financial terms of Weyerhaeuser’s November 10, 2014 proposal.

On November 21, 2014, Mr. Simons called Mr. Holley to indicate that Weyerhaeuser was still interested in possibly evaluating a potential transaction with Plum Creek, and Mr. Simons and Mr. Holley scheduled a meeting for early December 2014.

On December 5, 2014, Mr. Holley and Mr. Simons met to further discuss a potential transaction. Mr. Simons indicated that he did not believe Weyerhaeuser would be able to improve upon its previous offer of $48 per share of Plum Creek common stock. Mr. Holley indicated that the proposed offer of $48 per share of Plum Creek common stock was not sufficient and not a basis upon which to commence discussions. Mr. Simons indicated that he would discuss Plum Creek’s position with the Weyerhaeuser board and then get back to Mr. Holley.

On December 17 and 18, 2014, the Weyerhaeuser board held a regular meeting. Weyerhaeuser management also attended the meeting. Mr. Simons updated the Weyerhaeuser board on recent discussions with Mr. Holley. Mr. Simons summarized his conversations with Mr. Holley and provided his perspective on Plum Creek’s expectations regarding the purchase price, noting that Plum Creek’s expectations were meaningfully above the purchase price in Weyerhaeuser’s proposal. Mr. Simons and the other members of the Weyerhaeuser board discussed a proposed response back to Mr. Holley indicating that Weyerhaeuser would not be willing to move forward with a transaction at the price communicated by Mr. Holley.

On December 19, 2014, Mr. Simons communicated to Mr. Holley that Weyerhaeuser would not be able to improve upon its offer of $48 per share, and was therefore ceasing its discussions with Plum Creek regarding a potential transaction.

On or about January 16, 2015, Party A informed Goldman Sachs that upon further evaluation, Party A had determined the scope and scale of a potential transaction was beyond Party A’s capabilities.

 

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On April 23, 2015, Mr. Simons and Mr. Holley met for a social engagement. During this meeting, Mr. Holley suggested that the parties should revisit the possibility of a transaction that could create value for Weyerhaeuser shareholders and Plum Creek stockholders. Mr. Simons agreed and suggested that they set up a meeting to continue discussions regarding the possibility of a transaction between Weyerhaeuser and Plum Creek.

On April 30, 2015, Mr. Holley and Mr. Simons met and discussed the value in a potential transaction between Weyerhaeuser and Plum Creek structured as an all-stock merger, including the potential value that could be created for both Weyerhaeuser’s shareholders and Plum Creek’s stockholders if the companies were combined.

On May 8, 2015, Mr. Simons called Mr. Holley to further discuss a potential merger between Weyerhaeuser and Plum Creek. Mr. Simons and Mr. Holley discussed potential benefits to Weyerhaeuser’s shareholders and Plum Creek’s stockholders from a combination of Weyerhaeuser and Plum Creek, and Mr. Holley noted that the Plum Creek board would be willing to further consider a potential combination of the two companies. Mr. Holley also noted that the Plum Creek board expected to conduct a strategic review at Plum Creek’s regularly scheduled board meeting in August 2015.

On May 21 and 22, 2015, the Weyerhaeuser board held a regular meeting. Weyerhaeuser management and representatives from Morgan Stanley were also in attendance. At this meeting, Mr. Simons provided an update on the recent discussions with Mr. Holley to the Weyerhaeuser board. Mr. Simons outlined the rationale for a transaction with Plum Creek, and Mr. Williamson provided additional comments on a proposed transaction. Representatives of Morgan Stanley discussed certain financial aspects of a potential all-stock merger. Members of Weyerhaeuser management outlined and proposed principal terms for negotiating a transaction with Plum Creek and the potential timeline for completing a transaction. The Weyerhaeuser board engaged in discussion regarding the transaction, including the rationale, the negotiating strategy, dividend policy and governance matters. After discussion, the Weyerhaeuser board expressed support for moving forward with negotiations with Plum Creek on terms outlined by Weyerhaeuser management.

On May 26, 2015, Weyerhaeuser delivered a proposal letter to Plum Creek outlining Mr. Simons’ thoughts on a potential at-market combination of the two companies. Weyerhaeuser’s proposal specified that Plum Creek stockholders would receive an at-market exchange ratio (which, based on the closing prices of Weyerhaeuser shares and Plum Creek common stock as of May 25, 2015, implied an exchange ratio of 1.27 Weyerhaeuser shares for each share of Plum Creek common stock). The letter also indicated that based on the closing price as of May 25, 2015, this exchange ratio would result in Plum Creek’s stockholders owning approximately 30% of the combined company, and Weyerhaeuser’s shareholders owning approximately 70% of the combined company. The proposal provided that: (1) board representation of the combined company would reflect the pro forma ownership of the combined company, (2) Mr. Holley would become the non-executive chairman of the board of directors of the combined company, (3) Mr. Simons would remain chief executive officer of the combined company and (4) the other senior executive positions would be determined based on the principle of “best person for the job”. The proposal contemplated an increase in Weyerhaeuser’s dividend per share to result in Plum Creek stockholders being “dividend neutral” and indicated that Weyerhaeuser would consider a share repurchase program to be announced concurrently with the transaction, with the repurchase commencing after the closing of the transaction. The proposal asked that Plum Creek and Weyerhaeuser enter into a reciprocal confidentiality agreement and commence due diligence and the negotiation of a customary definitive agreement.

On May 27, 2015, Mr. Holley called Mr. Simons to discuss the letter proposal from Weyerhaeuser.

On May 29, 2015, Plum Creek and Weyerhaeuser entered into a reciprocal non-disclosure agreement, which included a standstill provision that by its terms terminated on November 6, 2015, to allow their respective management teams to share non-public information with each other to explore a potential transaction.

 

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Also on May 29, 2015, Mr. Holley contacted Mr. Simons to indicate that the exchange of due diligence materials was premature and that the Plum Creek board was scheduled to discuss Weyerhaeuser’s proposal at its August meeting. Mr. Holley noted that Plum Creek would not enter into further substantive discussions regarding a transaction until after the August board meeting.

On June 4, 2015, Mr. Simons called Mr. Holley and expressed a desire to continue general discussions regarding a potential transaction.

On July 22, 2015, at the request of Mr. Simons, Mr. Holley and Mr. Simons had a meeting where Mr. Simons discussed potential advantages to Weyerhaeuser’s shareholders and Plum Creek’s stockholders in a potential combination of Plum Creek and Weyerhaeuser. Mr. Simons shared with Mr. Holley a proposed shared company vision and discussed potential governance for a combined company.

On August 4, 2015, the Plum Creek board held a regular meeting. At this meeting, Mr. Holley reported to the Plum Creek board about the status of discussions with Weyerhaeuser. It was the consensus of the Plum Creek board that Mr. Holley should respond to Mr. Simons indicating that the Plum Creek board was generally supportive of further exploring a transaction with Weyerhaeuser, but given the then-current projects Plum Creek was pursuing at the time, Plum Creek desired to defer further conversations with Weyerhaeuser.

On August 10, 2015, at the request of Mr. Simons, Mr. Holley and Mr. Simons spoke by telephone. Mr. Holley indicated that, while the Plum Creek board was generally supportive of further exploration of a potential transaction, Plum Creek was working on several projects and would not engage in further discussions until those projects were complete, which Plum Creek anticipated would be approximately mid-October, 2015.

On August 16, 2015, Mr. Simons called Mr. Holley to follow-up on their August 10, 2015 conversation and expressed concern about the slow pace of discussions with respect to a potential transaction. Mr. Holley indicated that Plum Creek had projects to complete and early October would be the earliest opportunity to engage in additional discussions regarding a potential transaction.

On August 19, 2015, Mr. Simons and Devin Stockfish, Weyerhaeuser’s General Counsel, met with Charles Williamson, Weyerhaeuser’s chairman of the board. Mr. Simons updated Mr. Williamson on his recent discussions with Mr. Holley regarding a potential transaction with Plum Creek. Mr. Simons noted that according to Mr. Holley, Plum Creek would not engage in further discussions until October at the earliest.

On September 15, 2015, Mr. Simons contacted Mr. Holley to request a meeting. Mr. Holley indicated that Plum Creek was ready to re-engage in further discussions regarding a potential transaction, and Mr. Simons and Mr. Holley agreed to meet on October 6, 2015.

On October 6, 2015, Mr. Holley and Mr. Simons met and discussed a potential transaction. Mr. Simons noted that Weyerhaeuser still thought of a potential combination as a merger and sought a response from Mr. Holley to the at-market combination proposal he made on May 26, 2015. Mr. Simons noted that based on the closing price as of October 5, 2015, an at-market exchange ratio would result in Plum Creek stockholders receiving 1.46 Weyerhaeuser common shares for each share of Plum Creek common stock. Mr. Holley suggested that a premium to the Plum Creek common stock would be necessary for Weyerhaeuser’s proposal to be considered. Mr. Simons noted that a 10% premium would correspond to an exchange ratio of 1.60 Weyerhaeuser shares per share of Plum Creek common stock, but that at a 10% premium, a potential transaction was likely only slightly accretive to Weyerhaeuser, and that any potential transaction would need to be cash flow accretive. Mr. Holley and Mr. Simons discussed synergies from a potential transaction. Mr. Simons confirmed that Weyerhaeuser’s proposal was for consideration entirely in the form of Weyerhaeuser common shares. Mr. Simons also indicated that at time of announcement Weyerhaeuser would announce a share repurchase in the range of $2 billion to $3 billion. Mr. Simons also indicated that the other terms of Weyerhaeuser’s proposal were the same as set forth in Weyerhaeuser’s May 26, 2015 letter.

 

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On October 9, 2015, the Plum Creek board held a special meeting at which Plum Creek management and representatives of Skadden Arps and Goldman Sachs were in attendance. At the meeting, Mr. Holley reported on his October 6, 2015 discussions with Weyerhaeuser. Representatives of Goldman Sachs provided an updated preliminary financial analysis of a potential transaction with Weyerhaeuser. After discussion, the Plum Creek board authorized Mr. Holley to solicit an improved proposal from Weyerhaeuser and to engage Weyerhaeuser to exchange preliminary due diligence information.

On October 10, 2015, Mr. Holley and Mr. Simons spoke by telephone, and Mr. Holley indicated that the Plum Creek board believed that an exchange ratio of 1.70 Weyerhaeuser common shares per share of Plum Creek common stock and a 20% premium was fair and likely still accretive on a cash flow basis, which Mr. Holley and the Plum Creek board agreed was important for the proposed combination. Mr. Holley indicated that Plum Creek might have flexibility with respect to its proposed exchange ratio of 1.70 Weyerhaeuser common shares per share of Plum Creek common stock, but at that valuation, Plum Creek was willing to initiate the exchange of due diligence materials. Mr. Simons indicated he would discuss Plum Creek’s counterproposal with the Weyerhaeuser board.

On October 14, 2015, the Weyerhaeuser board held a regular meeting. Members of Weyerhaeuser management and representatives from Morgan Stanley also attended the meeting. At this meeting, Mr. Simons summarized his recent discussions with Mr. Holley and discussed Plum Creek’s expectations regarding exchange premium and governance items. Mr. Simons also commented on Plum Creek’s recently announced joint venture. Members of the Weyerhaeuser board engaged in discussion and asked questions of Mr. Simons with respect to deal premium, the proposed board representation for the combined company and combined company management. Representatives of Morgan Stanley reviewed with the Weyerhaeuser board certain financial aspects of the potential transaction with Plum Creek, a share repurchase program contemplated by Weyerhaeuser in connection with a merger with Plum Creek and a proposed divestiture by Weyerhaeuser of Weyerhaeuser’s cellulose fibers business. Mr. Simons and other members of Weyerhaeuser management discussed the potential synergies that might result from a transaction with Plum Creek. Members of Weyerhaeuser management then reviewed with the Weyerhaeuser board proposed terms for a transaction with Plum Creek, including with respect to deal structure, exchange ratio, governance matters and the potential share repurchase. Members of Weyerhaeuser management also discussed several key areas of due diligence for the transaction. The members of the Weyerhaeuser board asked questions of Weyerhaeuser management, including with respect to due diligence items, proposed terms of the transaction and the rationale for a transaction with Plum Creek. After discussion, the Weyerhaeuser board approved continuing discussions with Plum Creek regarding a potential transaction on substantially the terms presented by Weyerhaeuser management.

On October 15, 2015, Mr. Simons called Mr. Holley and indicated that Weyerhaeuser’s offer remained at an exchange ratio of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock and that Mr. Simons would formalize this proposal in a letter. Mr. Simons and Mr. Holley also discussed their respective board’s positions on the board composition of the combined company, including Plum Creek’s position that there should be five directors from the current Plum Creek board. Mr. Simons also indicated that Weyerhaeuser would likely announce a review of strategic alternatives for its cellulose fibers business at the time of announcing a transaction with Plum Creek.

Also on October 15, 2015, Mr. Simons delivered an updated letter proposal to Mr. Holley. Under this proposal, Plum Creek’s stockholders would receive 1.60 Weyerhaeuser common shares for each share of Plum Creek common stock. The proposal stated that: (1) the board of directors of the combined company would consist of 12 members (with four directors to come from the current Plum Creek board and eight directors to come from the current Weyerhaeuser board), (2) Mr. Holley would become the non-executive chairman of the board of directors of the combined company, (3) Mr. Simons would continue as the chief executive officer of the combined company and (4) the other senior executive positions would be determined based on the principle of “best person for the job.” The proposal noted that Weyerhaeuser would plan to announce a $2.5 billion share repurchase program concurrently with the announcement of the potential transaction.

 

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Also on October 15, 2015, Mr. Simons updated Mr. Williamson about his discussions with Mr. Holley, including with respect to the board composition of the combined company.

On October 16, 2015, Mr. Holley called Mr. Simons and indicated that there was preliminary agreement on the 1.60 exchange ratio and that Plum Creek was ready to initiate the sharing of due diligence materials with Weyerhaeuser in connection with a potential merger transaction. Consistent with the discussion of board composition on October 15, 2015, Mr. Holley requested that the board of directors of the combined company consist of 13 members (with five directors to come from the current Plum Creek board and eight directors to come from the current Weyerhaeuser board). Mr. Simons indicated that this proposal on the board composition was acceptable. On October 16, 2015, Weyerhaeuser and Plum Creek exchanged due diligence request lists.

On October 16, 2015, Plum Creek contacted Merrill, Lynch Pierce, Fenner & Smith Incorporated (referred to as “BofA Merrill Lynch”) regarding the engagement of BofA Merrill Lynch as a financial advisor to Plum Creek in connection with a potential transaction with Weyerhaeuser.

From October 19, 2015 through November 6, 2015, Plum Creek and Weyerhaeuser, and their respective advisors, engaged in the exchange of non-public information in connection with the evaluation of a potential merger transaction between Plum Creek and Weyerhaeuser. In addition, members of Weyerhaeuser management, together with Weyerhaeuser’s legal and financial advisors, on the one hand, and Plum Creek management, together with Plum Creek’s legal and financial advisors, on the other hand conducted a series of diligence sessions, including business, financial and legal diligence sessions.

From October 20, 2015 through November 6, 2015, Mr. Simons met with certain members of the Plum Creek senior management. Mr. Simons, in consultation with Mr. Holley, worked to identify the senior management team of the combined company that ultimately would be announced in connection with the merger.

On October 20, 2015, Cravath, Swaine, & Moore LLP (referred to as “Cravath”), Weyerhaeuser’s outside legal counsel, delivered an initial draft of the merger agreement to Plum Creek and its representatives. The draft merger agreement provided for a $300 million mutual termination fee in certain circumstances, including in the event that either the Plum Creek or Weyerhaeuser board changed their recommendation in favor of the potential transaction. The draft merger agreement also included a provision requiring Plum Creek and Weyerhaeuser to hold a stockholder or shareholder meeting, respectively, even if their respective boards of directors had changed their recommendation to vote in favor of the potential transaction (referred to as a “‘force-the-vote’ provision”).

From October 20, 2015 through November 6, 2015, Plum Creek and Weyerhaeuser, and their respective legal advisors, negotiated the terms of the merger agreement.

On October 23, 2015, the Plum Creek board held a special meeting, which was attended by members of Plum Creek management as well as representatives of Skadden Arps and Goldman Sachs. Goldman Sachs provided an updated preliminary financial analysis, and provided its analysis and view that it was unlikely that there would be competitive alternative purchasers of or merger partners for Plum Creek. The Plum Creek board discussed at length the risks and potential benefits of reaching out to alternative buyers. It was the consensus of the Plum Creek board to wait until the next board meeting on November 3, 2015 before making a decision as to whether the benefits of reaching out to other parties outweighed the risks.

On October 25, 2015, Skadden Arps provided to Cravath a revised draft of the merger agreement.

On October 27, 2015, Cravath provided to Skadden Arps a revised draft of the merger agreement.

On October 30, 2015, Cravath and Skadden Arps held telephone calls to negotiate the terms of the definitive merger agreement and related transaction issues.

On November 2, 2015, Mr. Simons met with Mr. Morgan to discuss the proposed merger. Mr. Williamson also met with Mr. Holley on November 2, 2015 to discuss the proposed merger and related governance matters.

 

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Also on November 2, 2015, Plum Creek’s Compensation Committee (referred to as the “Plum Creek Compensation Committee”) held a meeting. At this meeting, the Plum Creek Compensation Committee unanimously recommended that the Plum Creek board resolve to modify certain of Plum Creek’s compensation arrangements in light of the proposed transaction with Weyerhaeuser.

On November 3, 2015, the Plum Creek board held a regular meeting. Members of Plum Creek management and representatives from Skadden Arps, Goldman Sachs, and BofA Merrill Lynch were in attendance. At this meeting, the Plum Creek board reviewed disclosures provided by each of Goldman Sachs and BofA Merrill Lynch regarding the extent of certain relationships with Weyerhaeuser. Goldman Sachs and BofA Merrill Lynch each disclosed that, during the preceding two-year period, their respective Investment Banking Divisions had not provided any financial advisory or underwriting services to Weyerhaeuser or its affiliates for which it had received compensation. BofA Merrill Lynch also disclosed that, during the preceding two-year period, BofA Merrill Lynch and its affiliates had provided corporate banking services to Weyerhaeuser for which it had received compensation and that certain Plum Creek deal team members met with Weyerhaeuser in the Spring of 2015 to discuss, among other things, a potential combination transaction with Plum Creek. The Plum Creek board considered the disclosures in detail and in light of the disclosures whether to retain additional or alternative financial advisors. It was the consensus of the Plum Creek board that although BofA Merrill Lynch’s past contacts with Weyerhaeuser may raise the appearance of a potential conflict of interest, on balance the benefit of the expertise provided by BofA Merrill Lynch outweighed the potential conflicts and that any potential conflicts could be appropriately managed. In reaching this conclusion, the Plum Creek board considered, among other items, Plum Creek’s engagement of Goldman Sachs as a separate independent financial advisor, the fact that no M&A advisory fees were payable by Weyerhaeuser to BofA Merrill Lynch in connection with a potential transaction, and the size and scope of BofA Merrill Lynch’s dealings with Weyerhaeuser. The Plum Creek board then approved Plum Creek’s engagements of Goldman Sachs and BofA Merrill Lynch, which engagements had been entered into subject to the approval of the Plum Creek board.

At the same November 3, 2015 meeting, the Plum Creek board received an update and advice from Plum Creek management, Goldman Sachs, BofA Merrill Lynch and Skadden Arps regarding the status of discussions with Weyerhaeuser. Representatives of Goldman Sachs noted that the likelihood of Plum Creek receiving a superior proposal from a third party was low. Representatives of Goldman Sachs presented an updated financial analysis of a potential transaction with Weyerhaeuser. Representatives of BofA Merrill Lynch also discussed their view of a potential transaction with Weyerhaeuser.

At the same November 3, 2015 meeting, the Plum Creek board considered whether to engage with any other potential buyers. It was the consensus of the Plum Creek board that it was highly unlikely that any other credible buyer would be capable of delivering value comparable to that offered by Weyerhaeuser, and that any outreach could jeopardize the proposed transaction with Weyerhaeuser.

At the same November 3, 2015 meeting, the Plum Creek board directed its advisors to propose to Weyerhaeuser lowering the mutual termination fee in the draft merger agreement from $300 million to $250 million, in exchange for accepting Weyerhaeuser’s proposed mutual “force-the-vote” provision.

Also on November 3, 2015, Skadden Arps provided to Cravath a revised draft of the merger agreement. Consistent with the direction of the Plum Creek board, this draft proposed that the mutual termination fee in the draft merger agreement be lowered from $300 million to $250 million in exchange for Plum Creek’s acceptance of the mutual “force-the-vote” provision, which proposal was subsequently accepted by Weyerhaeuser.

Also on November 3, 2015, Mr. Holley and Mr. Simons met. They discussed outstanding items on the merger agreement, timing issues, management issues and governance matters. Mr. Simons raised the issue of exchange ratio premium with Mr. Holley. Mr. Simons noted that while the exchange ratio premium based on the 30-trading-day volume weighted average price ratio was generally in line with the previously discussed 10% premium, the spot exchange ratio premium had increased due to the appreciation in Weyerhaeuser’s share price

 

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following favorable coverage in a recently published article about Weyerhaeuser in a financial magazine. Mr. Holley conveyed his view that the 1.60 exchange ratio had been negotiated and he did not believe that Plum Creek would accept any downward adjustment to the exchange ratio premium.

On November 4, 2015, Cravath and Skadden Arps held telephone calls to negotiate the terms of the definitive merger agreement and related transaction issues.

Also on November 4, 2015, Mr. Holley called Mr. Simons to reiterate that Plum Creek absolutely would not accept any downward adjustment to the exchange ratio premium.

From November 4 through November 6, 2015, Cravath and Skadden Arps exchanged comments to the definitive merger agreement on a daily basis.

On November 6, 2015, the Weyerhaeuser board held a special meeting. Members of Weyerhaeuser management and representatives of Morgan Stanley, Cravath and Covington & Burling LLP, Weyerhaeuser’s tax counsel, were also in attendance at the meeting. Members of the Weyerhaeuser board had been provided with a set of meeting materials, including a summary of the terms and conditions of the merger agreement prepared by Cravath and certain financial analyses prepared by Morgan Stanley. A representative of Cravath provided an overview of the fiduciary duties applicable to the Weyerhaeuser board, as well as an overview of the current state of the merger agreement and various deal terms. Representatives of Morgan Stanley reviewed disclosures previously provided to the Weyerhaeuser board, including information regarding Morgan Stanley’s prior investment banking relationship with Weyerhaeuser and that Morgan Stanley had not been engaged on any financial advisory or financing services for Plum Creek during the preceding two-year period. Representatives of Morgan Stanley also reviewed certain financial aspects of the merger. Also at the meeting, representatives of Morgan Stanley rendered an oral opinion to the Weyerhaeuser board, confirmed by delivery of a written opinion, as more fully described in the section entitled “—Opinion of Weyerhaeuser’s Financial Advisor” beginning on page [•], that, as of November 6, 2015, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in its written opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to Weyerhaeuser. Following a discussion of the foregoing matters by members of the Weyerhaeuser board, including Weyerhaeuser’s other strategic alternatives and prospects as a standalone company, the Weyerhaeuser board unanimously (1) approved and adopted the merger agreement, (2) approved the merger upon the terms and subject to the conditions set forth in the merger agreement and (3) approved the issuance by Weyerhaeuser of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to and in accordance with the terms and conditions of the merger agreement. At this meeting, the Weyerhaeuser board also authorized the $2.5 billion share repurchase program described in the section entitled “—Dividends and Share Repurchases” beginning on page [•] and the exploration of strategic alternatives for Weyerhaeuser’s cellulose fibers business.

