Current Price – WY $30.87, TPH $15.01
Offer Price – $1.11 stock of Tri Pointe for $1.00 stock of Weyerhaeuser
Upside – 7.2% or $216 for Odd Lot holders
Expiration date – June 30, 2014
Odd Lot holders (less than 100 shares) are not subject to proration
Trading Strategy:
Buy 99 WY and sell short 218 TPH. Lock in gain of $216. Tender WY for TPH. Cover short after receiving exchange shares.
Summary:
The exchange offer is designed to permit Weyerhaeuser shareholders to exchange their Weyerhaeuser common shares for WRECO common shares (which will convert into shares of TRI Pointe common stock) at a discount of 10 percent to the per-share value of TRI Pointe common stock, subject to an upper limit described below. This discount means that tendering Weyerhaeuser shareholders are expected to ultimately receive approximately $1.11 of shares of TRI Pointe common stock for every $1.00 of Weyerhaeuser common shares tendered and accepted in the exchange offer. The upper limit in the exchange offer will be 1.7003 WRECO common shares, or 2.2053 shares of TRI Pointe common stock (based on the 1.297 shares of TRI Pointe common stock into which each WRECO common share will convert) for each Weyerhaeuser common share tendered in the exchange offer.
The shares of TRI Pointe common stock issued in the merger are expected to represent approximately 79.6 percent of the TRI Pointe common stock that will be outstanding immediately after the merger.
Weyerhaeuser will calculate the value of Weyerhaeuser common shares, WRECO common shares and shares of TRI Pointe common stock based on the simple arithmetic averages of the daily volume-weighted average prices (“VWAP”) of Weyerhaeuser common shares and TRI Pointe common stock on the New York Stock Exchange (“NYSE”) on each of the last three trading days (“Valuation Dates”) of the exchange offer period (including the expiration date), as it may be voluntarily extended, but not including the last two trading days that are part of any Mandatory Extension (as described below). Based on an expiration date of June 30, 2014, the Valuation Dates are expected to be June 26, 2014, June 27, 2014 and June 30, 2014. See “This Exchange Offer—Terms of this Exchange Offer”
No proration for Odd Lot holders:
An exception to proration can apply to shareholders who beneficially own “odd-lots”, that is, fewer than 100 Weyerhaeuser common shares. Beneficial holders of fewer than 100 Weyerhaeuser common shares who validly tender all of their shares and request preferential treatment
Source of Funds:
Not applicable as exchange transaction.