Weyerhaeuser Sells Homebuilding Subsidiary

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Weyerhaeuser Company is selling its real estate subsidiary to Tri Pointe Homes in a deal worth approximately $2.7 billion.

The Weyerhauser assets will combine with a subsidiary of Tri Pointe to create one of the 10 largest home builders in the United States, according to a company statement.

The agreement will give Irvine, California-based Tri Pointe Homes access to approximately 27,000 lots in "high-growth, lot-constrained" markets, in addition to home building brands Pardee Homes in California, Maracay Homes in Arizona and Trendmaker Homes in Texas.

Weyerhaeuser shareholders will receive 130 million shares in the new company, about 80.5 percent of the combined company. Weyerhauser will also receive about $700 million in cash.

Weyerhauser earlier this year announced plans to focus on its lumber business. 

"The combined company will be a strong standalone homebuilder, and the separation of our homebuilding division allows us to focus on driving performance in our forest products businesses to deliver further value to our shareholders," Doyle Simons, Weyerhaeuser president and chief executive officer said in the announcement.

As the demand for U.S. housing picks up, builders are having a hard time finding land ready for construction. Instead, builders find it easier to buy companies with access to land, analysts say. 

"What we're seeing is guys that are really looking for land opportunity and that's the big deal in the housing space today - finding land that is still attractively priced," Williams Financial Group analyst David Williams told Reuters.

Tri Pointe builds homes in California and Colorado and has a market capitalization of approximately $500 million after going public in January, Reuters reports. 

Weyerhaeuser Company owns or controls about seven million acres of timberlands, primarily in the U.S., and manages another 14 million acres under long-term licenses in Canada, the company stated.

The deal is expected to close in the second quarter of 2014.