On November 6, 2015, the Plum Creek board held a special meeting. Members of Plum Creek management and representatives from Skadden Arps, Goldman Sachs and BofA Merrill Lynch were in attendance. At this meeting, representatives of Goldman Sachs reviewed with the Plum Creek board its financial analysis of the merger consideration and rendered an oral opinion, confirmed by delivery of a written opinion dated November 6, 2015, as more fully described in the section entitled “—Opinion of Plum Creek’s Financial Advisor” beginning on page [•], to the effect that, as of that date and based on and subject to assumptions made, matters considered and limitations as set forth therein, the exchange ratio of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to the merger agreement is fair from a financial point of view to the Plum Creek stockholders (other than Weyerhaeuser and its affiliates). After discussion, the Plum Creek board, having determined that the terms of the merger agreement and the transactions contemplated thereby were advisable and in the best interests of Plum Creek and its stockholders, unanimously approved and declared the merger agreement and the transactions contemplated thereby advisable, fair to, and in the best interests of Plum Creek and its stockholders.

 

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At the same meeting, the Plum Creek board resolved to modify certain of Plum Creek’s compensation arrangements in light of the proposed transaction with Weyerhaeuser. These modifications are discussed in Plum Creek’s Current Report on Form 8-K filed with the SEC on November 9, 2015 and described in the section entitled “—Financial Interests of Plum Creek’s Directors and Officers in the Merger” beginning on page [•].

Following the November 6, 2015 meeting of the Plum Creek board, Plum Creek and Weyerhaeuser executed and delivered the merger agreement on the evening of November 6, 2015. Plum Creek and Weyerhaeuser issued a joint press release announcing the execution of the merger agreement on Sunday, November 8, 2015.

Weyerhaeuser’s Reasons for the Merger; Recommendation of the Weyerhaeuser Board

At its meeting on November 6, 2015, the Weyerhaeuser board unanimously (1) approved and adopted the merger agreement, (2) approved the merger upon the terms and subject to the conditions set forth in the merger agreement and (3) approved the issuance by Weyerhaeuser of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to and in accordance with the terms and conditions of the merger agreement. Accordingly, the Weyerhaeuser board unanimously recommends that the Weyerhaeuser shareholders vote “FOR” each of the share issuance proposal and the Weyerhaeuser adjournment proposal.

In evaluating the merger agreement and the issuance of Weyerhaeuser common shares to Plum Creek stockholders, the Weyerhaeuser board consulted with, and received the advice of, Weyerhaeuser’s management and its legal and financial advisors. In reaching its decision, the Weyerhaeuser board considered a number of factors, including the following factors that the Weyerhaeuser board viewed as generally supporting its decision to approve and adopt the merger agreement and recommend that Weyerhaeuser shareholders vote “FOR” the share issuance proposal and the Weyerhaeuser adjournment proposal.

Strategic Considerations. The Weyerhaeuser board believes that the merger will provide a number of significant strategic benefits for Weyerhaeuser shareholders, including the following:

 

•

the merger will create the world’s premier timber, land and forest products company and will create a combined company with more than 13 million acres of diverse and productive timberland;

 

•

the combined company will have greater potential to create value for shareholders than Weyerhaeuser would otherwise have on a standalone basis, with a significant increase in scale and potential to achieve meaningful synergies through, among other factors, the consolidation of corporate overhead and duplicate functions;

 

•

the potential benefits of having a portfolio of businesses more heavily weighted to timberlands, which tends to be less volatile than other businesses within Weyerhaeuser’s current portfolio;

 

•

the combined company will be uniquely positioned to capitalize on the continued recovery in the U.S. housing market;

 

•

the combined company will be positioned to further leverage the highest and best use potential across the combined company’s land portfolio;

 

•

the combined company is expected to benefit from the adoption of best practices and capabilities from each company;

 

•

the opportunity to combine two strong senior management teams by adopting best-in-class talent from each company’s existing management teams, resulting in a senior management team with complementary skill sets and capabilities and an in-depth knowledge of both Weyerhaeuser and its business and Plum Creek and its business;

 

•

the benefits of the combined company’s continued commitment to disciplined capital allocation and an investment grade balance sheet; and

 

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•

the merger is expected to deliver accretion to Weyerhaeuser’s funds available for distribution per share in the first full year following the closing of the merger, assuming full synergies of $100 million achieved within one year of closing of the merger and completion of a $2.5 billion share repurchase, which will create additional value for Weyerhaeuser’s shareholders.

Other Factors Considered by the Weyerhaeuser Board. In addition to considering the strategic factors described above, the Weyerhaeuser board considered the following additional factors, all of which it viewed as supporting its decision:

 

•

its knowledge of Weyerhaeuser’s business, operations, financial condition, earnings and prospects and its knowledge of Plum Creek’s business, operations, financial condition, earnings and prospects, taking into account the results of Weyerhaeuser’s due diligence review of Plum Creek;

 

•

the results of the due diligence review of Plum Creek and its business conducted by Weyerhaeuser and its advisors;

 

•

the fact that eight members of the 13-member combined company board will be members of the existing Weyerhaeuser board and that Mr. Simons will be chief executive officer of the combined company and Mr. Holley will be non-executive chairman of the combined company board;

 

•

the current and prospective business climate in the industry in which Weyerhaeuser and Plum Creek operate, including the alternatives reasonably available to Weyerhaeuser if it did not pursue the merger;

 

•

the projected financial results of Weyerhaeuser and Plum Creek as standalone companies and the fit of the transaction with Weyerhaeuser’s strategic goals;

 

•

the historical trading prices of Weyerhaeuser common shares and Plum Creek common stock;

 

•

the oral opinion of Morgan Stanley rendered to the Weyerhaeuser board on November 6, 2015, which was later confirmed by the delivery of a written opinion that, as of November 6, 2015, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations set forth in its written opinion, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Weyerhaeuser, as more fully described in the section entitled “—Opinion of Weyerhaeuser’s Financial Advisor” beginning on page [•];

 

•

the historical share prices of Weyerhaeuser and Plum Creek, including the fact that the implied value of the exchange ratio of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock represents an implied premium of 13.8% to the 30-trading-day volume weighted average price ratio of shares of Plum Creek common stock to Weyerhaeuser common shares;

 

•

the terms and conditions of the merger agreement, including the strong commitments by both Weyerhaeuser and Plum Creek to complete the merger;

 

•

the fact that the merger agreement provides for a fixed exchange ratio and that no adjustment will be made in the merger consideration to be received by Plum Creek stockholders in the merger as a result of possible increases or decreases in the trading price of Weyerhaeuser’s common stock following the announcement of the merger;

 

•

the fact that existing Weyerhaeuser shareholders are expected to hold approximately 65% of the combined company immediately after completion of the merger and will have the opportunity to participate in the future performance of the combined company;

 

•

the fact that the cultural and operational philosophy of Weyerhaeuser and Plum Creek are compatible in that both companies share similar values rooted in safety, integrity, and sustainability and delivering value to shareholders;

 

•

the fact that the merger agreement expressly permits Weyerhaeuser to explore strategic alternatives for its cellulose fibers business;

 

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•

the planned repurchase of Weyerhaeuser common shares as a means to make the merger more cash flow accretive to the shareholders of the combined company; and

 

•

the anticipated customer, supplier and stakeholder reaction to the merger.

The Weyerhaeuser board weighed these benefits and supporting factors against a number of other factors identified in its deliberations weighing negatively against the merger, including:

 

•

the challenges inherent in the combination of two businesses of the size and scope of Weyerhaeuser and Plum Creek and the size of the companies relative to each other, including the risk that integration costs may be greater than anticipated and the possible diversion of management attention for an extended period of time;

 

•

the challenges of developing and executing a successful strategy and business plan for the combined company;

 

•

the difficulties of combining the businesses and workforces of Weyerhaeuser and Plum Creek;

 

•

the potential that the fixed exchange ratio under the merger agreement could result in Weyerhaeuser delivering greater value to the Plum Creek stockholders than had been anticipated by Weyerhaeuser should the value of Weyerhaeuser common shares increase after the execution of the merger agreement;

 

•

Plum Creek’s right, subject to certain conditions, to respond to and negotiate with respect to certain alternative takeover proposals made prior to the time Plum Creek stockholders adopt the merger agreement;

 

•

the fact that certain provisions of the merger agreement, although reciprocal, may have the effect of discouraging alternative takeover proposals involving Weyerhaeuser;

 

•

the restrictions in the merger agreement on the conduct of Weyerhaeuser’s and Plum Creek’s business during the period between execution of the merger agreement and completion of the merger;

 

•

the risk that Weyerhaeuser shareholders or Plum Creek stockholders may object to and challenge the merger and take actions that may prevent or delay the completion of the merger, including to vote down the applicable proposals at the Weyerhaeuser or Plum Creek special meeting;

 

•

the risk that the pendency of the merger for an extended period of time following the announcement of the merger could have an adverse impact on Weyerhaeuser or the combined company;

 

•

the potential for diversion of management and employee attention during the period prior to completion of the merger, and the potential negative effects on Weyerhaeuser’s and the combined company’s businesses;

 

•

the risk that, despite the efforts of Weyerhaeuser and Plum Creek prior to completion of the merger, the combined company may lose key personnel;

 

•

the risk of not capturing all the anticipated cost savings and synergies between Weyerhaeuser and Plum Creek and the risk that other anticipated benefits might not be realized;

 

•

the possibility that the combined company might not achieve its projected financial results;

 

•

the risk that credit rating agencies might downgrade Weyerhaeuser’s ratings or might place Weyerhaeuser’s credit ratings under review for downgrade as a result of the merger or the announcement of the merger or the planned share repurchase;

 

•

the risk that changes in the regulatory landscape may adversely affect the business benefits anticipated to result from the merger; and

 

•

the risks of the type and nature described in the section entitled “Risk Factors” beginning on page [•] and the matters described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•].

 

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The Weyerhaeuser board considered all of these factors as a whole, and, on balance, concluded that they supported a determination to (1) approve and adopt the merger agreement, (2) approve the merger upon the terms and subject to the conditions set forth in the merger agreement and (3) approve the issuance by Weyerhaeuser of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock pursuant to and in accordance with the terms and conditions of the merger agreement. The foregoing discussion of the factors considered by the Weyerhaeuser board is not intended to be exhaustive, but rather includes the principal factors considered by the Weyerhaeuser board. In light of the number and wide variety of factors considered in connection with its evaluation of the merger and the complexity of these factors, the Weyerhaeuser board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign any relative or specific weights to the various factors that it considered in reaching its decision. In considering these factors, individual members of the Weyerhaeuser board may have given differing weights to different factors. The Weyerhaeuser board conducted an overall review of the factors described above, including thorough discussions with Weyerhaeuser’s management and legal and financial advisors.

In considering the recommendation of the Weyerhaeuser board to approve the share issuance proposal, Weyerhaeuser shareholders should be aware that Weyerhaeuser’s directors may have interests in the merger that are different from, or in addition to, those of Weyerhaeuser shareholders generally. For additional information, see the section entitled “—Financial Interests of Weyerhaeuser Directors and Officers in the Merger” beginning on page [•].

The factors contained in this explanation of the reasoning of the Weyerhaeuser board and certain information presented in this section are forward-looking in nature. Therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•].

Plum Creek’s Reasons for the Merger; Recommendation of the Plum Creek Board

The Plum Creek board has determined that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Plum Creek and its stockholders. Accordingly, by a vote at a meeting held on November 6, 2015, the Plum Creek board unanimously determined that the merger agreement and the transactions contemplated by the merger agreement were advisable, fair to and in the best interests of Plum Creek and its stockholders and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger.

Accordingly, the Plum Creek board unanimously recommends that Plum Creek stockholders vote “FOR” each of the merger proposal, the Plum Creek adjournment proposal and the compensation proposal at the Plum Creek special meeting.

As described in the section entitled “— Background of the Merger” beginning on page [•], the Plum Creek board consulted with Plum Creek’s management and Plum Creek’s legal and financial advisors and, in reaching its determination and recommendation, the Plum Creek board considered a number of factors.

Many of the factors considered favored the conclusion of the Plum Creek board that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to and in the best interests of Plum Creek and its stockholders, including the following (which are not in any relative order of importance):

 

•

the growing challenges faced by the timber and timberland management industry, including exposure to macroeconomic trends and increased regulation and the fact that the industry is highly competitive, cyclical and experiences wide fluctuations in product supply and demand;

 

•

the expectation that the combination of Plum Creek’s and Weyerhaeuser’s businesses will result in greater long-term stockholder value than the potential for funds available for distribution per share accretion that might result from other alternatives available to Plum Creek, including seeking an alternative transaction with another third party or remaining an independent public company, in each case considering the potential for Plum Creek stockholders to share in any future earnings growth of Plum Creek’s businesses and continued costs;

 

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•

Plum Creek’s estimate that, in connection with the merger, the combined company would achieve full run-rate synergies of $100 million within one year of completion of the merger;

 

•

Weyerhaeuser’s commitment to announce, concurrently with the entry into the merger agreement:

 

•

forecasted annual cost savings of $100 million;

 

•

a $2.5 billion share repurchase program;

 

•

the review of strategic alternatives for its cellulose fibers business;

 

•

anticipated accretion to per-share funds available for distribution in the first full year following the completion of the merger; and

 

•

that Weyerhaeuser expects to maintain its current annual dividend of $1.24 per common share, representing a 13% dividend increase to the dividend currently received by Plum Creek’s stockholders;

 

•

the combined company’s ability to execute large acquisition opportunities;

 

•

the opportunity to combine expertise, including the skills of experienced managers in the timber industry, to better meet the needs of the customers of both Plum Creek and Weyerhaeuser;

 

•

the expectation that the combined company will deliver long-term operating improvement, with greater potential for earnings expansion;

 

•

the increased financial strength of the combined company and the resulting ability to invest in current businesses and future growth opportunities;

 

•

the fact that the consideration to be received by Plum Creek stockholders is shares in Weyerhaeuser, providing Plum Creek stockholders with a substantial ownership interest in Weyerhaeuser following the completion of the merger and an opportunity to participate in the potential for funds available for distribution per share accretion and potential cost synergies created by the merger;

 

•

because the merger consideration consists of Weyerhaeuser common shares and the exchange ratio is fixed, Plum Creek stockholders will benefit from any increase in the trading price of Weyerhaeuser common shares between the announcement of the merger and the closing of the merger and any increases following the closing of the merger;

 

•

the fact that the consideration proposed by Weyerhaeuser reflected extensive negotiations between the parties and their respective advisors, and the belief of the Plum Creek board that the agreed merger consideration represented Weyerhaeuser’s best proposal;

 

•

the historical share prices of Plum Creek and Weyerhaeuser, including the fact that the implied value of the exchange ratio of 1.60 Weyerhaeuser common shares per share of Plum Creek common stock represents:

 

•

an implied premium of 13.8% to the 30-trading-day volume weighted average price ratio of shares of Plum Creek common stock to Weyerhaeuser common shares;

 

•

an approximate premium of 21% based on the closing price per share of Plum Creek common stock of $41.07 on November 5, 2015; and

 

•

an approximate premium of 21% based on the volume-weighted average closing price per share of Plum Creek common stock of $40.96 over the 30-day period ending November 5, 2015;

 

•

the Plum Creek board’s familiarity with, and understanding of, Plum Creek’s business, assets, financial condition, results of operations, current business strategy and prospects;

 

•

information and discussions with Plum Creek’s management and advisors regarding Weyerhaeuser’s business, assets, financial condition, results of operations, current business strategy and prospects, including the projected long-term financial results of Weyerhaeuser;

 

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•

the opinion of Goldman Sachs rendered to the Plum Creek board on November 6, 2015, to the effect that, as of that date and based on and subject to assumptions made, matters considered limitations as set forth therein, the 1.60 exchange ratio pursuant to the merger agreement is fair from a financial point of view to the Plum Creek stockholders, as more fully described in the section entitled “—Opinion of Plum Creek’s Financial Advisor” beginning on page [•];

 

•

the governance terms in the merger agreement, which provide that:

 

•

the board of the combined company will consist of five directors from the current Plum Creek board, including Rick Holley, Plum Creek’s chief executive officer;

 

•

Rick Holley, Plum Creek’s chief executive officer, will be the non-executive chairman of the combined company for an initial 3-year term; and

 

•

Thomas Lindquist, Russell Hagen and Timothy Punke will serve as executive officers of the combined company as executive vice president, Real Estate, Energy & Natural Resources; senior vice president, chief financial officer; and senior vice president, Corporate Affairs, respectively;

 

•

the nature of the closing conditions included in the merger agreement, as well as the likelihood of satisfaction of all of the conditions to the completion of the proposed merger;

 

•

the obligation of Weyerhaeuser to use reasonable best efforts to obtain any required antitrust approval;

 

•

Plum Creek’s right to engage in negotiations with, and provide information to, a third party that makes an unsolicited proposal relating to an alternative transaction, if the Plum Creek board determines in good faith after consultation with its financial advisors and outside legal counsel that such proposal constitutes, or would reasonably be expected to lead to, a “superior proposal” (as more fully described in the section entitled “—The Merger Agreement—No Solicitation by Plum Creek; Plum Creek Board Recommendation” beginning on page [•]);

 

•

the right of the Plum Creek board to change its recommendation in favor of the approval of the merger agreement if it has determined, in good faith, after consultation with its financial advisors and outside legal counsel, that the failure to take such action would be inconsistent with its directors’ fiduciary duties, subject to certain conditions (including providing notice to Weyerhaeuser and taking into account any modifications to the terms of the merger that are proposed by Weyerhaeuser);

 

•

the right of Plum Creek to seek to specifically enforce Weyerhaeuser’s obligations under the merger agreement in certain instances (as more fully described in the section entitled “—The Merger Agreement—Specific Performance” beginning on page [•]);

 

•

the customary nature of the other representations, warranties and covenants of Plum Creek in the merger agreement;

 

•

the structure of the transaction and the terms of the merger agreement, including the fact that the merger is intended to qualify as a “reorganization” within the meaning of the Code, and is therefore, not expected to be taxable to the Plum Creek stockholders with respect to the Weyerhaeuser common shares received in the merger; and

 

•

the requirement that Plum Creek or Weyerhaeuser pay a termination fee or expense reimbursement to the other party under certain circumstances specified in the merger agreement (as more fully described in the section entitled “—The Merger Agreement—Transaction Expenses and Termination Fees” beginning on page [•]).

In the course of its deliberations, the Plum Creek board also considered a variety of risks and other potentially negative factors, including the following (which are not in any relative order of importance):

 

•

the possibility that the merger may not be completed or that completion may be unduly delayed for reasons beyond the control of Plum Creek or Weyerhaeuser;

 

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•

the fact that the exchange ratio is fixed, indicating that Plum Creek stockholders could be adversely affected by a decrease in the trading price of Weyerhaeuser common shares during the pendency of the proposed merger and the fact that the merger agreement does not provide Plum Creek with a price-based termination right or other similar protection in favor of Plum Creek or its stockholders;

 

•

the potential for diversion of management and employee attention and for increased employee attrition during the period prior to completion of the proposed merger, and the potential effect of the proposed merger on Plum Creek’s business and relations with customers, suppliers and strategic alliance and joint venture partners;

 

•

the restrictions on the conduct of Plum Creek’s business prior to completion of the proposed merger, requiring Plum Creek to conduct its business only in the ordinary course of business in all material respects, subject to specific limitations, which could delay or prevent Plum Creek from undertaking business opportunities that may arise pending completion of the merger and could negatively impact Plum Creek’s ability to attract and retain employees and decisions of customers, suppliers and strategic alliance and joint venture partners;

 

•

the difficulty inherent in integrating the businesses, assets and workforces of two large companies and the risk that anticipated strategic and other benefits to Plum Creek and Weyerhaeuser following completion of the proposed merger, including the forecasted cost synergies described above, will not be realized or will take longer to realize than expected;

 

•

the transaction costs to be incurred in connection with the proposed merger, regardless of whether the proposed merger is completed;

 

•

the possibility that, although Weyerhaeuser’s forecast for Weyerhaeuser’s Adjusted EBITDA for 2016 was $1,716 million, Plum Creek management, after discussions with Weyerhaeuser management and due diligence review, considered that Weyerhaeuser’s Adjusted EBITDA for 2016 may be $1,616 million, and Plum Creek management directed Goldman Sachs to use the lower Adjusted EBITDA number for the purposes of Goldman Sachs’ analysis;

 

•

the fact that the merger agreement includes restrictions on the ability of Plum Creek to solicit proposals for alternative transactions or engage in discussions regarding such proposals, subject to exceptions and termination provisions, which in some cases requires payment of a termination fee by Plum Creek (as more fully described in the section entitled “—The Merger Agreement—No Solicitation by Plum Creek; Plum Creek Board Recommendation” beginning on page [•]), which could have the effect of discouraging such proposals from being made or pursued;

 

•

Weyerhaeuser’s right to engage in negotiations with, and provide information to, a third party that makes an unsolicited proposal relating to an alternative transaction, if the Weyerhaeuser board determines in good faith after consultation with its financial advisors and outside legal counsel that such proposal constitutes, or would reasonably be expected to lead to, a “superior proposal” (as more fully described in the section entitled “—The Merger Agreement—No Solicitation by Weyerhaeuser; Weyerhaeuser Board Recommendation” beginning on page [•]);

 

•

the fact that if the merger is not completed, Plum Creek will have expended significant human and financial resources on a failed transaction, and may also be required to pay a termination fee under various circumstances (as more fully described in the section entitled “—The Merger Agreement—Transaction Expenses and Termination Fees” beginning on page [•]);

 

•

the absence of appraisal rights for Plum Creek stockholders under Delaware law; and

 

•

various other risks associated with the merger and the business of Plum Creek and the combined company described in the section entitled “Risk Factors” beginning on page [•] and in the section entitled “Cautionary Statements Regarding Forward-Looking Statements” beginning on page [•], respectively.

The Plum Creek board considered all of these factors as a whole, and, on balance, concluded that they supported a determination to approve the merger agreement and the transactions contemplated by the merger

 

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agreement, including the merger. The foregoing discussion of the factors considered by the Plum Creek board is not intended to be exhaustive, but rather includes the principal factors considered by the Plum Creek board. In light of the number and wide variety of factors considered in connection with its evaluation of the merger and the complexity of these factors, the Plum Creek board did not find it useful to, and did not attempt to, quantify, rank or otherwise assign any relative or specific weights to the various factors that it considered in reaching its decision. In considering these factors, individual members of the Plum Creek board may have given differing weights to different factors. The Plum Creek board conducted an overall review of the factors described above, including thorough discussions with Plum Creek’s management and legal and financial advisors.

In considering the recommendation of the Plum Creek board to approve the merger proposal, Plum Creek stockholders should be aware that Plum Creek’s directors may have interests in the merger that are different from, or in addition to, those of Plum Creek stockholders generally. For additional information, see the section entitled “—Financial Interests of Plum Creek Directors and Officers in the Merger” beginning on page [•].

The factors contained in this explanation of the reasoning of the Plum Creek board and certain information presented in this section are forward-looking in nature. Therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•].

Opinion of Weyerhaeuser’s Financial Advisor

Weyerhaeuser retained Morgan Stanley to provide it with financial advisory services in connection with the proposed merger. Weyerhaeuser selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, and its knowledge of the business and affairs of Weyerhaeuser. As part of this engagement, the Weyerhaeuser board requested that Morgan Stanley evaluate the fairness, from a financial point of view, to Weyerhaeuser of the exchange ratio pursuant to the merger agreement. On November 6, 2015, at a meeting of the Weyerhaeuser board, Morgan Stanley rendered its oral opinion, later confirmed by delivery of a written opinion, that, as of November 6, 2015, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations as set forth in its written opinion, the exchange ratio pursuant to the merger agreement was fair, from a financial point of view, to Weyerhaeuser.

