Plum Creek Timber Company, Inc.
Robbins Arroyo LLP: Acquisition of Plum Creek Timber Company, Inc. (PCL) by Weyerhaeuser Co. (WY) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Plum Creek Timber Company, Inc. (NYSE: PCL) by Weyerhaeuser Co. (NYSE: WY). On November 8, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Weyerhaeuser will acquire Plum Creek Timber. Under the terms of the agreement, Plum Creek Timber shareholders will receive 1.6 shares of Weyerhaeuser for each share of Plum Creek Timber common stock, the value of which is equivalent to $48.64 per share of Plum Creek Timber.
Is the Proposed Acquisition Best for Plum Creek Timber and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Plum Creek Timber is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $48.64 merger consideration is significantly below the target price of $50.00 set by an analyst at ERA Forest Products Research on April 7, 2015. In the last three years, Plum Creek Timber traded as high as $54.62 on May 22, 2013, and most recently traded above the merger consideration – at $50.08 – on October 28, 2013.
On October 26, 2015, Plum Creek Timber reported strong earnings results for its third quarter 2015. Revenues were $414 million, a 10.4% increase over the prior year third quarter. Operating income increased 26.4% from $91 million in third quarter 2014 to $115 million in third quarter 2015. Adjusted EBITDA, a non-GAAP measure of operating performance, for the first nine months of 2015 was $472 million, higher than the $389 million in the same period of 2014. Further, Plum Creek Timber beat consensus analyst estimates for adjusted earnings per share and adjusted net income in the last four quarters. In commenting on these results, Plum Creek Timber Chief Executive Officer Rick Holley remarked, “Earnings for the third quarter were better than we initially anticipated with good performance from each of our business segments despite uneven demand and more challenging near-term market conditions. As always, our operations are remaining flexible, adjusting to local market conditions with the goal of maximizing the value of our harvests over the long term.”
In light of these facts, Robbins Arroyo LLP is examining Plum Creek Timber’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Plum Creek Timber shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Plum Creek Timber shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.