MeadWestvaco Corporation recently announced that it has reached a definitive agreement with Plum Creek Timber Company, Inc. whereby Plum Creek will acquire all of MWV's U.S. forestlands.
The total consideration of the transaction is approximately $1.1 billion.
The aggregate value of the transaction, including both parties' investments in a new partnership, is approximately $1.5 billion.
MWV intends to return approximately $665 million of the proceeds from the transaction to its shareholders.
"This transaction delivers on all of our objectives — it enables us to maximize the value of our land holdings in a tax-efficient manner, while retaining the substantial upside potential of the attractive real estate opportunities in the growing Charleston market. At the same time, we are maintaining a secure source of fiber for our mills," said John A. Luke, Jr., chairman and CEO, MWV.
"Plum Creek is an outstanding company that shares our commitment to both sustainably managing forests and forging lasting community partnerships in real estate development. As a strong company with deep expertise in land management and development, Plum Creek is the ideal partner for MWV as we move forward with the high-return real estate entitlement and community development opportunities we have in Charleston."
Under the terms of the agreement, Plum Creek will acquire all of MWV's U.S. forestlands and certain related assets, comprising approximately 501,000 acres in Alabama, Georgia, South Carolina, Virginia and West Virginia, for $934 million, of which approximately $74 million will be in cash and $860 million will be in the form of a 10-year installment note from Plum Creek that MWV intends to securitize or otherwise finance after closing. Also included in the transaction is the royalty and lease income currently being generated on these lands from coal and wind.
MWV will retain full ownership of its oil and natural gas rights on approximately 191,000 acres of land in West Virginia that are located over the Marcellus Shale fairway.
As part of the transaction, MWV and Plum Creek will execute 25-year fiber supply agreements covering forestlands in Virginia and West Virginia to ensure an uninterrupted supply of high-quality fiber to MWV's Covington, Va., paperboard mill. The fiber will be sold at market price.