The full text of the written opinion of Morgan Stanley, dated November 6, 2015, is attached to this proxy statement/prospectus as Annex B and is incorporated herein by reference. The summary of the opinion of Morgan Stanley in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion and Weyerhaeuser shareholders should read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley in rendering its opinion. Morgan Stanley’s opinion was directed to, and for the information of, the Weyerhaeuser board, in its capacity as such, and addressed only the fairness from a financial point of view to Weyerhaeuser of the exchange ratio pursuant to the merger agreement as of the date of such opinion. Morgan Stanley’s opinion did not address any other aspects or implications of the merger or other transactions contemplated by the merger agreement. The opinion did not in any manner address the prices at which Weyerhaeuser common shares or shares of Plum Creek common stock would trade following completion of the merger or at any time. Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation as to how any holder of Weyerhaeuser common shares or Plum Creek common stock should vote at the special meetings to be held in connection with the merger, or as to any other action that a Weyerhaeuser shareholder or a Plum Creek stockholder should take relating to the merger or any other matter.

For purposes of its opinion, Morgan Stanley, among other things:

 

1)	Reviewed certain publicly available financial statements and other business and financial information of Plum Creek and Weyerhaeuser, respectively;

 

2)	Reviewed certain internal financial statements and other financial and operating data concerning, and the financial performance of, Plum Creek and Weyerhaeuser, respectively;

 

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3)	Reviewed certain financial projections prepared by the management of Plum Creek;

 

4)	Reviewed certain financial projections prepared by the management of Weyerhaeuser;

 

5)	Reviewed information relating to certain strategic, financial and operational benefits anticipated from the merger, prepared by the management of Weyerhaeuser;

 

6)	Discussed the past and current operations and financial condition and the prospects of Plum Creek with senior executives of Plum Creek;

 

7)	Discussed the past and current operations and financial condition and the prospects of Weyerhaeuser, including information relating to certain strategic, financial and operational benefits anticipated from the merger, with senior executives of Weyerhaeuser;

 

8)	Reviewed the pro forma impact of the merger on Weyerhaeuser’s funds available for distribution per share, consolidated capitalization and certain other financial ratios;

 

9)	Reviewed and compared the reported prices and trading activity for Plum Creek common stock and Weyerhaeuser common shares;

 

10)	Participated in certain discussions among representatives of Weyerhaeuser and Plum Creek and their financial and legal advisors;

 

11)

Compared the financial performance of certain segments of Plum Creek and Weyerhaeuser, respectively, with certain publicly-traded companies that it deemed comparable to such business segments of Plum Creek and Weyerhaeuser, and reviewed the prices and trading activity of these publicly-traded companies;

 

12)	Reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

 

13)	Reviewed a draft of the merger agreement dated November 6, 2015; and

 

14)	Performed such other analyses, reviewed such other information and considered such other factors as it deemed appropriate.

In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to it by Plum Creek and Weyerhaeuser, and formed a substantial basis for its opinion. With respect to the projections of Weyerhaeuser and Plum Creek referred to above, Morgan Stanley assumed that they were reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements of Plum Creek and Weyerhaeuser of the future financial performance of Plum Creek and Weyerhaeuser. With respect to the information related to certain strategic, financial and operational benefits anticipated from the merger, Morgan Stanley assumed that such information was reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Weyerhaeuser. Morgan Stanley was advised by Weyerhaeuser, and assumed, with Weyerhaeuser’s consent, that the projections of Weyerhaeuser and Plum Creek referred to above, and the strategic, financial and operational benefits anticipated from the merger by the management of Weyerhaeuser, were reasonable bases upon which to evaluate the financial prospects of Plum Creek and Weyerhaeuser. Morgan Stanley relied upon, without independent verification, the assessment by the management of Weyerhaeuser of: (1) the strategic, financial and other benefits expected to result from the merger and (2) the timing and risks associated with the integration of Plum Creek and Weyerhaeuser. In addition, Morgan Stanley assumed that the merger will be completed in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, including, among other things, that the merger will be treated as a tax-free reorganization, pursuant to the Internal Revenue Code of 1986, as amended. Morgan Stanley assumed that the final merger agreement would not differ in any material respect from the draft merger agreement reviewed by it. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed merger.

 

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Morgan Stanley assumed that each of Plum Creek and Weyerhaeuser has operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes since its formation as a REIT and Morgan Stanley assumed that the merger will not adversely affect such status or operations of Plum Creek or Weyerhaeuser.

Morgan Stanley’s opinion did not address the relative merits of the merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. In its opinion, Morgan Stanley noted that it is not a legal, tax or regulatory advisor. In its opinion, Morgan Stanley noted that it is a financial advisor only and it relied upon, without independent verification, the assessment of Weyerhaeuser and Plum Creek and their legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of Plum Creek’s officers, directors or employees, or any class of such persons, relative to the consideration to be paid to the holders of shares of Plum Creek common stock in the transaction. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of Plum Creek or Weyerhaeuser, nor was it furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, November 6, 2015. Events occurring after November 6, 2015 may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

The following is a summary of the material financial analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion, dated November 6, 2015. Some of these summaries include information in tabular format. In order to understand fully the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Certain dollar amounts set forth in this summary have been rounded while exchange ratios set forth herein may be based on unrounded numbers. Because of rounding, certain aggregate amounts may not sum to its component. The analyses listed in the tables and described below must be considered as a whole; considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion.

For purposes of the financial analyses summarized below, the term “implied price per share” refers to the implied equity value per share for Plum Creek common stock of $49.47 based on the 1.60x exchange ratio pursuant to the merger agreement and Weyerhaeuser’s closing stock price of $30.92 on November 4, 2015, which was the last trading day prior to finalization of Morgan Stanley’s financial analyses. For your informational purposes, and although not part of the analyses performed by Morgan Stanley for purposes of its opinion, based on Weyerhaeuser’s closing stock price of $30.40 on November 6, 2015, which was the last trading day prior to the public announcement of the merger, and based on the 1.60x exchange ratio pursuant to the merger agreement, the implied equity value per share for Plum Creek common stock was $48.64.

For purposes of this section entitled “—Opinion of Weyerhaeuser’s Financial Advisor”, Morgan Stanley utilized in its analysis funds available for distribution, or FAD, (1) for Weyerhaeuser management forecasts as set forth in the line item entitled “Funds available for distribution for common dividends” in the section entitled “—Certain Weyerhaeuser Forecasts” beginning on page [•], and (2) for Plum Creek management forecasts as set forth in the line item entitled “Funds available for distribution” in the section entitled “—Certain Plum Creek Forecasts” beginning on page [•] and, in the case of Plum Creek, deducted changes in working capital. In addition, at the direction of Weyerhaeuser, Morgan Stanley reduced the forecasted amounts of Plum Creek’s FAD by FAD attributable to operations that Plum Creek had previously announced would be sold to a joint venture to which Plum Creek is a party and increased FAD by the common returns and management fees attributable to such joint venture operations (all as forecasted by the management of Plum Creek). The net adjustments to FAD described in the previous sentence, which were derived from forecasts provided by Plum Creek, were $6 million, $7 million, $8 million, $11 million and $12 million for 2016, 2017, 2018, 2019 and 2020, respectively. Further, at the direction of Weyerhaeuser, Morgan Stanley included in the net debt of Plum

 

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Creek cash of approximately $420 million resulting from the announced sale of timberlands to a joint venture to which Plum Creek is a party (which sale was scheduled to occur after September 30, 2015 and was therefore not reflected on Plum Creek’s balance sheet as of September 30, 2015) and excluded debt owing by Plum Creek to certain joint ventures in which it participated. As part of its analysis, Morgan Stanley included in the net debt of Weyerhaeuser Weyerhaeuser’s mandatory convertible preference shares and excluded debt that was non-recourse to Weyerhaeuser.

Trading Range Analysis

Last 12 Months Trading Range. Morgan Stanley reviewed the trading range of Plum Creek common stock and Weyerhaeuser common shares for the 12 months ended November 4, 2015. Morgan Stanley observed that the low and high closing prices for Plum Creek common stock for the 12-month period ended November 4, 2015, rounded to the nearest dollar, were $37 and $45 per share, respectively. Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47. For your informational purposes, and although not part of the analyses performed by Morgan Stanley for purposes of its opinion, based on Weyerhaeuser’s closing stock price of $30.40 on November 6, 2015, which was the last trading day prior to the public announcement of the merger, as of the close of trading on such date, the implied price per share of Plum Creek common stock was $48.64.

Morgan Stanley observed that the low and high closing prices for Weyerhaeuser common shares for the 12-month period ended November 4, 2015, rounded to the nearest dollar, were $27 and $37 per share, respectively. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley calculated the daily historical exchange ratios for the 12-month period ended November 4, 2015 implied by dividing the closing price of Plum Creek common stock for the relevant date by the closing price of Weyerhaeuser common shares for such date. This analysis indicated an implied exchange ratio reference range of 1.15x to 1.46x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

Equity Research Stock Price Targets. Morgan Stanley reviewed selected public market trading price targets for Plum Creek common stock prepared and published by nine equity research analysts that published or confirmed price targets for Plum Creek on and after September 15, 2015 and on or prior to November 4, 2015. These targets reflected each analyst’s estimate of the future public market trading price of Plum Creek common stock. Morgan Stanley noted the range of undiscounted stock price targets for Plum Creek common stock from such research targets, rounded to the nearest dollar, was $38 to $46 per share. Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47.

Morgan Stanley reviewed selected public market trading price targets for Weyerhaeuser common shares prepared and published by 13 equity research analysts that published or confirmed price targets for Weyerhaeuser on and after August 2, 2015 and on or prior to November 4, 2015. These targets reflected each analyst’s estimate of the future public market trading price of Weyerhaeuser common shares. Morgan Stanley noted the range of undiscounted stock price targets for Weyerhaeuser common shares from such research targets, rounded to the nearest dollar, was $28 to $38 per share. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley calculated the exchange ratio range implied by the equity research price targets. In order to calculate the exchange ratio, Morgan Stanley compared the lowest research price target for Plum Creek common stock to the highest research price target for Weyerhaeuser common shares to derive the lowest exchange ratio implied by the price targets. Similarly, Morgan Stanley compared the highest research price target for Plum Creek common stock to the lowest research price target for Weyerhaeuser common shares to derive the highest exchange ratio implied by the price targets. This analysis yielded an implied range of exchange ratios of 1.00x to 1.64x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

 

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The public market trading price targets published by research analysts do not necessarily reflect current market trading prices for Weyerhaeuser common shares or Plum Creek common stock and these estimates are subject to uncertainties, including the future financial performance of Weyerhaeuser and Plum Creek and future financial market conditions.

Historical Trading Multiple Analysis

Morgan Stanley performed a historical trading multiple analysis to determine the ratio of the closing stock price per share of Plum Creek common stock and per Weyerhaeuser common share, respectively, to Plum Creek’s and Weyerhaeuser’s respective estimated FAD per share that Plum Creek and Weyerhaeuser had traded at during various periods. Morgan Stanley refers to this statistic as P/FAD. Morgan Stanley calculated the applicable closing price to estimated FAD per share for each of Plum Creek and Weyerhaeuser for the 12 months following the date of measurement, based on publicly available research estimates. In its analysis, Morgan Stanley calculated P/FAD as of the close of trading on November 4, 2015 and for the daily average over the six-month, one-year, three-year and five-year periods ending November 4, 2015.

Morgan Stanley also performed a historical dividend yield analysis to determine the dividend yields at which a share of Plum Creek common stock and Weyerhaeuser common shares, respectively, had traded at during various periods. Morgan Stanley calculated the applicable dividend yields by annualizing the dividend declared by Plum Creek and Weyerhaeuser, respectively, in the quarter prior to measurement and dividing such amount by the closing stock price of a share of Plum Creek common stock and Weyerhaeuser common shares, respectively. Morgan Stanley calculated the applicable dividend yield for each of Plum Creek and Weyerhaeuser as of the close of trading on November 4, 2015 and for the daily average over the six-month, one-year, three-year and five-year periods ending November 4, 2015.

The analysis yielded the following:

 

		Plum Creek P/FAD				Weyerhaeuser P/FAD				Plum Creek Dividend Yield				Weyerhaeuser Dividend Yield
Close of Trading, at 11/4/15			20.4				22.5				4.3	%			4.0	%
Six-Month Average			20.2				25.2				4.3	%			3.5	%
One-Year Average			20.0				23.3				4.2	%			3.2	%
Three-Year Average			21.5				20.2				3.9	%			2.6	%
Five-Year Average			22.2				21.9				4.1	%			2.7	%

Based on this analysis and its professional judgment, Morgan Stanley selected a reference range of P/FAD of 20x to 23x and a reference range of dividend yields of 4.0% to 4.5%. Morgan Stanley applied the reference range of P/FAD to consensus Wall Street research estimates (referred to as “Street consensus”) of estimated FAD of approximately $382 million for Plum Creek for calendar year 2016 (derived based on Wall Street research estimates of line items included in FAD) as well as to estimates of Plum Creek’s FAD for calendar year 2016 provided by Plum Creek management. In addition, Morgan Stanley applied the reference range of P/FAD to Street consensus of estimated FAD of approximately $747 million for Weyerhaeuser for calendar year 2016 (derived based on Wall Street research estimates of line items included in FAD) as well as to estimates of Weyerhaeuser FAD for calendar year 2016 provided by Weyerhaeuser management. Morgan Stanley applied the reference range of dividend yields to the annualized last declared quarterly dividend of Plum Creek and Weyerhaeuser, respectively, prior to the date of Morgan Stanley’s opinion.

 

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These analyses indicated the following implied per share equity value reference ranges, rounded to the nearest dollar, for a share of Plum Creek common stock and a Weyerhaeuser common share, on a fully diluted basis:

 

		Selected Multiple Range		Implied Plum Creek Share Price Range		Implied Weyerhaeuser Share Price Range
Street consensus estimated 2016 FAD		20x – 23x		$44 – $50		$29 – $33
Management estimated 2016 FAD		20x – 23x		$39 – $45		$29 – $33
Dividend Yield		4.0% – 4.5%		$39 – $44		$28 – $31

Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley then calculated the exchange ratio reference ranges implied by the historical trading range analysis. For each of the Street consensus estimated 2016 FAD, Management estimated 2016 FAD and dividend yield analyses, Morgan Stanley compared the lowest implied per share value for Plum Creek common stock to the highest implied per share value for Weyerhaeuser common shares to derive the lowest exchange ratio implied by each analysis. Similarly, Morgan Stanley compared the highest implied per share value for Plum Creek common stock to the lowest implied per share value for Weyerhaeuser common shares to derive the highest exchange ratio implied by each analysis.

The implied exchange ratio reference ranges resulting from this analysis were:

 

		Implied Exchange Ratio Range
Street consensus estimated 2016 FAD			1.32x – 1.74x
Management estimated 2016 FAD			1.18x – 1.56x
Dividend Yield			1.26x – 1.60x

Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

Sum-of-the-Parts Analysis

Morgan Stanley performed a sum-of-the-parts valuation analysis on each of Plum Creek and Weyerhaeuser. A sum-of-the parts analysis involves a valuation of a company on a segment-by-segment basis to determine an implied value for the enterprise as a whole.

Plum Creek Sum-of-the-Parts Analysis. Morgan Stanley performed a sum-of-the-parts valuation analysis for the following business segments of Plum Creek: timberlands; real estate; joint ventures; manufacturing; energy and natural resources; and corporate overhead. As part of its analysis, Morgan Stanley reviewed equity research reports, dated October 2015, prepared and published by three equity research analysts that contained sum-of-the-parts valuations for Plum Creek’s business segments (referred to as the “Plum Creek SOTP analyst reports”).

With respect to Plum Creek’s timberlands segment, Morgan Stanley reviewed the Plum Creek SOTP analyst reports which provided estimated prices per timberland acre by geography. In addition, Morgan Stanley reviewed data contained in Plum Creek’s publicly available investor materials regarding selected precedent timberlands transactions with a value greater than $35 million from 2013 to 2014 in the U.S. South and selected precedent timberlands transactions with a value greater than $35 million from 2012 to 2014 in the U.S. Northwest. Based on its review and its professional judgment, Morgan Stanley selected reference price per acre ranges for the

 

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timberlands owned by Plum Creek, and applied these reference ranges to the acreage owned by Plum Creek in the following geographies as of December 31, 2014 (as disclosed in Plum Creek’s publicly available investor materials), to derive implied values by geography as follows:

 

		Millions of Acres				Acreage Valuation Reference Range ($ per acre)								Implied Value ($ in billions)
Segment						Low				High				Low				High
Timberlands
U.S. South			3.5			$	1,600			$	2,000			$	5.6			$	7.0
West of Cascades			0.4			$	2,600			$	3,700			$	1.1			$	1.6
West Inland			0.8			$	1,000			$	1,200			$	0.8			$	1.0
Other (Great Lakes and Northeast)			1.9			$	500			$	750			$	0.9			$	1.4
Total Timberlands														$	8.5			$	11.0

With respect to Plum Creek’s real estate segment and Plum Creek’s joint ventures, Morgan Stanley reviewed the Plum Creek SOTP analyst reports. Based on this review and its professional judgment, Morgan Stanley selected reference ranges of value for such segments as follows:

 

		Value Reference Range ($ in billions)
Segment		Low				High
Real Estate		$	1.2			$	1.5
Joint Ventures		$	0.2			$	0.3

With respect to Plum Creek’s manufacturing segment, Morgan Stanley reviewed the Plum Creek SOTP analyst reports. In addition, Morgan Stanley performed a comparable company analysis, which attempts to provide an implied value of business by comparing it to similar businesses that are publicly traded. Morgan Stanley reviewed and compared, using publicly available information, current and historical financial information, ratios and public market multiples for publicly-traded companies that have certain business and operating characteristics similar to the manufacturing segment. The companies selected were West Fraser Timber Co. Ltd., Canfor Corp. and Boise Cascade Company, which were selected on the basis of their financial and operating metrics and characteristics, including service offerings, risk profile, size, geographic footprint, scale and type of operations. Morgan Stanley analyzed the trading multiples for the comparable companies to determine the ratios of Aggregate Value (defined as market capitalization plus total debt and minority interests less cash and cash equivalents) to Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, depletion and amortization) for the 12-months prior to measurement (referred to as “LTM EBITDA”) that the companies were trading at as of the close of trading on November 4, 2015. With respect to Plum Creek’s energy and natural resources segment, Morgan Stanley reviewed a range of Aggregate Value to LTM EBITDA multiples for such segment identified or derived from the Plum Creek SOTP analyst reports. With respect to Plum Creek’s corporate overhead segment, Morgan Stanley derived reference ranges based on the Aggregate Value to LTM EBITDA multiples for Weyerhaeuser’s other non-timber business segments.

Based on this analysis and its professional judgment, Morgan Stanley selected reference ranges of Aggregate Value to LTM EBITDA multiples for Plum Creek’s manufacturing, energy and natural resources and corporate overhead segments and applied these ranges to the Adjusted EBITDA of the respective business segments of Plum Creek for the 12 months ending September 30, 2015, based on Plum Creek’s publicly filed information, as follows:

 

		LTM EBITDA ($ in millions)				Selected Multiple Reference Range								Implied Value ($ in billions)
Segment						Low				High				Low				High
Manufacturing			57				6.0x				7.0x			$	0.3			$	0.4
Energy and Natural Resources			31				7.5x				10.0x			$	0.2			$	0.3
Corporate Overhead			(34	)			7.0x				9.0x			($	0.2	)		($	0.3	)

 

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Morgan Stanley then aggregated the implied values for each business segment based on the analysis above and deducted the net debt of Plum Creek as of September 30, 2015 to derive an implied equity value reference range for a share of Plum Creek common stock on a fully diluted basis. This analysis indicated an implied per share equity value reference range, rounded to the nearest dollar, for a share of Plum Creek common stock on a fully diluted basis of $47 to $64. Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47.

Weyerhaeuser Sum-of-the-Parts Analysis. Morgan Stanley performed a sum-of-the-parts valuation analysis for the following business segments of Weyerhaeuser: timberlands, wood products, cellulose fibers and corporate overhead. As part of its analysis, Morgan Stanley reviewed equity research reports, dated November and October 2015, prepared and published by five equity research analysts that contained sum-of-the-parts valuations for Weyerhaeuser’s business segments (referred to as the “Weyerhaeuser SOTP analyst reports”).

With respect to Weyerhaeuser’s timberlands segment, Morgan Stanley reviewed the Weyerhaeuser SOTP analyst reports which provided estimated prices per timberland acre by geography. In addition, Morgan Stanley reviewed data contained in Plum Creek’s publicly available investor materials regarding selected precedent timberlands transactions with a value greater than $35 million from 2013 to 2014 in the U.S. South and selected precedent timberlands transactions with a value greater than $35 million from 2012 to 2014 in the U.S. Northwest. Based on its review and its professional judgment, Morgan Stanley selected reference price per acre ranges for the timberlands owned by Weyerhaeuser, and applied these reference ranges to the acreage owned by Weyerhaeuser in the following geographies as of December 31, 2014 (as provided by Weyerhaeuser management) to derive implied values by geography, as follows:

 

		Millions of Acres				Acreage Valuation Reference Range ($ per acre)								Implied Value ($ in billions)
Segment						Low				High				Low				High
Timberlands
US South			4.0			$	1,600			$	2,000			$	6.5			$	8.1
US West of Cascades			2.6			$	3,400			$	3,900			$	8.8			$	10.1
Uruguay / Others			0.3			$	700			$	1,200			$	0.2			$	0.4
Total Timberlands														$	15.5			$	18.6

With respect to Weyerhaeuser’s wood products and cellulose fibers segments, Morgan Stanley reviewed the Weyerhaeuser SOTP analyst reports. In addition, Morgan Stanley performed a comparable company analysis. Morgan Stanley reviewed and compared, using publicly available information, current and historical financial information, ratios and public market multiples for publicly-traded companies that have certain business and operating characteristics similar to the wood products and cellulose fibers segments. The companies selected with respect to the wood products segment were West Fraser Timber Co., Canfor Corp. and Boise Cascade Company. The companies selected with respect to the cellulose fibers segment were Rayonier Advanced Materials Inc. and Mercer International Inc. In each case, these companies were selected on the basis of their financial and operating metrics and characteristics, including service offerings, risk profile, size, geographic footprint, scale and type of operations. Morgan Stanley analyzed the respective trading multiples for the comparable companies to determine the ratios of Aggregate Value to LTM EBITDA that the companies were trading at as of the close of trading on November 4, 2015. With respect to Weyerhaeuser’s corporate overhead segment, Morgan Stanley reviewed the Aggregate Value to LTM EBITDA multiples assigned to such segment in the Weyerhaeuser SOTP analyst reports and the multiples it selected for Weyerhaeuser’s other non-timber business segments.

 

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Based on this analysis and its professional judgment, Morgan Stanley selected reference ranges of Aggregate Value to LTM EBITDA multiples for Weyerhaeuser’s wood products, cellulose fibers and corporate overhead segments and applied these ranges to the Adjusted EBITDA of the respective business segments of Weyerhaeuser for the 12 months ending September 30, 2015, based on Weyerhaeuser’s publicly filed information, as follows:

 

		LTM EBITDA ($ in millions)				Selected Multiple Reference Range								Implied Value ($ in billions)
Segment						Low				High				Low				High
Wood Products			383				6.0x				7.0x			$	2.3			$	2.7
Cellulose Fibers			399				5.5x				6.5x			$	2.2			$	2.6
Corporate Overhead			(106	)			6.0x				7.0x			($	0.6	)		($	0.7	)

Morgan Stanley then aggregated the implied values for each business segment based on the analysis above and deducted the net debt of Weyerhaeuser as of September 30, 2015 to derive an implied equity value reference range for a Weyerhaeuser common share on a fully diluted basis. This analysis indicated an implied per share equity value reference range, rounded to the nearest dollar, for a Weyerhaeuser common share on a fully diluted basis of $29 to $36. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley then calculated the exchange ratio ranges implied by the sum-of-the-parts analysis. Morgan Stanley compared the lowest implied equity value per share for Plum Creek common stock to the highest implied equity value per share for Weyerhaeuser common shares to derive the lowest exchange ratio implied by the sum-of-the-parts analysis. Similarly, Morgan Stanley compared the highest implied equity value per share for Plum Creek common stock to the lowest implied equity value per share for Weyerhaeuser common shares to derive the highest exchange ratio implied by the sum-of-the-parts analysis. The implied exchange ratio range resulting from this analysis was 1.30x to 2.23x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

No company or transaction utilized as a comparison in the comparable company or precedent transaction analysis is identical to the businesses of Plum Creek or Weyerhaeuser or any segment thereof or directly comparable in business mix, and size or other metrics. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences between the companies, Plum Creek and Weyerhaeuser and the businesses being compared and other factors that would affect the value of the companies to which the businesses of Plum Creek and Weyerhaeuser are being compared. In selecting comparable companies and transactions, Morgan Stanley made judgments and assumptions with regard to size, business mix, industry performance, geographic mix, economic, market and financial conditions and other matters, many of which are beyond the control of Plum Creek or Weyerhaeuser, such as the impact of competition on Plum Creek and Weyerhaeuser and their business segments and the industry generally, industry growth and the absence of any adverse material change in the financial conditions and prospects of Plum Creek and Weyerhaeuser or the industry or the financial markets in general, which could affect the public trading value of the companies and the companies to which they are being compared. Mathematical analysis (such as determining the mean or medium) is not in itself a meaningful method of using comparable company data.

Discounted Equity Value Analysis

For each of Plum Creek and Weyerhaeuser, Morgan Stanley performed a discounted equity value analysis, which is designed to provide insight into the future value of a company’s common equity as a function of the company’s estimated future FAD. The resulting value is subsequently discounted to arrive at a present value for the company’s potential future stock price.

Plum Creek Discounted Equity Value. Morgan Stanley calculated the discounted equity value per share of Plum Creek common stock as of December 31, 2015. To calculate the discounted equity value per share of Plum Creek common stock, Morgan Stanley utilized calendar year 2017, 2018 and 2019 estimated FAD per share

 

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based on the financial forecasts provided by management of Plum Creek. For each scenario, Morgan Stanley calculated the future equity value per share of Plum Creek common stock at year end 2016, 2017 and 2018, respectively, by applying a P/FAD multiple of 20.0x and 23.0x to Plum Creek’s estimated FAD per share for each of 2017, 2018 and 2019 provided by Plum Creek management. These multiples were based on the reference range contained in Morgan Stanley’s historical trading multiple analysis (see the section entitled “—Historical Trading Multiples Analysis” beginning on page [•]). Morgan Stanley discounted the resulting future equity values per share to December 31, 2015 using a discount rate of 6.5%, based on Morgan Stanley’s estimate of Plum Creek’s then current cost of equity. Morgan Stanley included in its calculations the present value of cumulative dividends from December 31, 2015 to the applicable valuation date, assuming a constant dividend per share.

Weyerhaeuser Discounted Equity Value. Morgan Stanley calculated the discounted equity value per share of Weyerhaeuser common shares as of December 31, 2015. To calculate the discounted equity value per share of Weyerhaeuser common shares, Morgan Stanley utilized calendar year 2017, 2018 and 2019 estimated FAD per share based on the financial forecasts provided by management of Weyerhaeuser. For each scenario, Morgan Stanley calculated the future equity value per share of Weyerhaeuser common shares at year end 2016, 2017 and 2018, respectively, by applying a P/FAD multiple of 20.0x and 23.0x to Weyerhaeuser’s estimated FAD per share for each of 2017, 2018 and 2019 provided by Weyerhaeuser management. These multiples were based on the reference range contained in Morgan Stanley’s historical trading multiple analysis (see the section entitled “—Historical Trading Multiples Analysis” beginning on page [•]). Morgan Stanley discounted the resulting future equity values per share to December 31, 2015 using a discount rate of 7.4%, based on Morgan Stanley’s estimate of Weyerhaeuser’s then current cost of equity. Morgan Stanley included in its calculations the present value of cumulative dividends from December 31, 2015 to the applicable valuation date.

This analysis indicated the following implied per share equity value reference ranges, rounded to the nearest dollar, for a share of Plum Creek common stock and a Weyerhaeuser common share on a fully diluted basis:

 

		Implied Value Per Share
Plum Creek		$	42 –$52
Weyerhaeuser		$	25– $33

Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley then calculated the exchange ratio ranges implied by the discounted equity value analyses. Morgan Stanley compared the lowest implied equity value per share for Plum Creek common stock to the highest implied equity value per share for Weyerhaeuser common shares to derive the lowest exchange ratio implied by the discounted equity value analyses. Similarly, Morgan Stanley compared the highest implied equity value per share for Plum Creek common stock to the lowest implied equity value per share for Weyerhaeuser common shares to derive the highest exchange ratio implied by the discounted equity value analyses. The implied exchange ratio range resulting from this analysis was 1.26x to 2.04x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

Precedent Premia Analysis

Morgan Stanley reviewed, based on publicly available information, the premiums paid in selected acquisition transactions in North America.

 

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North American All-Stock Transactions. Morgan Stanley considered premiums paid in transactions where the consideration was stock and which had a transaction value of $1.0 billion or more. Morgan Stanley considered transactions since the beginning of 1995. Morgan Stanley noted that the mean and median premiums paid in the transactions reviewed were approximately 30% and 24%, respectively, over the unaffected closing stock price (defined as the earliest of the day before market rumors directly mentioning the company name or the last full day of trading before transaction announcement). Based on this analysis and its professional judgment, Morgan Stanley selected a reference premium range of 20% to 30% to apply to Plum Creek’s closing stock price on November 4, 2015 of $41.06.

Shared Governance Mergers. Morgan Stanley considered premiums paid in the following transactions, which consisted of transactions since 1995 in which the consideration was stock and which had a transaction value of $1.0 billion or more and in which (1) the acquiring company shareholders retained ownership of between 60% and 70% in the combined company and (2) the target achieved significant board representation and management positions in the combined company (including by target personnel becoming either the chief executive officer or chairman of the combined company):

 

Acquiror		Target
Halliburton		Dresser
BP		Amoco
Conexant		Globespan Virata
The St. Paul Companies		Travelers Property Casualty
FPL Group		Constellation Energy
Regions Financial Corp.		AmSouth Bancorporation
Goldcorp		Glamis
Bank of New York		Mellon Financial Corp
Sims Group		Metal Management
CenturyTel		Embarq Corp.
Allscripts-Misys Healthcare		Eclipsys Corporation
Duke Energy		Progress Energy

Morgan Stanley noted that the mean and median premiums paid in the transactions reviewed were approximately 14% and 16%, respectively, over the unaffected closing stock price. Based on this analysis and its professional judgment, Morgan Stanley selected a reference premium range of 10% to 20% to apply to Plum Creek’s closing stock price on November 4, 2015 of $41.06.

 

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Large REIT Transactions. Morgan Stanley considered premiums paid in the following transactions, which involved real estate investment trusts, which were announced after January 1, 2005 and which had a transaction value of $2.0 billion or more:

 

Acquiror		Target
Blackstone Real Estate		Equity Office Properties Trust
Tishman Speyer, Lehman Bros		Archstone-Smith Trust
American Realty Capital		Cole Real Estate
Brookfield / Blackstone		Trizec Properties
Blackstone Real Estate		BioMed Realty Trust
Lone Star Funds		Home Properties
Ventas		Nationwide Health Properties
Essex Property Trust		BRE Properties
Centro Properties Group		New Plan Excel Realty
Blackstone Real Estate		Strategic Hotels & Resorts
Morgan Stanley Real Estate		Crescent Real Estate
Mid-America Apartment Communities		Colonial Properties Trust
SL Green		Reckson Associates
Omega Healthcare		Aviv REIT
Realty Income Corporation		American Realty Capital Trust
Ventas		American Realty Capital Healthcare Trust
Chambers Street Properties		Gramercy Property Trust

Morgan Stanley noted that the mean and median premiums paid in the transactions reviewed were approximately 12% and 13%, respectively, over the unaffected closing stock price. Based on this analysis and its professional judgment, Morgan Stanley selected a reference premium range of 10% to 20% to apply to Plum Creek’s closing stock price on November 4, 2015 of $41.06.

Morgan Stanley then calculated the exchange ratio implied by dividing the reference ranges for a share of Plum Creek common stock derived from the precedent premia analyses by the closing price for Weyerhaeuser common shares on November 4, 2015 of $30.92. The analyses indicated the following implied per share equity value reference ranges, rounded to the nearest dollar, for a share of Plum Creek common stock and the corresponding implied exchange ratio ranges:

 

		Selected Premium Range		Implied Plum Creek Share Price Range		Implied Exchange Ratio Range
North American All-Stock Transactions		20% – 30%		$49 – $53		1.59x – 1.73x
Shared Governance Mergers		10% – 20%		$45 – $49		1.46x – 1.59x
Large REIT Transactions		10% – 20%		$45 – $49		1.46x – 1.59x

Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

For your informational purposes, and although not part of the analyses performed by Morgan Stanley for purposes of its opinion, the exchange ratio of 1.60x represented an implied premium of 13.8% to the 30-trading-day volume weighted average price ratio of shares of Plum Creek common stock to Weyerhaeuser common shares (based on the 30-day period ending November 6, 2015) as noted in the joint press release, dated November 8, 2015, announcing the merger.

No company or transaction utilized as a comparison in the analysis of selected precedent premia transactions is identical to Plum Creek or Weyerhaeuser or directly comparable to the merger in business mix, timing and size or other metrics. Accordingly, an analysis of the results of the foregoing necessarily involves

 

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complex considerations and judgments concerning differences between the merger and the other transactions, Plum Creek and Weyerhaeuser and other factors. In evaluating the precedent premia transactions, Morgan Stanley made judgments and assumptions with regard to the applicable transactions, size, business mix, governance matters, industry performance, geographic mix, economic, market and financial conditions and other matters, many of which are beyond the control of Plum Creek or Weyerhaeuser. Mathematical analyses (such as determining the mean or median) are not in themselves a meaningful method of using comparable data.

Discounted Cash Flow Analysis

Morgan Stanley performed discounted cash flow analysis on each of Plum Creek and Weyerhaeuser, which are designed to estimate the value of a company on a standalone basis by calculating the present value of estimated future cash flows and terminal value of that company. Morgan Stanley calculated a range of per share equity values (as of December 31, 2015) for each of Weyerhaeuser and Plum Creek.

Plum Creek Discounted Cash Flow Analysis. Morgan Stanley first calculated the estimated unlevered free cash flow (calculated as FAD adding back interest expense, assuming that there is no tax shield resulting from interest expense) of Plum Creek for the period from January 1, 2016 to December 31, 2020. The FAD and interest expense was based on the forecasts of the management of Plum Creek. Morgan Stanley calculated a terminal value for Plum Creek by applying a range of perpetual growth rates of 0.5% to 1.5%, based on Morgan Stanley’s professional judgment, to the unlevered free cash flow of Plum Creek for 2020. Morgan Stanley then discounted the unlevered free cash flow and terminal value to present value as of December 31, 2015 using a discount rate of 5.9%, representing the approximate midpoint of the range of discount rates for Plum Creek selected by Morgan Stanley based on Morgan Stanley’s estimation of Plum Creek’s then current weighted average cost of capital. Morgan Stanley then deducted the net debt of Plum Creek from the resulting value to derive equity value. Net debt was based on Plum Creek’s management projections of net debt as of December 31, 2015. This analysis indicated an implied per share reference range, rounded to the nearest dollar, for a share of Plum Creek common stock of $45 to $56 per share, on a fully diluted basis. Morgan Stanley noted that the closing price for Plum Creek common stock on November 4, 2015 was $41.06. Morgan Stanley noted that the implied price per share of Plum Creek common stock as of the close of trading on November 4, 2015 was $49.47.

Weyerhaeuser Discounted Cash Flow Analysis. Morgan Stanley first calculated the estimated unlevered free cash flow (calculated as FAD adding back interest expense, net of the tax shield resulting from certain indebtedness of a subsidiary of Weyerhaeuser that is a taxable REIT subsidiary applying a 38% tax rate as directed by Weyerhaeuser) of Weyerhaeuser for the period from January 1, 2016 to December 31, 2020. FAD and interest expense for the period through December 31, 2019 was based on the forecasts of the management of Weyerhaeuser. At the direction of Weyerhaeuser, FAD for 2020 was derived by increasing FAD for 2019 by 2.0%. Morgan Stanley calculated a terminal value for Weyerhaeuser by applying a range of perpetual growth rates of 0.5% to 1.5%, based on Morgan Stanley’s professional judgment, to the unlevered free cash flow of Weyerhaeuser for 2020. Morgan Stanley then discounted the unlevered free cash flow and terminal value to present value as of December 31, 2015 using a discount rate of 6.2%, representing the midpoint of the range of discount rates for Weyerhaeuser selected by Morgan Stanley based on Morgan Stanley’s estimation of Weyerhaeuser’s then current weighted average cost of capital. Morgan Stanley then deducted the net debt of Weyerhaeuser from the resulting value to derive equity value. Net debt was based on Weyerhaeuser’s debt as of September 30, 2015 and cash and cash equivalents of Weyerhaeuser at December 31, 2015 as forecasted by the management of Weyerhaeuser. This analysis indicated an implied per share reference range, rounded to the nearest dollar, for a Weyerhaeuser common share of $28 to $35 per share, on a fully diluted basis. Morgan Stanley noted that the closing price for Weyerhaeuser common shares on November 4, 2015 was $30.92.

Morgan Stanley then calculated the exchange ratio ranges implied by the discounted cash flow analyses. Morgan Stanley compared the lowest implied per share value for Plum Creek common stock to the highest implied per share value for Weyerhaeuser common shares to derive the lowest exchange ratio implied by each pair of analyses. Similarly, Morgan Stanley compared the highest implied per share value for Plum Creek common stock to the lowest implied per share value for Weyerhaeuser common shares to derive the highest

 

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exchange ratio implied by each pair of analyses. The implied exchange ratio range resulting from this analysis was 1.30x to 1.96x. Morgan Stanley noted that the merger agreement provided for an exchange ratio of 1.60x.

Contribution Analysis

Morgan Stanley reviewed the relative contributions of each of Weyerhaeuser and Plum Creek to FAD and Adjusted EBITDA of the combined company for calendar years 2015, 2016 and 2017, in each case based both on Street consensus and the forecasts provided by the managements of Weyerhaeuser and Plum Creek.

Morgan Stanley calculated the implied equity contributions shown below for each of Weyerhaeuser and Plum Creek and implied exchange ratios based on such contributions. The Adjusted EBITDA analysis was adjusted to take into account the impact of Weyerhaeuser’s and Plum Creek’s net debt as of September 30, 2015, respectively.

The analysis indicated the following:

 

		Implied Equity Contribution								Implied Exchange Ratio
Adjusted EBITDA Management		Weyerhaeuser				Plum Creek
Forecasts
2015			72	%			28	%			1.193x
2016			79	%			21	%			0.892x
2017			77	%			23	%			0.963x
Adjusted EBITDA Street
Consensus
2015			72	%			28	%			1.177x
2016			78	%			22	%			0.913x
2017			78	%			22	%			0.908x
FAD Management
Forecasts
2015			54	%			46	%			2.537x
2016			69	%			31	%			1.355x
2017			65	%			35	%			1.560x
FAD Street
Consensus
2015			56	%			44	%			2.324x
2016			66	%			34	%			1.512x
2017			68	%			32	%			1.423x

Morgan Stanley noted that the exchange ratio provided for in the merger agreement was 1.60x.

Illustrative Combined Company Market Value Analysis

Morgan Stanley performed an illustrative combined company market value analysis, the purpose of which is to review the implied increase in market value to the Weyerhaeuser shareholders based on assumptions regarding synergies and pro forma ownership of the combined company. The illustrative combined company market value analysis was performed for illustrative purposes only and is not indicative of actual trading levels and does not take into account the timing to achieve any synergies or the timing of the closing of the transaction.

In its illustrative analysis, Morgan Stanley first calculated the then-current equity market value of Weyerhaeuser as of the close of trading on November 4, 2015, which resulted in a value of approximately $15.9 billion. Morgan Stanley then calculated the then-current equity market value of Plum Creek as of the close of trading on November 4, 2015, which resulted in a value of approximately $7.1 billion. Morgan Stanley then noted that the exchange ratio set forth in the merger agreement of 1.60x implied a pro forma ownership of

 

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approximately 65% of the combined company by Weyerhaeuser shareholders and approximately 35% by Plum Creek stockholders, and thus Plum Creek stockholders would hypothetically receive approximately 35% of the then-current market value of Weyerhaeuser while Weyerhaeuser shareholders would hypothetically receive approximately 65% of the then-current market value of Plum Creek.

Morgan Stanley also noted that based on the implied pro forma ownership, Plum Creek stockholders would hypothetically receive approximately 35% of any increase in market value from synergies in connection with the merger while Weyerhaeuser shareholders would hypothetically receive approximately 65% of any increase in market value from synergies in connection with the merger. For purposes of this analysis, Morgan Stanley assumed run-rate synergies of $100 million, as directed by Weyerhaeuser management. The value of these run-rate synergies, net of costs to achieve the synergies, was capitalized based on a P/FAD multiple of 20.0x. This multiple was based on the low end of the reference range contained in Morgan Stanley’s historical trading multiple analysis (see the section entitled “—Historical Trading Multiples Analysis” beginning on page [•]).

The illustrative analysis indicated the following:

 

100% of standalone market value of Weyerhaeuser as of November 4, 2015		$	15.9 billion
Minus, 35% of standalone market value of Weyerhaeuser as of November 4, 2015		($	5.6 billion	)
Plus, 65% of standalone market value of Plum Creek as of November 4, 2015		$	4.6 billion
Plus, 65% of value of synergies capitalized at 20x P/FAD		$	1.2 billion
Total Value to Weyerhaeuser Shareholders		$	16.2 billion

Morgan Stanley noted that the illustrative analysis indicated a value to Weyerhaeuser shareholders that was approximately $0.3 billion or approximately 2% higher than Weyerhaeuser’s equity market value as of the close of trading on November 4, 2015.

General

Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of Weyerhaeuser or Plum Creek.

In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters. Many of these assumptions are beyond the control of Weyerhaeuser and Plum Creek and variations to such financial assumptions and methodologies may impact the results of Morgan Stanley’s analysis. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness from a financial point of view of the exchange ratio to Weyerhaeuser pursuant to the merger agreement, and in

 

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connection with the delivery of its opinion to the Weyerhaeuser board. These analyses do not purport to be appraisals or to reflect the prices at which Weyerhaeuser common shares or shares of Plum Creek common stock might actually trade.

The exchange ratio was determined through arm’s-length negotiations between Weyerhaeuser and Plum Creek and was approved by the Weyerhaeuser board. Morgan Stanley provided advice to the Weyerhaeuser board during these negotiations but did not, however, recommend any specific exchange ratio to Weyerhaeuser or the Weyerhaeuser board, or that any specific exchange ratio constituted the only appropriate exchange ratio for the merger. Morgan Stanley’s opinion and presentation to the Weyerhaeuser board was one of many factors taken into consideration by the Weyerhaeuser board in deciding to approve and adopt the merger agreement. Consequently, the analyses as described above should not be viewed as determinative of the opinion of the Weyerhaeuser board with respect to the exchange ratio or of whether the Weyerhaeuser board would have been willing to agree to a different exchange ratio.

Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with its customary practice. Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Morgan Stanley’s securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of its customers, in debt or equity securities or loans of Weyerhaeuser or Plum Creek, or their affiliates, or any other company, or any currency or commodity, that may be involved in the transactions contemplated by the merger agreement, or any related derivative instrument.

Under the terms of its engagement letter, Morgan Stanley provided the Weyerhaeuser board with financial advisory services and a financial opinion and Weyerhaeuser has agreed to pay Morgan Stanley an aggregate fee of $38 million, of which $9.5 million was payable upon the entering into of the merger agreement and the remainder of which is contingent upon the closing of the merger. Weyerhaeuser has also agreed to reimburse Morgan Stanley for its reasonable and documented expenses, including fees of outside counsel and other professional advisors, incurred in performing its services. In addition, Weyerhaeuser has agreed to indemnify Morgan Stanley and its affiliates, their respective officers, directors, employees and agents and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under the federal securities laws, relating to or arising out of Morgan Stanley’s engagement. From May 2013 to the date of its opinion, in addition to the services provided in connection with the merger and this opinion, Morgan Stanley has provided financial advisory and financing services for Weyerhaeuser and its affiliates, including as lender under Weyerhaeuser’s revolving credit facility, and received aggregate fees of approximately $48.5 million in connection with such services. During the same period, Morgan Stanley and its affiliates were not engaged to provide financial advisory or financing services to Plum Creek and did not receive any fees for such services during such time. Morgan Stanley is advising Weyerhaeuser on its exploration of strategic alternatives for its cellulose fibers business, and expects to receive customary fees in connection with the rendering of such services. Morgan Stanley may also seek to provide such services to Weyerhaeuser or its affiliates in the future and would expect to receive fees for the rendering of these services.

Opinion of Plum Creek’s Financial Advisor

Goldman Sachs rendered its opinion to the Plum Creek board that, as of November 6, 2015 and based upon and subject to the factors and assumptions set forth therein, the exchange ratio of Weyerhaeuser common shares to be paid for each share of issued and outstanding Plum Creek common stock pursuant to the merger agreement was fair from a financial point of view to the holders (other than Weyerhaeuser and its affiliates) of Plum Creek common stock.

 

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The full text of the written opinion of Goldman Sachs, dated November 6, 2015, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided its opinion for the information and assistance of the Plum Creek board in connection with its consideration of the transaction. The Goldman Sachs opinion is not a recommendation as to how any holder of Plum Creek common stock should vote with respect to the transaction, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

•

the merger agreement;

 

•

annual reports to stockholders and Annual Reports on Form 10-K of Plum Creek and Weyerhaeuser for the five years ended December 31, 2014;

 

•

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Plum Creek and Weyerhaeuser;

 

•

certain other communications from Plum Creek and Weyerhaeuser to their respective stockholders;

 

•

certain publicly available research analyst reports for Plum Creek and Weyerhaeuser; and

 

•

certain internal financial analyses and forecasts for Plum Creek prepared by its management and for Weyerhaeuser prepared by its management, in each case, as approved for Goldman Sachs’ use by Plum Creek (referred to as the “Forecasts”), including certain operating synergies projected by the managements of Plum Creek and Weyerhaeuser to result from the transaction, as approved for Goldman Sachs’ use by Plum Creek (referred to as the “Synergies”).

Goldman Sachs also held discussions with members of the senior managements of Plum Creek and Weyerhaeuser regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction and the past and current business operations, financial condition and future prospects of Plum Creek and Weyerhaeuser; reviewed the reported price and trading activity for Plum Creek common stock and Weyerhaeuser common shares; compared certain financial and stock market information for Plum Creek and Weyerhaeuser with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the timber industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with Plum Creek’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Plum Creek’s consent that the Forecasts, including the Synergies, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of each of Plum Creek and Weyerhaeuser. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Plum Creek or Weyerhaeuser or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for completion of the transaction will be obtained without any adverse effect on Plum Creek or the expected benefits of the transaction in any way meaningful to its analysis. Goldman Sachs has also assumed that the transaction will be completed on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

 

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Goldman Sachs’ opinion does not address the underlying business decision of Plum Creek to engage in the transaction or the relative merits of the transaction as compared to any strategic alternatives that may be available to Plum Creek; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to the acquisition of, or other business combination with, Plum Creek or any alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view, to the holders (other than Weyerhaeuser and its affiliates) of the Plum Creek common stock, as of the date of the opinion, of the exchange ratio pursuant to the merger agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the transaction or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transaction, including the fairness of the transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of Plum Creek; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Plum Creek, or class of such persons in connection with the transaction, whether relative to the exchange ratio pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which Weyerhaeuser common shares will trade at any time or as to the impact of the transaction on the solvency or viability of Plum Creek or Weyerhaeuser or the ability of Plum Creek or Weyerhaeuser to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary market and other conditions, as in effect on, and the information made available to it as of the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ advisory services and the opinion expressed were provided for the information and assistance of the Plum Creek board in connection with its consideration of the transaction and such opinion does not constitute a recommendation as to how any holder of the Plum Creek common stock should vote with respect to such transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Plum Creek board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before November 5, 2015, the last trading day before the public announcement of the transaction and is not necessarily indicative of current market conditions.

Following Goldman Sachs’ presentation to the Plum Creek board on November 6, 2015 (referred to as the “November 6 Presentation”), it was determined that certain items affecting the calculation of the estimates of unlevered free cash flow used in the Plum Creek illustrative discounted cash flow analysis and a calculation used in the Plum Creek illustrative leveraged buyout analysis (referred to as the “LBO Calculation”) were treated incorrectly. Goldman Sachs subsequently performed such analyses, as of November 6, 2015, using the corrected LBO Calculation and estimates of unlevered free cash flow for Plum Creek, calculated as the sum of Adjusted EBITDA less the sum of taxes, capital expenditures and increases in net working capital for the fourth quarter of 2015 and years 2016 through 2020 (as corrected, referred to as the “Final Plum Creek Unlevered Free Cash Flow Estimates”). Such subsequent analyses performed by Goldman Sachs do not address any circumstances, developments or events occurring after November 6, 2015, which is the date of the written opinion of Goldman Sachs, and Goldman Sachs’ opinion set forth in its written opinion letter was provided only as of such date. Based upon and subject to the foregoing, Goldman Sachs confirmed to the Plum Creek board that, had Goldman Sachs performed its financial analyses set forth in the presentation on November 6, 2015 using the Final Plum Creek Unlevered Free Cash Flow Estimates and the corrected LBO Calculation, there would have been no change to the conclusion set forth in the written opinion of Goldman Sachs.

 

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Information regarding Weyerhaeuser’s forecasts is set forth in the section entitled “—Certain Weyerhaeuser Forecasts” beginning on page [•], information regarding Plum Creek’s forecasts is set forth in the section entitled “—Certain Plum Creek Forecasts” beginning on page [•] and information regarding the synergies projected by the management of Plum Creek to result from the transaction and adjustments to the Weyerhaeuser forecasts is set forth in the section entitled “—Plum Creek’s Reasons for the Merger; Recommendation of the Plum Creek Board” beginning on page [•]. This information is based on numerous variables and assumptions that are inherently uncertain. See the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•] and “Risk Factors” beginning on page [•].

Historical Stock Trading Analysis

Goldman Sachs reviewed the historical trading prices and volumes for Plum Creek common stock and Weyerhaeuser common shares for the 3-year period ended November 5, 2015, which ranged from $54.40 to $37.31 per share of Plum Creek common stock and $36.69 to $24.99 per Weyerhaeuser common share. In addition, Goldman Sachs analyzed the exchange ratio compared to the relative values of Plum Creek common stock and Weyerhaeuser common shares and noted the following:

 

		Exchange Ratio				Implied Share Price				Implied Plum Creek Ownership
November 5, 2015			1.32x			$	41.07				31	%
Proposed Transaction			1.60x			$	49.73				35	%

Plum Creek Illustrative Discounted Cash Flow Analysis

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Plum Creek. Using discount rates ranging from 5.75% to 6.25%, reflecting estimates of Plum Creek’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2015 (1) estimates of unlevered free cash flow for Plum Creek, which is Adjusted EBITDA less the sum of taxes, capital expenditures and increases in net working capital, for the fourth quarter of 2015 and years 2016 through 2020 and (2) a range of illustrative terminal values for Plum Creek, which were calculated by applying perpetuity growth rates ranging from 2.25% to 2.75%, to terminal year estimates of the unlevered free cash flow for Plum Creek, as reflected in the Forecasts. Stock-based compensation was treated as a cash expense for purposes of calculating unlevered free cash flow. Goldman Sachs derived ranges of illustrative enterprise values for Plum Creek by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for Plum Creek net debt as of September 30, 2015, in each case, as provided by the management of Plum Creek to derive a range of illustrative equity values for Plum Creek. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Plum Creek, as provided by the management of Plum Creek. As set forth in the November 6 Presentation, this analysis indicated a range of illustrative values per share of Plum Creek common stock of $42.00 to $56.00 and using the Final Plum Creek Unlevered Free Cash Flow Estimates, this analysis indicated a range of illustrative values per share of Plum Creek common stock of $41.00 to $54.00.

Plum Creek Illustrative Future Share Price and Total Return Analysis

Goldman Sachs performed an illustrative analysis of the implied future value and total return per share of the Plum Creek common stock using the Forecasts and publicly available information. For this analysis, Goldman Sachs derived implied future values per share of Plum Creek common stock by applying per share multiples of price to one-year forward funds available for distribution, or FAD, ranging from 19.0x to 21.0x for each of the years 2016 through 2018. Goldman Sachs then assumed that all dividends were paid out and counted toward the total return per share and discounted these estimated future share prices of Plum Creek common stock and dividends to September 30, 2015 using an illustrative discount rate of 6.7%, reflecting an estimate of Plum Creek’s cost of equity, to derive a range of illustrative present values of $40.45 to $48.25 per share of Plum Creek common stock.

 

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Weyerhaeuser Illustrative Discounted Cash Flow Analysis

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Weyerhaeuser. Using discount rates ranging from 5.75% to 6.25%, reflecting estimates of Weyerhaeuser’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2015 (1) estimates of unlevered free cash flow for Weyerhaeuser, which is Adjusted EBITDA less the sum of taxes, capital expenditures, increases in net working capital and other adjustments (including pensions and post retirement cash contributions) for the fourth quarter of 2015 and years 2016 through 2019, as reflected in the Forecasts, and (2) a range of illustrative terminal values for Weyerhaeuser, which were calculated by applying perpetuity growth rates ranging from 2.25% to 2.75%, to terminal year estimates of the unlevered free cash flow for Weyerhaeuser, as reflected in the Forecasts. For purposes of the estimates of unlevered free cash flow for Weyerhaeuser, at the direction of Plum Creek management, taxes were calculated by applying a rate of 38% to Weyerhaeuser’s estimated earnings before interest and taxes attributable to Weyerhaeuser’s businesses conducted through one or more of its taxable REIT subsidiaries and stock-based compensation was treated as a cash expense. Goldman Sachs derived ranges of illustrative enterprise values for Weyerhaeuser by adding the ranges of present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values derived, Weyerhaeuser net debt as of September 30, 2015, in each case, as provided by the management of Weyerhaeuser to derive a range of illustrative equity values for Weyerhaeuser. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of Weyerhaeuser, as provided by the management of Weyerhaeuser, to derive a range of illustrative present values of $32.00 to $44.00 per share of Weyerhaeuser common shares.

Illustrative Present Value of Cost Synergies Analysis

Using the Synergies, Goldman Sachs prepared an illustrative present value of the projected cost synergies. Using discount rates ranging from 5.75% to 6.25%, reflecting estimates of the combined company’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2015 (1) estimates of unlevered free cash flow for the projected cost synergies for years 2016 through 2019, as reflected in the Synergies, and (2) a range of illustrative terminal values which were calculated by applying perpetuity growth rates ranging from 2.25% to 2.75%, to terminal year estimates of the unlevered free cash flow for the projected cost synergies, as reflected in the Synergies. Goldman Sachs derived ranges of illustrative present values of the projected cost synergies by adding the ranges of present values it derived above. Goldman Sachs then divided the range of illustrative present values it derived by the number of fully diluted outstanding shares of the combined company and applied an exchange ratio of 1.60x to derive a range of illustrative present values of projected cost synergies of $4.00 to $5.00 per share of Plum Creek common stock.

Illustrative Pro Forma Merger Analysis

Using the Forecasts, including the Synergies and the $2.5 billion share repurchase, and other publicly available information as of November 5, 2015, Goldman Sachs prepared analyses of the potential financial impact of the transaction. For each of the fiscal years 2016 through 2018, Goldman Sachs compared the projected FAD per share of the Weyerhaeuser common shares, on a standalone basis, to the projected FAD per common share of the combined company. This analysis indicated that the transaction would be accretive to the estimated FAD per Weyerhaeuser common share in the years 2016 to 2018.

Illustrative Pro Forma Discounted Cash Flow Analysis

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on the combined company. Using discount rates ranging from 5.75% to 6.25%, reflecting estimates of Plum Creek’s and Weyerhaeuser’s weighted average cost of capital, Goldman Sachs discounted to present value as of September 30, 2015 estimates of unlevered free cash flows for Weyerhaeuser and Plum Creek (respectively on a standalone basis) and derived ranges of the illustrative equity values of Plum Creek and Weyerhaeuser. Goldman

 

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Sachs divided the sum of (1) the illustrative standalone equity values of Plum Creek and Weyerhaeuser and (2) the illustrative present value of projected cost synergies of the combined company, by the number of fully diluted outstanding shares of the combined company and applied an exchange ratio of 1.60x, to derive a range of illustrative present values per share of $52.00 to $70.00 per share of Plum Creek common stock.

Illustrative Pro Forma Future Share Price and Total Return Analysis

Using the Forecasts, including the Synergies and the $2.5 billion share repurchase, and publicly available information as of November 5, 2015, Goldman Sachs performed a pro forma illustrative analysis of the future share price and total return per share of the combined company. For the purposes of this analysis, Goldman Sachs calculated the pro-forma future values per common share for the combined company by applying per share multiples of price to one-year forward FAD ranging from 18.0x to 20.0x for each of the years 2016 through 2018. Goldman Sachs then assumed that all dividends were paid out and counted toward the total return per share and discounted these estimated future share prices of the combined company and dividends to September 30, 2015 using an illustrative discount rate of 7.1%, reflecting an estimate of the cost of equity for the combined company, to derive a range of illustrative present values for the combined company of $46.45 to $56.90 per share of Plum Creek common stock.

Illustrative Contribution Analysis

Using the Forecasts and publicly available information, Goldman Sachs reviewed specific historical and estimated future operating and financial information including, among other things, earnings before interest, taxes, depreciation, depletion and amortization (referred to as “Adjusted EBITDA”), FAD and net asset value (referred to as “NAV”) for Plum Creek, Weyerhaeuser and the combined company resulting from the merger based on the Forecasts and publicly available information. The following table presents the results of the analysis:

 

Contribution Analysis
		Year		Weighted Contribution								Implied Exchange Ratio
				Weyerhaeuser				Plum Creek
Adjusted EBITDA		2015E			73	%			27	%			1.1x
		2016E			78	%			22	%			0.8
		2017E			78	%			22	%			0.8
		2018E			77	%			23	%			0.9
		2019E			77	%			23	%			0.9
FAD		2015E			54	%			46	%			2.5x
		2016E			65	%			35	%			1.6
		2017E			65	%			35	%			1.6
		2018E			65	%			35	%			1.6
		2019E			67	%			33	%			1.4
NAV		Consensus Median			71	%			29	%			1.2x
Discounted Cash Flow		Midpoint (1)			70	%			30	%			1.3x
Market Cap		November 5, 2015			69	%			31	%			1.3x
		Proposed Transaction			65	%			35	%			1.6

 

(1)	Based on the midpoint on the discounted cash flow analyses for each of Weyerhaeuser common shares and Plum Creek common stock, excluding the Synergies.

Implied Premia of Precedent Transactions

Goldman Sachs reviewed and analyzed the acquisition premia for certain publicly disclosed sale transactions involving all stock consideration with a transaction value of greater than $500 million, calculated

 

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relative to the target’s closing share price one day prior to the announcement, based on information obtained from Thomson SDC. Using such data for such selected transactions, for the years 2004 to 2015 (through November 5, 2015), Goldman Sachs calculated the average acquisition premia for these transactions for the applicable years and the following table summarizes the results of this analysis:

 

Consideration (Number of Transactions)		Average Acquisition Premia One Day Prior to Announcement
All Stock (124)			18	%
All Stock/REIT Only (6)			9	%

Plum Creek Illustrative Leveraged Buyout Analysis

Goldman Sachs performed an illustrative leveraged buyout analysis using the Forecasts and publicly available historical information. Goldman Sachs assumed a range of illustrative internal rate of returns of 15% to 25% to a hypothetical financial buyer, derived by Goldman Sachs utilizing its professional judgment and experience. Goldman Sachs assumed an exit at the end of 2020 at exit multiples of enterprise value to trailing Adjusted EBITDA multiples of 19.0x to 23.0x, which reflect illustrative implied prices at which a hypothetical financial buyer might exit its investment through a sale transaction. This illustrative range of exit multiples was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account historical average enterprise value to trailing Adjusted EBITDA multiples for the Plum Creek common stock during the five-year period ended November 5, 2015. As set forth in the November 6 Presentation, this analysis resulted in a range of implied purchase prices of $26.00 to $43.00 per share of Plum Creek common stock and using the corrected LBO Calculation, there would have been no change to the range.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Plum Creek or Weyerhaeuser or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the Plum Creek board as to the fairness from a financial point of view to the holders (other than Weyerhaeuser and its affiliates) of Plum Creek common stock of the exchange ratio pursuant to the merger agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Plum Creek, Weyerhaeuser, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The exchange ratio was determined through arm’s-length negotiations between Plum Creek and Weyerhaeuser and was approved by the Plum Creek board. Goldman Sachs provided advice to Plum Creek during these negotiations. Goldman Sachs did not recommend any specific exchange ratio to Plum Creek or the Plum Creek board or that any specific exchange ratio constituted the only appropriate exchange ratio for the transaction.

As described in the section entitled “—Plum Creek’s Reasons for the Merger; Recommendation of the Plum Creek Board” beginning on page [•], Goldman Sachs’ opinion to the Plum Creek board was one of many factors taken into consideration by the Plum Creek board in making its determination to approve the merger agreement.

 

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The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of Plum Creek, Weyerhaeuser, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction contemplated by the merger agreement for the accounts of Goldman Sachs and its affiliates and employees and their customers. Goldman Sachs acted as financial advisor to Plum Creek in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the merger agreement. Goldman Sachs has provided certain investment banking services to Plum Creek and its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation. During the two-year period ended November 6, 2015, the Investment Banking Division of Goldman Sachs has not provided any financial advisory or underwriting services to Weyerhaeuser or its affiliates for which it has received compensation. Goldman Sachs may also in the future provide investment banking services to Plum Creek, Weyerhaeuser and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

Following the announcement of the proposed merger, Goldman Sachs requested and received from Plum Creek permission to discuss with Weyerhaeuser, and thereafter potentially participate in, the announced post-closing $2.5 billion share repurchase by Weyerhaeuser.

The Plum Creek board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction. Pursuant to a letter agreement dated October 22, 2015, Plum Creek engaged Goldman Sachs to act as its financial advisor in connection with the contemplated transaction. Pursuant to the terms of this engagement letter, Plum Creek has agreed to pay Goldman Sachs a transaction fee which is currently estimated to be approximately $40.4 million (determined by using the average of the last sales prices for the Plum Creek common stock and the Weyerhaeuser common shares on the five trading days ending November 23, 2015), of which a $4 million study fee was payable upon the presentation by Goldman Sachs to the Plum Creek board of the results of the study undertaken to enable Goldman Sachs to render its opinion and the remaining balance of which is payable immediately prior to completion of the transaction. In addition, Plum Creek has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Financial Interests of Weyerhaeuser Directors and Officers in the Merger

In considering the recommendation of the Weyerhaeuser board that Weyerhaeuser shareholders vote to approve the share issuance proposal, you should be aware that certain of Weyerhaeuser’s directors and executive officers have interests in the merger that are in addition to, or different from, the interests of other Weyerhaeuser shareholders. The Weyerhaeuser board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in adopting and approving the merger agreement and in recommending the approval of the share issuance proposal and the Weyerhaeuser adjournment proposal. Following completion of the merger, certain members of the Weyerhaeuser board will continue to be directors of the combined company and certain executive officers of Weyerhaeuser will continue to be executive officers of the combined company, as further described in the section entitled “—Board of Directors Following the Merger” beginning on page [•].

Weyerhaeuser’s directors and executive officers will not receive any special compensation the payment of which is contingent upon completion of the merger. Certain of Weyerhaeuser’s executive officers may receive

 

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compensation under Weyerhaeuser’s executive compensation programs attributable to additional responsibilities in connection with the merger and subsequent integration process. Weyerhaeuser’s director and executive compensation programs are described in further detail in Weyerhaeuser’s Proxy Statement on Schedule 14A, filed with the SEC on April 1, 2015 and incorporated by reference into this joint proxy statement/prospectus.

Financial Interests of Plum Creek Directors and Officers in the Merger

Certain of Plum Creek’s directors and executive officers have interests in the merger that are in addition to, or different from, the interests of other Plum Creek stockholders. The Plum Creek board was aware of these interests and considered them, among other matters, in evaluating and negotiating the merger agreement and the merger, and in approving the merger agreement and the merger and in recommending the approval of the merger proposal, the Plum Creek adjournment proposal and the compensation proposal. For purposes of the Plum Creek agreements and plans described below, to the extent applicable, the completion of the transactions contemplated by the merger agreement will constitute a change of control, change in control or term of similar meaning. These interests are described in further detail below.

In addition, following completion of the merger, certain members of the Plum Creek board will serve as directors of the combined company and certain executive officers of Plum Creek will serve as executive officers of the combined company, as further described in the section entitled “—Board of Directors Following the Merger” beginning on page [•].

Treatment of Plum Creek Stock Options and Other Equity-Based Awards

Certain Plum Creek executive officers hold one or more of the following awards: options to purchase shares of Plum Creek common stock (referred to as “Plum Creek Options”), Plum Creek restricted stock units (referred to as “Plum Creek RSUs”), and Plum Creek value management awards (referred to as “Plum Creek VMAs”). In addition, certain Plum Creek non-employee directors hold stock units credited to their accounts under the Plum Creek Timber Company, Inc. Deferral Plan that are payable in shares of Plum Creek common stock or whose value is determined by reference to the value of Plum Creek common stock (referred to as “Plum Creek DSUs”).

Upon completion of the merger, outstanding Plum Creek Options and other equity-based awards, whether vested or unvested, will be treated as follows:

 

•

Plum Creek Options. Each Plum Creek Option that is outstanding immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into an option, on the same terms and conditions as were applicable under the corresponding Plum Creek Option, to acquire a number of Weyerhaeuser common shares equal to the product (rounded down to the nearest whole number) of (1) the number of shares of Plum Creek common stock subject to the Plum Creek Option immediately prior to the completion of the merger and (2) 1.60, at an exercise price per share (rounded up to the nearest whole cent) equal to (a) the exercise price per share of Plum Creek common stock of such Plum Creek Option immediately prior to the effective time divided by (b) 1.60.

 

•

Plum Creek RSUs. Each grant of Plum Creek RSUs that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into a grant of restricted stock units, on the same terms and conditions as were applicable under the corresponding grant of Plum Creek RSUs, with respect to a number of Weyerhaeuser common shares determined by multiplying the number of shares of Plum Creek common stock subject to the grant of Plum Creek RSUs by 1.60, rounded down to the nearest whole share.

 

•

Plum Creek DSUs. Each Plum Creek DSU that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into a deferred stock unit, on the same terms and conditions as were applicable under the corresponding Plum Creek DSU, with respect to a number of Weyerhaeuser common shares determined by multiplying the number of shares of Plum Creek common stock subject to the Plum Creek DSU by 1.60, rounded down to the nearest whole share.

 

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•

Plum Creek VMAs (Pre-2015). Each Pre-2015 VMA that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be canceled, with the holder thereof becoming entitled to receive an amount in cash determined by assuming that all applicable performance goals were satisfied at the greater of (1) the target level as set forth in the applicable award agreement and (2) actual performance over a shortened performance period ending as of the completion of the merger, as determined by the Plum Creek board (or, if appropriate, any committee thereof) in good faith consistent with past practices. The payments in respect of Pre-2015 VMAs will be paid as promptly as practicable following, but in no event later than 10 business days after, the completion of the merger, without interest, in accordance with Plum Creek’s payroll procedures.

 

•

Plum Creek VMAs (Post-2014). Each Post-2014 VMA that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will (1) have its performance goals deemed to be satisfied at the greater of (a) the target level as set forth in the applicable award agreement and (b) actual performance over a shortened performance period ending as of the completion of the merger, as determined by the Plum Creek board (or, if appropriate, any committee thereof) in good faith consistent with past practices, and (2) be assumed by Weyerhaeuser and converted into an award on the same terms and conditions as were applicable under the corresponding Post-2014 VMA (including continued service-based vesting requirements, but not including any performance goals, which shall be deemed to be satisfied as described above), with respect to a number of units as set forth in the applicable award agreement.

All such Plum Creek RSUs and Plum Creek VMAs that are converted into corresponding Weyerhaeuser equity awards will vest in full in the event of a termination of employment by Weyerhaeuser without cause or by the awardholder for “good reason”, in each case within the one-year period following the completion of the merger. For these purposes, “good reason” means (1) a reduction of the executive officer’s titles, positions, duties and responsibilities, (2) a reduction in the executive officer’s annual base salary or aggregate compensation and benefits opportunities, or (3) a relocation of the executive officer’s principal place of employment to a location more than 35 miles from the executive officer’s principal place of employment, in each case, as of immediately prior to the completion of the merger. Plum Creek’s executive officers may also be entitled to accelerated vesting of their equity awards in the event of a qualifying termination pursuant to their individual change in control agreements, as described in the section entitled “—Change in Control Agreements” beginning on page [•]. All Plum Creek Options and Plum Creek DSUs are fully vested as of the date of this joint proxy statement/prospectus. As a result of the conversion of Plum Creek RSUs and Post-2014 VMAs into Weyerhaeuser equity awards, Plum Creek’s executive officers will have a financial interest in the performance of the combined company.

The table below sets forth, for each Plum Creek non-employee director and executive officer, the number of (1) Plum Creek Options, (2) Plum Creek RSUs, (3) Plum Creek DSUs and (4) Plum Creek VMAs held by such non-employee directors and executive officers as of the date of this joint proxy statement/prospectus, other than any Plum Creek RSUs or Plum Creek VMAs that are expected to vest pursuant to their terms prior to March 31, 2016, the assumed closing date of the merger solely for purposes of this transaction-related compensation disclosure. The table below also sets forth the estimated value, per individual, in respect of such equity awards at the effective time of the merger, with such amounts calculated by multiplying the number of shares subject to the Plum Creek Options, Plum Creek RSUs and Plum Creek DSUs by $46.63 (the average closing market price of Plum Creek common stock over the first five business days following the first public announcement of the transaction on November 8, 2015), less the applicable exercise price in the case of the Plum Creek Options. The table below also sets forth the value of the Plum Creek VMAs, assuming the performance goals of (a) the Pre-2015 VMAs are achieved at target level ($100 per VMA unit) and (b) the Post-2014 VMAs are achieved at

 

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estimated actual performance ($182 per VMA unit). The amounts shown in the table below also do not attempt to forecast any grants, exercises, dividends, additional deferrals or forfeitures of Plum Creek equity awards following the date of this joint proxy statement/prospectus.

 

		Plum Creek Equity Awards
Name		Options (#)				RSUs (#)				DSUs (#)				VMAs (#)				Estimated Value ($)
Executive Officers
Barbara Crowe			60,000				3,800				—				5,100				1,371,154
Russell Hagen			44,000				9,750				—				13,500				2,723,083
Rick Holley			660,000				60,875				—				82,500				19,817,401
James Kilberg			—				10,325				—				13,400				2,395,455
James Kraft			51,000				5,550				—				7,550				1,753,277
David Lambert			55,000				11,075				—				15,000				3,110,077
Thomas Lindquist			17,500				27,625				—				37,500				6,726,053
Larry Neilson			78,000				10,325				—				13,400				3,013,275
Timothy Punke			—				9,125				—				6,500				1,362,499
Non-Employee Directors
Michelle Goldberg			—				—				289				—				13,476
Robin Josephs			—				—				—				—				—
Sara Grootwassink Lewis			—				—				3,753				—				175,002
John McDonald			—				—				—				—				—
Robert McLeod			—				—				—				—				—
John Morgan, Sr.			—				—				—				—				—
Mark Racicot			—				—				—				—				—
Lawrence Selzer			—				—				—				—				—
Stephen Tobias			—				—				11,073				—				516,334
Martin White			—				—				—				—				—

Arrangements with Weyerhaeuser

As of the date of this joint proxy statement/prospectus, there are no employment, equity contribution or other agreements, arrangements or understandings between any Plum Creek non-employee directors or executive officers, on the one hand, and Weyerhaeuser, on the other hand. The merger is not conditioned upon any non-employee director or executive officer of Plum Creek entering into any such agreements, arrangements or understandings.

The merger agreement provides for certain indemnification and insurance rights for former and present directors and officers of Plum Creek or any Plum Creek subsidiary. See “—Financial Interests of Plum Creek Directors and Officers in the Merger—Indemnification and Insurance” beginning on page [•].

Change in Control Agreements

Plum Creek expects to enter into change in control agreements with each Plum Creek executive officer. For purposes of this joint proxy statement/prospectus, we assume that the Plum Creek executive officers will enter into substantially identical change in control agreements with Plum Creek prior to the effective time of the merger with the terms and conditions that were approved by the Plum Creek board in connection with its approval of the merger and the merger agreement.

 

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The change in control agreements provide that, in connection with an executive officer’s termination of employment by Plum Creek without cause or by the executive officer for “good reason” within 24 months following a change in control of Plum Creek (referred to as a “qualifying termination”), the executive officer shall receive the following severance pay and benefits:

 

•

lump sum payment equal to three times the executive’s highest rate of annualized base salary in effect at any time up to and including the termination date;

 

•

lump sum payment equal to three times the executive’s target annual bonus established for the bonus plan year in which the termination date occurs (or, if higher, the target annual bonus established for the bonus plan year in which the change in control occurs);

 

•

lump sum payment of the executive’s pro-rated target annual bonus for the bonus plan year in which termination occurs;

 

•

lump sum payment of $75,000 for replacement health and welfare coverage (net of required payroll and income tax withholding);

 

•

reimbursement of up to $20,000 in costs for outplacement services incurred by the executive within the two-year period after the termination date;

 

•

full vesting of benefits under supplemental retirement plans in which the executive participates, calculated assuming employment continued following the termination date for three additional years; and

 

•

full vesting of unvested stock options and restricted stock units and vesting at target of performance-based equity awards.

Notwithstanding the change in control benefits described above, any Pre-2015 VMAs held by a Plum Creek executive officer will be converted upon completion of the merger into the right to receive a cash payment, as described in the section entitled “—Treatment of Plum Creek Stock Options and Other Equity-Based Awards” beginning on page [•].

The change in control agreements do not include any “golden parachute” tax gross-up payments in the event the executive officer is subject to the excise tax under Section 4999 of the Code, and instead require that benefits be reduced to avoid such excise tax unless the executive officer will receive higher after-tax amounts if there is no such reduction. The severance payments and benefits above are subject to the executive officer entering into a release of claims and restrictive covenant agreement, including a confidentiality covenant, two-year non-solicitation covenant and two-year non-competition covenant. If the executive officer violates any of these covenants, the executive officer would (1) forfeit rights to any unpaid amounts under the change in control agreement and (2) be required to repay Plum Creek (or any successor) an amount equal to the economic value of the severance payments and benefits already provided to the executive.

For purposes of the change in control agreements, “good reason” means, with respect to the applicable Plum Creek executive officer: (1) a material reduction in his or her authority, duties or responsibilities existing immediately prior to the change in control; (2) a required relocation of 50 miles or more within two years following a change in control; (3) a material reduction of his or her base salary as in effect immediately prior to the change in control; (4) a material reduction in the benefits coverage in the aggregate provided immediately prior to the change in control (unless his or her overall benefits coverage is substantially consistent with the average level of benefits coverage provided to similarly situated employees of the acquiror); (5) a material reduction in his or her level of participation, including target-level opportunities, in any short- and/or long-term incentive compensation plans in which he or she participates as of the effective date of the change in control agreement, or a material increase in the relative difficulty of the measures used to determine the payouts under such plans (unless substantially consistent with the level of participation or difficulty of the measures applicable to similarly situated employees of the acquiror); or (6) the failure to obtain a satisfactory agreement from any successor to Plum Creek to assume and agree to perform the change in control agreement.

 

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For an estimate of the value of the amounts that would be payable to each of the Plum Creek named executive officers pursuant to the agreements described above, assuming solely for purposes of this transaction-related compensation disclosure that the effective time of the merger occurred on March 31, 2016, and each named executive officer experienced a qualifying termination, see the section entitled “—Golden Parachute Compensation” beginning on page [•]. We estimate that the aggregate amount of the severance payments and benefits described above that would be paid or become payable to Plum Creek’s four other executive officers if the effective time of the merger occurred on March 31, 2016 and they all experienced a qualifying termination at such time would be $3,066,594 for Barbara Crowe, $4,839,243 for Russell Hagen, $3,519,997 for James Kraft and $3,463,899 for Timothy Punke.

Golden Parachute Compensation

The following table sets forth the information required by Item 402(t) of Regulation S-K regarding certain compensation that will or may be paid or become payable to each of Plum Creek’s “named executive officers” (as identified in accordance with SEC regulations) and that is based on or otherwise relates to the merger. For additional details regarding the terms of the payments described below, see the section entitled “—Financial Interests of Plum Creek Directors and Officers in the Merger” beginning on page [•].

The amounts listed below are estimates based on assumptions that may or may not actually occur, including the assumption that (1) the effective time of the merger occurs on March 31, 2016, (2) each named executive officer experiences a qualifying termination at the effective time of the merger and (3) the value of Plum Creek’s common stock at the effective time of the merger is $46.63 (the average closing market price over the first five business days following the first public announcement of the merger on November 8, 2015, as required by Item 402(t) of Regulation S-K). The amounts listed below do not reflect certain compensation actions that may occur before the completion of the merger, including annual equity awards, merit increases or acceleration of payment or vesting for tax planning purposes with respect to Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. The amounts in the table below do not include any Plum Creek RSUs or Plum Creek VMAs that are expected to vest pursuant to their terms prior to March 31, 2016. For these reasons, the actual amounts, if any, to be received by a named executive officer may differ from the amounts set forth below.

 

		Cash(1)				Equity(2)				Pension/ NQDC(3)				Perquisites/ Benefits(4)				Total
Named Executive Officer
Rick Holley		$	6,575,000			$	14,573,601			$	1,880,000			$	95,000			$	23,123,601
Thomas Lindquist		$	3,821,625			$	6,637,154			$	1,210,000			$	95,000			$	11,763,779
David Lambert		$	2,553,600			$	2,672,427			$	1,700,000			$	95,000			$	7,021,027
James Kilberg		$	2,256,800			$	2,395,455			$	240,000			$	95,000			$	4,987,255
Larry Neilson		$	2,268,000			$	2,395,455			$	230,000			$	95,000			$	4,988,455

 

(1)

Cash. As described in the section entitled “—Change in Control Agreements” beginning on page [•], represents a lump sum payment by Plum Creek (or its successor) equal to three times the sum of the named executive officer’s (a) highest rate of annualized base salary in effect at any time up to and including the termination date, plus (b) target annual bonus established for the bonus plan year in which the termination date occurs. Also includes a lump sum payment by Plum Creek (or its successor) in an amount equal to the

 

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named executive officer’s pro-rated target annual bonus for the bonus plan year in which termination occurs. These amounts are “double trigger” payments (that is, they are payable upon a qualifying termination that occurs within 24 months following a change in control), calculated as follows:

 

		Base Salary Multiple				Target Bonus Multiple				Pro Rata Bonus				Value of All Cash Payments
Named Executive Officers
Rick Holley		$	3,000,000			$	3,300,000			$	275,000			$	6,575,000
Thomas Lindquist		$	1,935,000			$	1,741,500			$	145,125			$	3,821,625
David Lambert		$	1,368,000			$	1,094,400			$	91,200			$	2,553,600
James Kilberg		$	1,209,000			$	967,200			$	80,600			$	2,256,800
Larry Neilson		$	1,215,000			$	972,000			$	81,000			$	2,268,000

 

(2)	Equity. As described in the section entitled “—Treatment of Plum Creek Stock Options and Other Equity-Based Awards” beginning on page [•], represents the value of the Plum Creek RSUs and Plum Creek VMAs, vesting on an accelerated basis, calculated as follows:

 

		Value of RSUs(a)				Value of Pre-2015 VMAs(b)				Value of Post-2014 VMAs(c)				Value of All Equity Awards
Named Executive Officers
Rick Holley		$	2,838,601			$	4,000,000			$	7,735,000			$	14,573,601
Thomas Lindquist		$	1,288,154			$	1,800,000			$	3,549,000			$	6,637,154
David Lambert		$	516,427			$	700,000			$	1,456,000			$	2,672,427
James Kilberg		$	481,455			$	640,000			$	1,274,000			$	2,395,455
Larry Neilson		$	481,455			$	640,000			$	1,274,000			$	2,395,455

 

(a)

RSUs. Represents the value of shares subject to Plum Creek RSUs that would accelerate on a “double-trigger” basis in connection with the named executive officer’s qualifying termination following completion of the merger, calculated at per share value of $46.63, multiplied by the number of shares of Plum Creek common stock subject to the Plum Creek RSUs awarded to the named executive officer.

 

(b)

Pre-2015 VMAs. Represents the cash value of the outstanding Pre-2015 VMAs that would accelerate on a “single-trigger” basis upon completion of the merger, calculated assuming achievement of the performance goals at target level ($100 per VMA unit), multiplied by the number of Pre-2015 VMA units awarded to the named executive officer.

 

(c)

Post-2014 VMAs. Represents the cash value of the Post-2014 VMAs that would accelerate on a “double-trigger” basis in connection with the named executive officer’s qualifying termination following the completion of the merger, calculated assuming achievement of the performance goals at estimated actual performance ($182 per VMA unit), multiplied by the number of Post-2014 VMA units awarded to the named executive officer.

 

(3)

Pension/NQDC. As described in the section entitled “—Change in Control Agreements” beginning on page [•], represents the value of three additional years of vesting of benefits under the Plum Creek supplemental retirement plan in which each named executive officer participates. Messrs. Holley and Lindquist participate in the Plum Creek Supplemental Benefits Plan – Pension (referred to as the “Supplemental Benefits Plan”). Messrs. Lambert, Kilberg and Neilson participate in the Plum Creek Timber Company, L.P. Key Employee Supplemental Pension Plan (referred to as the “Supplemental Pension Plan”). These benefits are “double-trigger” benefits, as described above. Vested amounts under the Supplemental Benefits Plan and Supplemental Pension Plan are paid by Plum Creek (or its successor) in a lump sum within a reasonable time after the date that is six months after the named executive officer’s termination date, and in no event

 

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later than two and one-half months after the end of the calendar year which contains the six-month anniversary of the named executive officer’s termination date. For each named executive officer, the amount listed above is calculated as follows:

 

		Supplemental Benefits Plan				Supplemental Pension Plan				Value of All Pension/ NQDC
Named Executive Officers
Rick Holley		$	1,880,000			$	—			$	1,880,000
Thomas Lindquist		$	1,210,000			$	—			$	1,210,000
David Lambert		$	—			$	1,700,000			$	1,700,000
James Kilberg		$	—			$	240,000			$	240,000
Larry Neilson		$	—			$	230,000			$	230,000

 

(4)

Perquisites/Benefits. As described in the section entitled “—Change in Control Agreements” beginning on page [•], represents (a) a lump sum cash payment by Plum Creek (or its successor) for replacement health and welfare coverage and (b) reimbursement by Plum Creek (or its successor) for the cost of outplacement services incurred by the named executive officer within the two-year period after the termination date, which payments are “double-trigger” payments as described above, calculated as follows:

 

		Health & Welfare Payment(a)				Outplacement Services				Value of All Perquisites/ Benefits
Named Executive Officers
Rick Holley		$	75,000			$	20,000			$	95,000
Thomas Lindquist		$	75,000			$	20,000			$	95,000
David Lambert		$	75,000			$	20,000			$	95,000
James Kilberg		$	75,000			$	20,000			$	95,000
Larry Neilson		$	75,000			$	20,000			$	95,000

 

(a)

This payment will be made to the named executive officer net of required payroll or income tax withholding.

Indemnification and Insurance

The merger agreement provides that Weyerhaeuser will indemnify, defend and hold harmless, to the fullest extent permitted under applicable law each former and present director or officer of Plum Creek or any of its subsidiaries, as the case may be (referred to as an “indemnified party”), against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses incurred in connection with any suit, action or other proceeding with respect to matters existing or occurring at or prior to the effective time of the merger, arising out of or pertaining to the fact that the Plum Creek indemnified party is or was an officer or director of Plum Creek or any of its subsidiaries or is or was serving at the request of Plum Creek or any of its subsidiaries as a director or officer of another person, whether asserted or claimed prior to, at or after the effective time of the merger as provided in Plum Creek’s or any of its subsidiaries’ respective certificates of incorporation or by-laws (or comparable organizational documents) as in effect on the date of the merger agreement and any indemnification or other similar agreements of Plum Creek or any of its subsidiaries, in each case as in effect on the date of the merger agreement.

The merger agreement requires that Weyerhaeuser purchase and maintain for six years following the merger a “tail” directors’ and officers’ liability insurance policy covering Plum Creek and its current and former directors and officers who are currently covered by the directors’ and officers’ liability insurance currently maintained by Plum Creek on terms and conditions not less favorable to the insured persons and at a cost not to exceed $1.8 million.

 

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The merger agreement also requires that, for a period of six years from the effective time of the merger and subject to restrictions on amendment or repeal unless otherwise required by law, the charter and bylaws of the combined company will contain provisions no less favorable with respect to indemnification, advancement of expenses and limitations on liability of directors and officers than are set forth in the charter or by-laws of Plum Creek and the Plum Creek subsidiaries.

Board of Directors Following the Merger

Pursuant to the merger agreement, at the time the merger becomes effective (1) the Weyerhaeuser board will be expanded from 10 directors to 13 directors, consisting of eight directors from Weyerhaeuser and five directors from Plum Creek and (2) Rick R. Holley, the current chief executive officer of Plum Creek, will be appointed as non-executive chairman of the Weyerhaeuser board. Doyle R. Simons, the current chief executive officer of Weyerhaeuser, will remain as the chief executive officer of Weyerhaeuser and remain on the Weyerhaeuser board following completion of the merger.

U.S. Federal Income Tax Consequences of the Merger

The following is a summary of U.S. federal income tax consequences of the merger generally applicable to U.S. Holders (as defined below) of Plum Creek common stock. There will be no U.S. federal income tax consequences of the merger to a holder of Weyerhaeuser common shares as a result of the merger.

This discussion addresses only holders of Plum Creek common stock who hold their shares as a capital asset within the meaning of the Code (generally, property held for investment). This discussion does not address any non-income taxes or any foreign, state or local tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010 (Section 1411 of the Code). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to holders of Plum Creek common stock in light of their particular circumstances or to holders subject to special rules (including a holder that is a financial institution; a pension plan or other tax-exempt organization; a partnership or an entity treated as a partnership for U.S. federal income tax purposes, an S corporation or other pass-through entity (or an investor therein); an insurance company; a regulated investment company or REIT; a dealer or broker in stocks and securities, or currencies; a trader in securities that elects mark-to-market treatment; a person that is subject to the alternative minimum tax provisions of the Code; a holder of Plum Creek common stock that received Plum Creek common stock through the exercise of an employee stock option, through a tax-qualified retirement plan or otherwise as compensation; a person that is not a U.S. Holder (as defined below); a person that has a functional currency other than the U.S. dollar; a holder of Plum Creek common stock that holds Plum Creek common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or a United States expatriate or person that has ceased to be a U.S. citizen or lawful permanent resident of the United States). This discussion is based on the Code, applicable Treasury regulations, administrative interpretations and court decisions, each as in effect as of the date of this joint proxy statement/prospectus and all of which are subject to change, possibly with retroactive effect. Any such change could affect the validity of this discussion.

For purposes of this discussion, a “U.S. Holder” is:

 

•

an individual citizen or resident of the United States;

 

•

a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

 

•

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

•

a trust (1) that is subject to the primary supervision of a court within the United States and all the substantial decisions of which are controlled by one or more U.S. persons or (2) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

 

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A person that is not a U.S. Holder is referred to herein as a “Non-U.S. Holder”.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Plum Creek common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partners of partnerships holding Plum Creek common stock should consult their own tax advisors.

THE FOLLOWING DISCUSSION DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL OF THE POTENTIAL TAX CONSEQUENCES OF THE MERGER. PLEASE CONSULT YOUR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES.

General

Weyerhaeuser and Plum Creek intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Weyerhaeuser’s obligation to complete the merger that Weyerhaeuser receive an opinion from Covington, tax counsel to Weyerhaeuser, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Plum Creek’s obligation to complete the merger that Plum Creek receive an opinion from Skadden, tax counsel to Plum Creek, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

These opinions will be based on customary assumptions and representations from Weyerhaeuser and Plum Creek, as well as certain covenants and undertakings by Weyerhaeuser and Plum Creek, including the assumption that the merger will be completed in the manner described in the merger agreement and this joint proxy statement/prospectus. If any of the assumptions, representations, covenants or undertakings is incorrect, incomplete or inaccurate or is violated, the validity of the opinions described above may be affected and the tax consequences of the merger could differ from those described in this joint proxy statement/prospectus.

An opinion of counsel represents counsel’s best legal judgment but is not binding on the IRS or any court, so there can be no certainty that the IRS will not challenge the conclusions reflected in the opinion or that a court would not sustain such a challenge. Neither Weyerhaeuser nor Plum Creek intends to obtain a ruling from the IRS on the tax consequences of the merger. If the IRS were to successfully challenge the “reorganization” status of the merger, the tax consequences could differ from those described in this joint proxy statement/prospectus.

U.S. Federal Income Tax Consequences to U.S. Holders

Accordingly, and on the basis of the opinions expected to be received in connection herewith, and subject to the discussion below relating to the receipt of cash in lieu of fractional shares:

 

•

a U.S. Holder of Plum Creek common stock will not recognize any gain or loss upon the exchange of shares of Plum Creek common stock for Weyerhaeuser common shares in the merger;

 

•

a U.S. Holder of Plum Creek common stock will have a tax basis in the Weyerhaeuser common shares received in the merger equal to the tax basis of the Plum Creek common stock surrendered in exchange therefor; and

 

•

a U.S. Holder of Plum Creek common stock will have a holding period for Weyerhaeuser common shares received in the merger that includes its holding period for its shares of Plum Creek common stock surrendered in exchange therefor.

 

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Cash in Lieu of Fractional Shares

No fractional Weyerhaeuser common shares will be distributed to holders of Plum Creek common stock in connection with the merger. A U.S. Holder that receives cash in lieu of a fractional Weyerhaeuser common share as part of the merger will generally recognize capital gain or loss measured by the difference between the cash received for such fractional share and the portion of the U.S. Holder’s tax basis in the shares of Plum Creek common stock allocable to the fractional share. Such capital gain or loss will generally be long-term capital gain or loss if the holding period for such shares of Plum Creek common stock is more than one year. Long-term capital gain of certain non-corporate taxpayers, including individuals, is generally taxed at preferential rates. The deductibility of capital losses is subject to limitations.

Tax Opinions from Counsel Regarding REIT Qualification of Weyerhaeuser and Plum Creek

It is a condition to the obligation of Plum Creek to complete the merger that Weyerhaeuser receive an opinion from Covington to the effect that, at all times since Weyerhaeuser’s taxable year ended December 31, 2010 and through the closing date, Weyerhaeuser has been organized and operated in conformity with the requirements for qualification as a REIT under the Code. It is a condition to the obligation of Weyerhaeuser to complete the merger that Plum Creek receive an opinion from Skadden to the effect that, at all times since Plum Creek’s taxable year ended December 31, 1999 and through the closing date, Plum Creek has been organized and operated in conformity with the requirements for qualification as a REIT under the Code. It must be emphasized that these opinions are based on customary assumptions and representations from Weyerhaeuser and Plum Creek, as well as certain covenants and undertakings by Weyerhaeuser and Plum Creek, including covenants that Weyerhaeuser and Plum Creek will at all times operate in accordance with the method of operation described in this joint proxy statement/prospectus, representations and covenants regarding their organization, assets, present and future conduct of business operations, the fair market value of Weyerhaeuser’s and Plum Creek’s investments and other items regarding their ability to meet the various requirements for qualification as a REIT. The opinions also assume that such representations are accurate and complete and that Weyerhaeuser and Plum Creek will take no action inconsistent with their qualification as a REIT.

Neither of the opinions described above will be binding on the IRS or the courts. The combined company intends to continue to operate in a manner to qualify as a REIT following the merger, but there is no guarantee that it will qualify or remain qualified as a REIT. Qualification and taxation as a REIT depends upon the ability of the combined company to meet, through actual annual (or, in some cases, quarterly) operating results, requirements relating to income, asset ownership, distribution levels and diversity of share ownership, and the various REIT qualification requirements imposed under the Code. Given the complex nature of the REIT qualification requirements, the ongoing importance of factual determinations and the possibility of future changes in the circumstances of the combined company, there can be no assurance that the actual operating results of the combined company will satisfy the requirements for taxation as a REIT under the Code for any particular tax year.

Tax Liabilities and Attributes Inherited from Plum Creek

If Plum Creek (or any of its subsidiary REITs) failed to qualify as a REIT for any of its taxable years, Plum Creek (or such subsidiary REIT) would be liable for (and the combined company would be directly or indirectly obligated to pay) U.S. federal income tax on its taxable income at regular corporate rates. Furthermore, after the merger, the asset and income tests will apply to all of the assets of the combined company, including the assets the combined company acquires from Plum Creek, and to all of the income of the combined company, including the income derived from the assets the combined company acquires from Plum Creek. As a result, the nature of the assets that the combined company acquires from Plum Creek and the income the combined company derives from those assets may have an effect on the tax qualification of the combined company as a REIT. In addition, if Plum Creek failed to qualify as a REIT prior to the merger, the combined company would be subject to U.S. federal income tax if, during the 10 years following the merger, the combined company disposed of certain assets that were

 

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acquired from Plum Creek in the merger. In this event, the combined company would generally be subject to U.S. federal income tax at the highest regular corporate rate on the built-in-gain (i.e., the excess of the asset’s fair market value over its adjusted tax basis), if any, that existed, with respect to such asset at the time of the merger.

U.S. Federal Income Taxation of Weyerhaeuser and its Shareholders

The following is a summary of the U.S. federal income tax consequences generally applicable to prospective holders of Weyerhaeuser common shares. The discussion does not address the tax consequences that may be relevant to individual shareholders in light of their particular circumstances or any special treatment to which they may be subject under certain U.S. federal income tax laws, such as dealers in securities, traders in securities that elect to mark to market, banks, insurance companies, tax-exempt organizations, except to the extent discussed in the section entitled “—Taxation of Tax-Exempt U.S. Shareholders” beginning on page [•], or non-United States persons, except to the extent discussed in the section entitled “—Taxation of Non-U.S. Shareholders” beginning on page [•]. This summary does not address any consequences arising under the laws of any state, local or foreign jurisdiction.

The information in the discussion below is based on current provisions of the Code, existing, temporary and currently proposed Treasury Regulations thereunder, the legislative history of the Code, existing administrative interpretations and practices of the IRS, and judicial decisions, all of which are subject to change either prospectively or retroactively. No assurance can be given that future legislation, Treasury Regulations, administrative interpretations or judicial decisions will not significantly change the current law or adversely affect existing interpretations of current law.

PROSPECTIVE HOLDERS OF WEYERHAEUSER COMMON SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF WEYERHAEUSER COMMON SHARES.

Taxation of Weyerhaeuser as a REIT

General

Under U.S. federal income tax law, if certain detailed conditions imposed by the Code and the related Treasury Regulations are satisfied, an entity that invests principally in real estate and that would otherwise be subject to tax as a corporation may elect to be treated as a REIT for U.S. federal income tax purposes. These conditions relate, in part, to the nature of the entity’s assets and income. Provided Weyerhaeuser qualifies to be subject to tax as a REIT, it will generally not be subject to U.S. federal corporate income tax on taxable income that it distributes currently to shareholders. This treatment substantially eliminates “double taxation.” Double taxation means taxation once at the corporate level when income is earned and once again at the shareholder level when such income is distributed.

Weyerhaeuser has elected to be treated for tax purposes as a REIT commencing with its taxable year ending on December 31, 2010. Weyerhaeuser believes that it was organized and has operated in such a manner as to qualify for taxation as a REIT, and intends to continue to operate in such a manner. However, the qualification and taxation of Weyerhaeuser as a REIT depends upon the ability of Weyerhaeuser to meet the various qualification tests imposed under the Code, including through actual annual operating results, asset composition, distribution levels and diversity of share ownership, all of the results of which have not been and will not be reviewed by the tax counsel of Weyerhaeuser. Accordingly, the actual results of the operations of the combined company during any particular taxable year may not satisfy those requirements, and no assurance can be given that the combined company will continue to operate in a manner so as to qualify or remain qualified as a REIT.

The sections of the Code and the corresponding Treasury Regulations relating to the taxation of REITs and their shareholders are highly technical and complex. The following discussion sets forth the material aspects of

 

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the rules that govern the U.S. federal income tax treatment of a REIT and its shareholders. This summary is based on current United States law, including the applicable Code provisions, rules and regulations promulgated thereunder, and administrative and judicial interpretations thereof, all of which are subject to change, which changes may apply retroactively.

Provided Weyerhaeuser qualifies for taxation as a REIT, it will generally not be subject to U.S. federal corporate income taxes on that portion of its ordinary income or capital gain that Weyerhaeuser currently distributes to shareholders. The REIT provisions of the Code generally allow a REIT to deduct dividends paid to its shareholders. This deduction for dividends substantially eliminates the “double taxation” at the corporate and shareholder levels that generally results from investment in a regular corporation. Weyerhaeuser will, however, be subject to U.S. federal income tax under certain circumstances, including the following:

 

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Weyerhaeuser will be subject to tax at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains. See, however, the section entitled “—Annual Distribution Requirements” beginning on page [•] with respect to its ability to elect to treat as having been distributed to shareholders certain of its capital gains upon which it has paid taxes, in which event so much of the taxes as Weyerhaeuser has paid with respect to such income would be available as a credit or refund to shareholders;

 

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Weyerhaeuser may be subject to the “alternative minimum tax” on certain of its items of tax preference;

 

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If Weyerhaeuser has (1) net income from the sale or other disposition of “foreclosure property” which is held primarily for sale to customers in the ordinary course of business or (2) other nonqualifying income from foreclosure property, Weyerhaeuser will be subject to tax at the highest corporate rate on such income. In general, foreclosure property is property acquired through foreclosure after a default on a loan secured by the property or on a lease of the property;

 

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Weyerhaeuser will be required to pay a 100% tax on any net income from prohibited transactions. In general, prohibited transactions are sales or other taxable dispositions of property, other than foreclosure property, held for sale to customers in the ordinary course of business;

 

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If Weyerhaeuser fails to satisfy the 75% gross income test or the 95% gross income test as discussed below, but Weyerhaeuser has maintained its qualification as a REIT because certain other requirements have been met, Weyerhaeuser will be subject to a 100% tax on an amount equal to (1) the gross income attributable to the greater of the amount by which Weyerhaeuser fails the 75% or 95% gross income test multiplied by (2) a fraction intended to reflect its profitability;

 

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If Weyerhaeuser fails to satisfy any of the REIT asset tests (other than a de minimis failure of the 5% or 10% asset tests), as described below, provided such failure is due to reasonable cause and not due to willful neglect, and nonetheless maintains its REIT qualification because of specified cure provisions, Weyerhaeuser will be required to pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the nonqualifying assets that caused Weyerhaeuser to fail such test;

 

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If Weyerhaeuser fails to satisfy any provision of the Code that would result in its failure to qualify as a REIT (other than a violation of the REIT gross income tests or certain violations of the asset tests described below) and the violation is due to reasonable cause and not due to willful neglect, Weyerhaeuser may retain its REIT qualification but will be required to pay a penalty of $50,000 for each such failure;

 

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Weyerhaeuser will be required to pay a 4% excise tax on the amount by which its annual distributions to shareholders are less than the sum of (1) 85% of its REIT ordinary income for the year, (2) 95% of its REIT capital gain net income for the year, other than capital gain income Weyerhaeuser elects to retain and pay tax on and (3) any undistributed taxable income from prior periods, other than capital gains from such years which Weyerhaeuser elected to retain and pay tax on;

 

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•

Weyerhaeuser may be required to pay a 100% excise tax on items of income and expense that are directly or constructively paid between a REIT and a taxable REIT subsidiary if and to the extent that the IRS successfully adjusts the reported amounts of these items;

 

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Weyerhaeuser will have subsidiaries or own interests in other lower-tier entities that are taxable C corporations, including its TRSs, the earnings of which will generally be subject to U.S. federal income tax; and

 

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If Weyerhaeuser acquires any asset from a corporation that is or has been a C corporation in a transaction in which the basis of the asset in the hands of Weyerhaeuser is determined by reference to the basis of the asset in the hands of the C corporation, and Weyerhaeuser subsequently recognizes gain on the disposition of the asset during the 10-year period beginning on the date on which Weyerhaeuser acquired the asset, then Weyerhaeuser will be required to pay tax at the highest regular corporate tax rate on this gain to the extent of the excess of (1) the fair market value of the asset over (2) the adjusted basis of Weyerhaeuser in the asset, in each case determined as of the date on which Weyerhaeuser acquired the asset. The results described in this paragraph with respect to the recognition of gain assume that the necessary parties make or refrain from making the appropriate elections under the applicable Treasury Regulations then in effect.

Requirements for Qualification

Weyerhaeuser has elected to be treated as a REIT beginning with its taxable year ended December 31, 2010. In order to continue to qualify as a REIT, Weyerhaeuser must meet the requirements discussed below relating to its organization, sources of income, nature of assets and distributions of income.

Organizational Requirements

Weyerhaeuser’s capital stock must be held by at least 100 persons and no more than 50% of the value of its capital stock may be owned, directly or indirectly, by five or fewer individuals (as specially defined for these purposes) at all times during the last half of the taxable year. For these purposes, an “individual” generally includes a supplemental unemployment compensation benefit plan, a private foundation or a portion of a trust permanently set aside or used exclusively for charitable purposes, but does not include a qualified pension plan or profit-sharing trust. These ownership requirements apply to Weyerhaeuser beginning in its second taxable year as a REIT and have applied and will continue to apply in each subsequent taxable year. Weyerhaeuser’s articles of incorporation provides for certain restrictions regarding the transfer of its capital stock in order to aid in meeting the stock ownership requirements, but these restrictions cannot insure that Weyerhaeuser will in all cases comply with these ownership requirements.

To avoid a monetary penalty, Weyerhaeuser must request on an annual basis information from its shareholders designed to disclose the actual ownership of its outstanding shares. Weyerhaeuser intends to comply with these requirements.

Income Tests

In order to maintain qualification as a REIT, Weyerhaeuser must annually satisfy two gross income requirements. First, for each taxable year Weyerhaeuser must derive, directly or indirectly, at least 75% of its gross income (excluding gross income from “prohibited transactions,” from certain hedging transactions and from certain foreign currency transactions) from investments relating to real property or mortgages on real property (including “rents from real property” and “gain from the sale or other disposition of real property”) other than property held primarily for sale to customers in the ordinary course of business or from certain types of temporary investments. Second, for each taxable year Weyerhaeuser must derive, directly or indirectly, at least 95% of its gross income (excluding gross income from “prohibited transactions,” from certain hedging transactions and from certain foreign currency transactions) from such real property investments, dividends,

 

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interest and gain from the sale or disposition of stock or securities (or from any combination of the foregoing). Gross income for this purpose includes Weyerhaeuser’s proportionate share of income of partnerships in which it owns an interest.

Rents that Weyerhaeuser receives will qualify as “rents from real property” in satisfying the gross income requirements for a REIT described above only if several conditions are met. Weyerhaeuser has received in the past and is anticipated to receive in the future rental income derived from certain farmlands and grazing lands and from certain hunting leases, as well as from certain other sources connected to its timberlands. It is anticipated that any income Weyerhaeuser receives from such hunting leases and properties will constitute “rents from real property” under the applicable rules. While it is not expected that Weyerhaeuser will receive a substantial amount of rental income, Weyerhaeuser will take steps to ensure that any such rental income will qualify as “rents from real property” for purposes of the 75% and 95% gross income tests. Furthermore, Weyerhaeuser believes that its gains derived from timber cutting contracts will be derived from the sale of real property for purposes of the REIT gross income tests.

Weyerhaeuser may receive distributions from its TRSs or other C corporations that are neither REITs nor qualified REIT subsidiaries. These distributions will be classified as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not for purposes of the 75% gross income test.

If Weyerhaeuser fails to satisfy one or both of the 75% or 95% gross income tests for any taxable year, Weyerhaeuser may nevertheless qualify as a REIT for such year if it is entitled to relief under certain provisions of the Code. These relief provisions will generally be available if:

 

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Weyerhaeuser’s failure to meet such tests was due to reasonable cause and not due to willful neglect; and

 

•

following the identification by Weyerhaeuser of the failure to meet the 75% or 95% gross income tests, Weyerhaeuser files a schedule with the IRS setting forth each item of the gross income of Weyerhaeuser for purposes of the 75% or 95% gross income tests in accordance with Treasury Regulations to be issued.

It is not possible, however, to state whether in all circumstances Weyerhaeuser would be entitled to the benefit of these relief provisions. As discussed in the section entitled “—General” beginning on page [•], even if these relief provisions apply, a tax would be imposed with respect to the excess gross income.

Asset Tests

At the close of each quarter of its taxable year, Weyerhaeuser must satisfy the following three tests relating to the nature of its assets:

 

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at least 75% of the value of its total assets must be represented by real estate assets (including, under certain circumstances, stock or debt instruments purchased with new capital), cash, cash items and U.S. government securities, and including its allocable share of assets held by partnerships in which Weyerhaeuser owns an interest;

 

•

of the investments included in the 25% asset class, the value of any one issuer’s securities owned by Weyerhaeuser may not exceed 5% of the value of its total assets, and Weyerhaeuser may not own more than 10% of any one issuer’s outstanding voting securities, as measured by either voting power or value; and

 

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not more than 25% of its total assets may be represented by securities other than those in the 75% asset class (e.g., U.S. government securities).

 

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The 5% and 10% asset limitations described above do not apply to wholly owned qualified REIT subsidiary corporations, or to electing taxable REIT subsidiary corporations. The value of stock held by a REIT in taxable REIT subsidiary corporations may not, however, exceed, in the aggregate, 25% of the value of a REIT’s total assets.

As of the date of this joint proxy statement/prospectus, substantially more than 75% of the fair market value of the assets owned directly or indirectly by Weyerhaeuser will consist of timberlands owned in fee, and Weyerhaeuser expects that, at all times after the merger, substantially more than 75% of the assets owned by it directly and indirectly will consist of fee ownership of timberland. Accordingly, Weyerhaeuser believes that it will be able to meet the 75% test described above on a going-forward basis.

If Weyerhaeuser fails to satisfy the asset tests at the end of a calendar quarter, such a failure would not cause Weyerhaeuser to lose its REIT status if (1) Weyerhaeuser satisfied all of the asset tests at the close of the preceding calendar quarter and (2) the discrepancy between the value of its assets and the asset requirements either did not exist immediately after the acquisition of any particular asset or was not wholly or partly caused by such an acquisition (i.e., the discrepancy arose from changes in the market values of its assets). If the condition described in clause (2) of the preceding sentence were not satisfied, Weyerhaeuser could still avoid disqualification by eliminating any discrepancy within 30 days after the close of the quarter in which it arose.

If Weyerhaeuser fails the 5% asset test, the 10% vote test, or the 10% value test at the end of any quarter, and such failure is not cured within 30 days thereafter, Weyerhaeuser may dispose of sufficient assets (generally, within six months after the last day of the quarter in which its identification of the failure to satisfy those asset tests occurred) to cure the violation; provided that the non-permitted assets do not exceed the lesser of 1% of its assets at the end of the relevant quarter or $10,000,000. If Weyerhaeuser fails any of the other asset tests, or its failure of the 5% and 10% asset tests is in excess of the de minimis amount described above, as long as the failure was due to reasonable cause and not willful neglect, Weyerhaeuser is permitted to avoid disqualification as a REIT, after the 30-day cure period, by taking steps, including the disposition of sufficient assets to meet the asset tests (generally within six months after the last day of the quarter in which Weyerhaeuser’s identification of the failure to satisfy the REIT asset test occurred), and paying a tax equal to the greater of $50,000 or 35% of the net income generated by the non-qualifying assets during the period in which Weyerhaeuser failed to satisfy the relevant asset test.

Annual Distribution Requirements

In order to qualify as a REIT, Weyerhaeuser is required to make distributions (other than capital gain dividends) to its shareholders in an amount at least equal to (1) the sum of (a) 90% of its “REIT taxable income” (computed without regard to the dividends paid deduction and its net capital gain) and (b) 90% of the net income (after tax), if any, from foreclosure property, minus (2) the sum of certain items of noncash income.

These distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared in October, November or December of the taxable year, are payable to shareholders of record on a specified date in any such month, and are actually paid before the end of January of the following year. Such distributions are treated as both paid by Weyerhaeuser and received by each shareholder on December 31 of the year in which they are declared. In addition, at the election of Weyerhaeuser, a distribution for a taxable year may be declared before Weyerhaeuser timely files its tax return for the year; provided Weyerhaeuser pays such distribution with or before its first regular dividend payment after such declaration; provided further that such payment is made during the 12-month period following the close of such taxable year. These distributions are taxable to Weyerhaeuser shareholders in the year in which paid, even though the distributions relate to the prior taxable year for purposes of the 90% distribution requirement of Weyerhaeuser.

To the extent that Weyerhaeuser does not distribute (or Weyerhaeuser is not treated as having distributed) all of its capital gain or Weyerhaeuser distributes (or Weyerhaeuser is treated as having distributed) at least 90%, but less than 100%, of its “REIT taxable income,” as adjusted, Weyerhaeuser will be subject to tax on the undistributed income at regular corporate tax rates.

 

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If Weyerhaeuser should fail to distribute during each calendar year at least the sum of (1) 85% of its REIT ordinary income for such year, (2) 95% of its REIT capital gain income for such year (other than capital gain income which Weyerhaeuser elects to retain and pay tax on as provided for below) and (3) any undistributed taxable income from prior periods (other than capital gains from such years which Weyerhaeuser elected to retain and pay tax on), Weyerhaeuser would be subject to a 4% excise tax on the excess of the required distribution over the amounts actually distributed.

Weyerhaeuser may elect to retain rather than distribute its net long-term capital gains. The effect of this election is that:

 

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Weyerhaeuser would be required to pay the tax on such gains at regular corporate tax rates;

 

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its shareholders, although required to include their proportionate share of the undistributed long-term capital gain in income, would receive a credit or refund for their share of the tax paid by Weyerhaeuser; and

 

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the basis of a shareholder’s shares would be increased by the amount of the undistributed long-term capital gains (minus the amount of the tax on capital gains paid by Weyerhaeuser which was included in income by the shareholder).

It is possible that Weyerhaeuser, from time to time, may not have sufficient cash or other liquid assets to meet the annual distribution requirements described above due to timing or other differences between (1) the actual receipt of income and actual payment of deductible expenses and (2) the inclusion of such income and deduction of such expenses in arriving at its taxable income. If Weyerhaeuser encounters this situation, it may elect to retain the capital gain and pay the tax on the gain. Nevertheless, in order to pay such tax or otherwise meet the distribution requirements, Weyerhaeuser may find it necessary to arrange for short or possibly long-term borrowings, issue equity or sell assets.

Alternatively, in order to meet the distribution requirements, Weyerhaeuser may pay dividends in the form of taxable in-kind distributions of property, including taxable share dividends. In the case of a taxable share dividend, shareholders would be required to include the dividend as income and would be required to satisfy the tax liability associated with the distribution with cash from other sources, including sales of Weyerhaeuser’s common shares.

Under certain circumstances, Weyerhaeuser may be able to rectify a failure to meet the distribution requirement for a year by paying “deficiency dividends” to its shareholders in a later year, which may be included in its deduction for dividends paid for the earlier year. Thus, Weyerhaeuser may be able to avoid being taxed on amounts distributed as deficiency dividends; however, Weyerhaeuser will be required to pay interest and a penalty based upon the amount of any deduction taken for deficiency dividends.

Failure to Qualify as a REIT

If Weyerhaeuser fails to qualify for taxation as a REIT in any taxable year and if the relief provisions do not apply, it will be subject to tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. Distributions to shareholders in any year in which Weyerhaeuser fails to qualify as a REIT will not be deductible by Weyerhaeuser nor will they be required to be made. As a result, cash available for distribution to shareholders would be significantly reduced. In addition, if Weyerhaeuser fails to qualify as a REIT, all distributions to shareholders will generally be eligible for the reduced qualifying dividend income rate, to the extent of its current and accumulated earnings and profits, and, subject to certain limitations of the Code, corporate distributees may be eligible for the dividends received deduction. Unless entitled to relief under specific statutory provisions, Weyerhaeuser will also be disqualified from being eligible to be subject to tax as a REIT for the four taxable years following the year during which such qualification was lost. It is not possible to state whether in all circumstances Weyerhaeuser would be entitled to such statutory relief.

 

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Taxation of Taxable U.S. Holders

As used herein, the term “U.S. Holder” has the same meaning ascribed to it on page [•].

Distributions to U.S. Holders

Provided that Weyerhaeuser qualifies as a REIT, distributions made to U.S. Holders that Weyerhaeuser properly designates as capital gain dividends will be subject to tax as capital gains (to the extent that they do not exceed Weyerhaeuser’s actual net capital gain for the taxable year) without regard to the period for which a U.S. Holder has held its shares. The maximum long-term federal capital gains rate for individuals with respect to capital gains dividends is 20%. If Weyerhaeuser elects to retain capital gains rather than distribute them, a U.S. Holder will be deemed to receive a capital gain dividend equal to its share of such retained capital gains. In such a case, a shareholder will receive a tax credit or refund for its share of the tax paid by Weyerhaeuser on such undistributed capital gains and the basis of the shareholder’s common shares would be increased by the amount of the undistributed capital gains (minus the amount of the tax on capital gains paid by Weyerhaeuser deemed distributed to such shareholder).

Distributions made to U.S. Holders, other than tax-exempt entities, that are not designated as capital gain dividends will be subject to tax as ordinary income to the extent of Weyerhaeuser’s current and accumulated earnings and profits as determined for U.S. federal income tax purposes. Subject to the exception discussed below, dividends received from REITs are generally not eligible to be taxed at the preferential qualified dividend income rates currently applicable to non-corporate U.S. Holders who receive dividends from taxable subchapter C corporations. If the amounts distributed exceed a shareholder’s allocable share of Weyerhaeuser’s earnings and profits, the excess will be treated as a return of capital to the extent of the shareholder’s adjusted basis in its shares, which will not be subject to tax, and thereafter as a gain from the sale or exchange of a capital asset. At the present time, Weyerhaeuser anticipates that substantially all of the distributions made by it will constitute capital gain dividends.

With respect to non-corporate U.S. Holders, Weyerhaeuser may elect to designate a portion of its distributions paid to such U.S. Holders as “qualified dividend income.” A portion of a distribution that is properly designated as qualified dividend income is taxable to non-corporate U.S. Holders as capital gain and generally taxable at the maximum U.S. federal rate of 20%, provided that the U.S. Holder has held the common shares with respect to which the distribution is made for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which such common shares became ex-dividend with respect to the relevant distribution.

Dividends declared by Weyerhaeuser in October, November or December of any year and payable to a shareholder of record on a specified date in any such month shall be treated as both paid by Weyerhaeuser and received by the shareholder on December 31 of such year, provided that Weyerhaeuser actually pays the dividend on or before January 31 of the following calendar year. See the section entitled “—Taxation of Weyerhaeuser as a REIT—Annual Distribution Requirements” beginning on page [•]. Shareholders may not include in their income tax returns any of Weyerhaeuser’s net operating losses or capital losses. Weyerhaeuser will notify each shareholder after the close of its taxable year as to the portions of the distributions attributable to that year which constitute ordinary income, capital gain or a return of capital.

Weyerhaeuser will be treated as having sufficient earnings and profits to treat as a dividend any distribution that Weyerhaeuser makes up to the amount required to be distributed in order to avoid imposition of the 4% excise tax discussed under the section entitled “—Taxation of Weyerhaeuser as a REIT—General” beginning on page [•] and the section entitled “—Taxation of Weyerhaeuser as a REIT—Annual Distribution Requirements” beginning on page [•]. As a result, shareholders may be required to treat as taxable dividends certain distributions that would otherwise result in tax free returns of capital. In addition, any “deficiency dividend” will be treated as a “dividend” (an ordinary dividend or a capital gain dividend, as the case may be), regardless of Weyerhaeuser’s earnings and profits.

 

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Passive Activity Losses and the Investment Interest Limitation

Distributions made by Weyerhaeuser and gain arising from the sale or exchange by a U.S. Holder of Weyerhaeuser common shares will not be treated as passive activity income, and, as a result, U.S. Holders will generally not be able to apply any “passive losses” against such income or gain. Dividends from Weyerhaeuser will generally be treated as investment income for purposes of the investment interest limitation to the extent the dividends do not constitute a capital gain dividend or a return of capital. Net capital gain from the sale or other disposition of common shares and capital gain dividends will generally not be considered investment income for purposes of the investment interest limitation.

Sale of Weyerhaeuser Common Shares

Upon any sale or other taxable disposition of Weyerhaeuser common shares (including pursuant to a Weyerhaeuser share repurchase program), a U.S. Holder will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between (1) the amount of cash and the fair market value of any property received on such sale or other disposition and (2) the holder’s adjusted basis in such shares for tax purposes. Such gain or loss will be capital gain or loss if the shares have been held by the U.S. Holder as a capital asset and will be eligible for preferential capital gains rates if such shares have been held for more than one year, as discussed in the section entitled “—Distributions to U.S. Holders” beginning on page [•]. In general, any loss recognized by a U.S. Holder upon the sale or other disposition of Weyerhaeuser common shares that has been held for six months or less (after applying certain holding period rules) will be treated as a long-term capital loss to the extent of distributions received by such U.S. Holder which were treated as long-term capital gains.

Taxation of Tax-Exempt U.S. Shareholders

Based upon a published ruling by the IRS, distributions that Weyerhaeuser makes to a shareholder that is a tax-exempt entity will not constitute “unrelated business taxable income” (“UBTI”), provided that the tax-exempt entity has not financed the acquisition of its shares with “acquisition indebtedness” within the meaning of the Code and the shares are not otherwise used in an unrelated trade or business of the tax-exempt entity.

Notwithstanding the preceding paragraph, however, a portion of the dividends Weyerhaeuser distributes may be treated as UBTI to certain United States private pension trusts if Weyerhaeuser were treated as a “pension-held REIT.” Weyerhaeuser is not currently nor does it anticipate that it will be a “pension-held REIT.” If Weyerhaeuser were to become a pension-held REIT, these rules would generally only apply to certain United States pension trusts that hold more than 10% of its stock.

Taxation of Non-U.S. Shareholders

The rules governing U.S. federal income taxation of the ownership and disposition of Weyerhaeuser common shares by Non-U.S. Holders are complex, and no attempt is made herein to provide more than a brief summary of such rules. Accordingly, the discussion does not address all aspects of U.S. federal income tax and does not address state, local or foreign tax consequences that may be relevant to a Non-U.S. Holder in light of its particular circumstances. In addition, this discussion assumes that Weyerhaeuser qualifies for taxation as a REIT. Prospective Non-U.S. Holders should consult their tax advisors to determine the impact of federal, state, local and foreign tax laws with regard to the ownership and disposition of Weyerhaeuser common shares (including reporting requirements) in light of their individual investment circumstances. As discussed below, because of the nature of Weyerhaeuser’s income, investment in Weyerhaeuser common shares by Non-U.S. Holders may be less favorable than investments in REITs whose principal activity is not timber-related.

Distributions to Non-U.S. Holders

Except as described below with respect to Non-U.S. Holders that hold 5% or less of Weyerhaeuser common shares, under the Foreign Investment in Real Property Tax Act of 1980 (referred to as “FIRPTA”), distributions

 

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to a Non-U.S. Holder that are attributable to gain from sales or exchanges by Weyerhaeuser of United States real property interests will cause the Non-U.S. Holder to be treated as recognizing such gain as income effectively connected with a United States trade or business. Non-U.S. Holders would thus generally be subject to tax at the same rates applicable to domestic shareholders (subject to a special alternative minimum tax in the case of nonresident alien individuals). Such distributions may also be subject to a 30% branch profits tax in the hands of a Non-U.S. Holder that is a corporation.

Weyerhaeuser is generally required to withhold 35% of any such distribution. That amount is creditable against the Non-U.S. Holder’s U.S. federal income tax liability. It should be noted that the 35% withholding tax rate on capital gain dividends is higher than the maximum rate on long-term capital gains of U.S. Holders that are individuals. It should also be emphasized that the income Weyerhaeuser receives under its timber cutting contracts will be characterized for U.S. federal income tax purposes as gain from the sale or other disposition of real property. Weyerhaeuser currently expects that substantially all of its distributions will be capital gain and, accordingly, will be subject to such treatment.

Notwithstanding the foregoing, a capital gain dividend that would otherwise have been treated as a United States real property interest capital gain, as described above, will generally not be treated as income that is effectively connected with a United States trade or business, and instead will be treated in the same manner as an ordinary dividend payable out of earnings and profits, described further below, if (1) the capital gain dividend is received with respect to a class of shares that is regularly traded on an established securities market located in the United States such as Weyerhaeuser common shares, and (2) the recipient Non-U.S. holder does not own more than 5% of that class of shares at any time during the year ending on the date on which the capital gain dividend is received.

The portion of dividends received by Non-U.S. Holders payable out of Weyerhaeuser’s earnings and profits which are not subject to 35% withholding for capital gains if any, and which are not effectively connected with a United States trade or business of the Non-U.S. Holder, will be subject to United States withholding tax at the rate of 30% (unless reduced by treaty). In general, Non-U.S. Holders will not be considered engaged in a United States trade or business solely as a result of their ownership of Weyerhaeuser common shares. In cases where the dividend income from a Non-U.S. Holder’s investment in Weyerhaeuser common shares is (or is treated as) effectively connected with the Non-U.S. Holder’s conduct of a United States trade or business, the Non-U.S. Holder will generally be subject to U.S. federal income tax at graduated rates, in the same manner as United States shareholders are subject to tax with respect to such dividends (and may also be subject to the 30% branch profits tax in the case of a Non-U.S. Holder that is a foreign corporation).

To obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder will be required to either (1) provide an IRS Form W-8BEN certifying such Non-U.S. Holder’s entitlement to benefits under a treaty together with, in certain circumstances, additional information, or (2) satisfy certain other applicable treaty certification requirements. Special rules apply to determine whether, for purposes of determining the applicability of a tax treaty and for purposes of the 30% withholding tax described above, dividends paid to a Non-U.S. Holder that is an entity should be treated as paid to the entity or to those persons or entities holding an interest in such entity. Non-U.S. Holders who hold Weyerhaeuser common shares through United States pass-through entities should consult their tax advisors.

Distributions in excess of Weyerhaeuser’s current and accumulated earnings and profits to Non-U.S. Holders will not be subject to tax to the extent that they do not exceed the adjusted basis of the shareholder’s common shares, but rather will reduce the adjusted basis of such common shares. To the extent that such distributions exceed the adjusted basis of a Non-U.S. Holder’s Weyerhaeuser common shares, they will give rise to gain from the sale or exchange of such shares, the tax treatment of which is described below. Because at the time of a distribution Weyerhaeuser will generally not know whether such distribution is in excess of earnings and profits, Weyerhaeuser will withhold at a rate of 35% on the entire amount of any distribution (or a lower applicable treaty rate). Nevertheless, a Non-U.S. Holder may seek a refund of such amounts from the IRS if it

 

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subsequently determines that such distribution was, in fact, in excess of Weyerhaeuser’s current or accumulated earnings and profits and the amount withheld exceeded the Non-U.S. Holder’s U.S. federal income tax liability, if any, with respect to the distribution.

Sale of Weyerhaeuser Common Shares

Gain recognized by a Non-U.S. Holder upon the sale or exchange of Weyerhaeuser common shares (including pursuant to a Weyerhaeuser share repurchase program) will generally not be subject to United States taxation unless such shares constitute a “United States real property interest” within the meaning of FIRPTA. Weyerhaeuser common shares will not constitute a “United States real property interest” so long as Weyerhaeuser is a “domestically controlled REIT.” A “domestically controlled REIT” is a REIT in which, at all times during a specified testing period, less than 50% in value of its stock is held directly or indirectly by Non-U.S. Holders. No assurance can be given that Weyerhaeuser will be a “domestically controlled REIT” because Weyerhaeuser common shares are publically traded. If Weyerhaeuser is not or ceases to be a “domestically controlled REIT,” gain arising from the disposition of Weyerhaeuser common shares will not be subject to tax, provided that such shares are publicly traded on an established securities market (as determined under applicable Treasury Regulations) and the shareholder holds 5% or less of the outstanding shares of Weyerhaeuser during the five-year period ending on the date of disposition.

Notwithstanding the foregoing, a Non-U.S. Holder will be subject to tax on gain from the sale or exchange of common shares not otherwise subject to FIRPTA if the Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States.

Backup Withholding Tax and Information Reporting

Weyerhaeuser must report annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with respect to, such shareholder, regardless of whether any tax was actually withheld. That information may also be made available to the tax authorities of the country in which a Non-U.S. Holder resides.

Backup withholding tax, which is generally imposed on certain payments to persons that fail to furnish certain information under the United States information reporting requirements, will generally not apply to dividends, including any capital gain dividends, that Weyerhaeuser pays on its shares to a Non-U.S. Holder to an address outside the United States. The payment of the proceeds from the disposition of Weyerhaeuser common shares to or through a United States office of a broker will be subject to information reporting and backup withholding unless the owner, under penalties of perjury, certifies, among other things, its status as a Non-U.S. Holder, or otherwise establishes an exemption. The payment of the proceeds from the disposition of Weyerhaeuser common shares to or through a non-U.S. office of a non-U.S. broker will generally not be subject to backup withholding and information reporting.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS. Shareholders of Weyerhaeuser common shares should consult their tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

Foreign Account Tax Compliance Act

Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances on dividends in respect of, and, after

 

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December 31, 2018, gross proceeds from the sale or other disposition of, Weyerhaeuser common shares which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. Accordingly, the entity through which Weyerhaeuser common shares are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of, and, after December 31, 2018, gross proceeds from the sale or other disposition of, Weyerhaeuser common shares held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to Weyerhaeuser or the applicable withholding agent that such entity does not have any “substantial United States owners” or (2) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S. Department of Treasury. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in Weyerhaeuser common shares.

Other Taxes

Weyerhaeuser, the operating partnership, any of its subsidiaries, or its shareholders may be subject to foreign, state and local tax in various countries, states and localities, including those countries, states and localities in which they transact business, own property or reside. The state, local or foreign tax treatment of Weyerhaeuser and its shareholders in those jurisdictions may differ from the U.S. federal income tax treatment described above. Consequently, prospective holders of Weyerhaeuser common shares should consult their tax advisors regarding the effect of foreign, state and local tax laws upon the ownership and disposition of Weyerhaeuser common shares in light of their individual investment circumstances.

Legislative or Other Actions Affecting REITs

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. No assurance can be given as to whether, when, or in what form, the U.S. federal income tax laws applicable to Weyerhaeuser and its shareholders may be enacted. Changes to the U.S. federal income tax laws and interpretations of U.S. federal tax laws could adversely affect an investment in the Weyerhaeuser common shares.

Accounting Treatment

Weyerhaeuser prepares its financial statements in accordance with GAAP and is the accounting acquirer. The merger will be accounted for in accordance with Accounting Standards Codification 805, Business Combinations. The purchase price will be determined based on the number of common shares issued and the trading price of Weyerhaeuser common shares on the date of the merger. The purchase price will also include additional consideration related to converted Plum Creek equity awards for amounts attributable to pre-merger services. The purchase price will be allocated to the fair values of assets acquired and liabilities assumed. Any residual purchase price after this allocation will be assigned to goodwill. Under Accounting Standards Codification 350, Intangibles – Goodwill and Other, goodwill is not amortized but is tested for potential impairment at least annually. The operating results of Plum Creek will be part of the combined company results beginning on the date of the merger.

Regulatory Clearances Required for the Merger

We are not aware of any approval under any antitrust, competition or similar law that is required in connection with the merger other than a filing with the Turkish Competition Authority that was made on

 

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November 24, 2015. We are unaware of any other material regulatory approvals that are required for the completion of the merger. On December 1, 2015, Plum Creek and Weyerhaeuser each received a letter from the Antitrust Division of the U.S. Department of Justice, requesting that the companies voluntarily produce certain information and documents to facilitate DOJ’s review of the merger. On December 8, 2015, Plum Creek and Weyerhaeuser each received a Civil Investigative Demand from the Office of Attorney General of the State of Washington. Plum Creek and Weyerhaeuser intend to fully cooperate with DOJ and the state’s investigation. At any time before or after the merger, the Antitrust Division of the U.S. Department of Justice, the Federal Trade Commission or another person could take action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger, seeking a rescission or other unwinding of the merger or permitting the completion of the merger subject to regulatory concessions or conditions. We cannot assure you that a challenge to the merger will not be made or that, if a challenge is made, it will not succeed.

Weyerhaeuser and Plum Creek have each agreed to use their reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with each other in doing, all things necessary, proper or advisable to complete and make effective, as soon as reasonably possible, the merger and the other transactions contemplated by the merger agreement, subject to certain exceptions and limitations, including that neither Weyerhaeuser nor Plum Creek will be required to undertake any efforts or take any action if the taking of such efforts or action, in the aggregate, would or would reasonably be expected to result (after giving effect to any reasonably expected proceeds of any divestiture or sale of assets) in a regulatory material adverse effect. For an explanation of what regulatory material adverse effect means, see the section entitled “—The Merger Agreement—Efforts to Complete the Merger” beginning on page [•].

Exchange of Shares in the Merger

Prior to the effective time of the merger, Weyerhaeuser will appoint an exchange agent reasonably acceptable to Plum Creek to handle the exchange of shares of Plum Creek common stock for Weyerhaeuser common shares. Shares of Plum Creek common stock (other than shares of Plum Creek common stock owned by Plum Creek as treasury shares, which will be canceled) will be automatically converted into Weyerhaeuser common shares without the need for any action by the holders of such shares of Plum Creek common stock.

As promptly as practicable after the effective time of the merger, Weyerhaeuser will cause the exchange agent to mail to each holder of record of Plum Creek common stock a letter of transmittal specifying that delivery will be effected, and risk of loss and title to any certificates or book-entry shares representing shares of Plum Creek common stock shall pass, only upon delivery of such certificates or book-entry shares to the exchange agent.

Plum Creek stockholders will not receive any fractional Weyerhaeuser common shares in the merger. Instead, each Plum Creek stockholder will be entitled to receive a cash payment in lieu of any fractional Weyerhaeuser common shares it otherwise would have received pursuant to the merger equal to (1) the fractional share interest to which such holder would otherwise be entitled (after taking into account all shares of Plum Creek common stock exchanged by such holder) multiplied by (2) the average of the volume weighted average price per share of Weyerhaeuser common shares on each of the five consecutive trading days ending with the last complete trading day prior to the completion of the merger.

After the effective time of the merger, shares of Plum Creek common stock will no longer be outstanding, will automatically be canceled and will cease to exist and certificates that previously represented shares of Plum Creek common stock will represent only the right to receive the merger consideration as described above. Until holders of Plum Creek common stock have surrendered their shares to the exchange agent for exchange, those holders will not receive dividends or distributions declared or made with respect to Weyerhaeuser common shares with a record date after the effective time of the merger. However, upon the surrender of their shares of Plum Creek common stock, such holders will receive the amount of dividends or other distributions with respect to Weyerhaeuser common shares theretofore paid with a record date after the effective time of the merger.

 

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After the effective time of the merger, Plum Creek will not register any transfers of the shares of Plum Creek common stock.

Weyerhaeuser shareholders need not take any action with respect to their Weyerhaeuser common shares.

Treatment of Plum Creek Stock Options and Other Equity-Based Awards

Plum Creek Options. Each Plum Creek Option that is outstanding immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into an option, on the same terms and conditions as were applicable under the corresponding Plum Creek Option, to acquire a number of Weyerhaeuser common shares equal to the product (rounded down to the nearest whole number) of (1) the number of shares of Plum Creek common stock subject to the Plum Creek Option immediately prior to the completion of the merger and (2) 1.60, at an exercise price per share (rounded up to the nearest whole cent) equal to (a) the exercise price per share of Plum Creek common stock of such Plum Creek Option immediately prior to the effective time divided by (b) 1.60.

Plum Creek RSUs. Each grant of Plum Creek RSUs that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into a grant of restricted stock units, on the same terms and conditions as were applicable under the corresponding grant of Plum Creek RSUs, with respect to a number of Weyerhaeuser common shares determined by multiplying the number of shares of Plum Creek common stock subject to the grant of Plum Creek RSUs by 1.60, rounded down to the nearest whole share.

Plum Creek DSUs. Each Plum Creek DSU that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be assumed by Weyerhaeuser and converted into a deferred stock unit, on the same terms and conditions as were applicable under the corresponding Plum Creek DSU, with respect to a number of Weyerhaeuser common shares determined by multiplying the number of shares of Plum Creek common stock subject to the Plum Creek DSU by 1.60, rounded down to the nearest whole share.

Plum Creek VMAs (Pre-2015). Each Pre-2015 VMA that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will be canceled, with the holder thereof becoming entitled to receive an amount in cash determined by assuming that all applicable performance goals were satisfied at the greater of (1) the target level as set forth in the applicable award agreement and (2) actual performance over a shortened performance period ending as of the completion of the merger, as determined by the Plum Creek board (or, if appropriate, any committee thereof) in good faith consistent with past practices. The payments in respect of Pre-2015 VMAs will be paid as promptly as practicable following, but in no event later than 10 business days after, the completion of the merger, without interest, in accordance with Plum Creek’s payroll procedures.

Plum Creek VMAs (Post-2014). Each Post-2014 VMA that is outstanding as of immediately prior to the completion of the merger, whether vested or unvested, will (1) have its performance goals deemed to be satisfied at the greater of (a) the target level as set forth in the applicable award agreement and (b) actual performance over a shortened performance period ending as of the completion of the merger, as determined by the Plum Creek board (or, if appropriate, any committee thereof) in good faith consistent with past practices, and (2) be assumed by Weyerhaeuser and converted into an award on the same terms and conditions as were applicable under the corresponding Post-2014 VMA (including continued service-based vesting requirements, but not including any performance goals, which shall be deemed to be satisfied as described above), with respect to a number of units as set forth in the applicable award agreement.

Dividends and Share Repurchases

Weyerhaeuser currently pays a quarterly cash dividend of $0.31 per common share, and Plum Creek currently pays a quarterly cash dividend of $0.44 per share of common stock. Both Weyerhaeuser and Plum

 

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Creek intend to continue their current dividend practices through the completion of the merger. Under the merger agreement, Weyerhaeuser and Plum Creek are required to coordinate with each other to designate the same record and payment dates for any quarterly dividends or distributions declared in accordance with the merger agreement in any calendar quarter in which the closing of the merger might reasonably be expected to occur so that (1) no holder of Weyerhaeuser common shares or shares of Plum Creek common stock will receive two dividends, or fail to receive one dividend, for any single calendar quarter and (2) the quarterly payments of dividends to holders of Weyerhaeuser common shares (and any necessary adjustments to Plum Creek’s schedule for quarterly dividends) will be made substantially in accordance with Weyerhaeuser’s historical quarterly dividend payment schedule.

The Weyerhaeuser board has authorized the repurchase of up to $2.5 billion Weyerhaeuser common shares. This authorization was announced concurrently with the announcement of the merger. Weyerhaeuser intends to execute a $2.5 billion share repurchase following closing and intends to finance a portion of this share repurchase with new indebtedness. We cannot assure you that all or any portion of this $2.5 billion share repurchase will be completed, and Weyerhaeuser’s plans with respect to the financing of this share repurchase may change.

Prior to completion of the merger, the merger agreement prohibits Weyerhaeuser from repurchasing Weyerhaeuser common shares and Plum Creek from repurchasing shares of Plum Creek common stock.

Following the announcement of the merger, Weyerhaeuser and BofA Merrill Lynch discussed Weyerhaeuser’s post-closing financing plans and following that discussion, Weyerhaeuser asked whether BofA Merrill Lynch might be available to discuss and potentially participate in the announced post-closing $2.5 billion share repurchase by Weyerhaeuser and the provision of financing, which financing would likely be used, at least in part, to fund the share repurchase. BofA Merrill Lynch requested and received from Plum Creek permission to discuss with Weyerhaeuser such potential participation and to provide services related to such share repurchase and such financing to Weyerhaeuser.

Listing of Weyerhaeuser Common Shares

It is a condition to the completion of the merger that the Weyerhaeuser common shares to be issued to Plum Creek stockholders and Plum Creek equity award holders pursuant to the merger be approved for listing on the NYSE, subject to official notice of issuance.

Delisting and Deregistration of Plum Creek Common Stock

Upon the completion of the merger, the Plum Creek common stock currently listed on the NYSE will cease to be quoted on the NYSE and will subsequently be deregistered under the Exchange Act.

No Appraisal or Dissenters’ Rights

Under the DGCL, holders of Plum Creek common stock are not entitled to appraisal rights in connection with the merger. Under Washington law, since approval by Weyerhaeuser shareholders of the merger is not required, Weyerhaeuser shareholders do not have dissenters’ rights in connection with the merger. For additional information, see the section entitled “No Appraisal or Dissenters’ Rights” beginning on page [•].

Certain Weyerhaeuser Forecasts

Weyerhaeuser does not as a matter of course make public forecasts as to future performance, earnings or other results, and forecasts for extended periods of time are of particular concern to Weyerhaeuser due to, among other reasons, the unpredictability, uncertainty and subjectivity of the underlying assumptions and estimates. However, in connection with Weyerhaeuser’s and Plum Creek’s evaluation of the proposed merger, Weyerhaeuser’s management provided to Plum Creek, as well as to Plum Creek’s and Weyerhaeuser’s respective

 

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financial advisors and the Weyerhaeuser board, non-public, internal financial forecasts regarding Weyerhaeuser’s anticipated future operations for the fiscal years ending December 31, 2015 through 2019. Weyerhaeuser has included below a summary of these internal financial forecasts.

The internal financial forecasts were not prepared for the purpose of public disclosure, nor were they prepared in compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to these internal financial forecasts. The reports of the independent registered public accounting firms incorporated by reference into this joint proxy statement/prospectus relate to Weyerhaeuser’s and Plum Creek’s historical financial information and do not extend to these internal financial forecasts and should not be read to do so. These internal financial forecasts were based on internal management reporting that may differ from Weyerhaeuser’s external public reporting. The summary of these internal financial forecasts is not being included in this joint proxy statement/prospectus to influence your decision whether to vote for the merger proposal or the share issuance proposal; rather, the summary is only being included in this joint proxy statement/prospectus because these internal financial forecasts were provided by Weyerhaeuser to Plum Creek, as well as to Weyerhaeuser’s and Plum Creek’s respective financial advisors and the Weyerhaeuser board.

Because these internal forecasts were developed for Weyerhaeuser on a standalone basis without giving effect to the merger, these internal forecasts do not give effect to the merger or any changes to Weyerhaeuser’s operations or strategy that may be implemented after the completion of the merger, including any potential synergies realized as a result of the merger, or to any costs related to, or that may arise in connection with, the merger. In addition, these internal forecasts do not give effect to a potential sale of Weyerhaeuser’s cellulose fibers business.

While presented with numeric specificity, these internal financial forecasts were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of Weyerhaeuser’s management. Important factors that may affect actual results and cause the internal financial forecasts to not be achieved include risks and uncertainties relating to Weyerhaeuser’s businesses, industry performance, commodity price trends, the regulatory environment, general business and economic conditions and other factors described under the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [•] and “Risk Factors” beginning on page [•] and in Weyerhaeuser’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as updated by any subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and are incorporated by reference into this joint proxy statement/prospectus (see the section entitled “Where You Can Find More Information” beginning on page [•] for the location of information incorporated by reference in this joint proxy statement/prospectus). Since the forecasts cover multiple years, this information by its nature becomes less meaningful and predictive with each successive year. The internal financial forecasts were prepared based on information Weyerhaeuser’s management had at the time of preparation in August 2015 (or, in the case of the 2015 forecasts, October 2015) and reflect factors and assumptions that are subject to change and do not necessarily reflect current factors and assumptions that Weyerhaeuser’s management may have about Weyerhaeuser’s businesses. As a result, actual results may differ materially from these internal financial forecasts. The inclusion of these internal forecasts in this joint proxy statement/prospectus should not be regarded as an indication that Weyerhaeuser, Plum Creek or any other recipient of the financial forecasts considered, or now considers,