Tri Pointe said Monday that the transaction will make it one of the 10 biggest U.S. homebuilders based on estimated combined equity market value.
Weyerhaeuser President and CEO Doyle Simons said in a statement that the company performed a strategic review of its homebuilding business and decided that the combination with Tri Pointe provided the greatest value for its shareholders.
"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," he said.
The deal includes about 130 million Tri Pointe shares valued at $2 billion and a payment of about $700 million in cash to Weyerhaeuser.
Weyerhaeuser will distribute ownership of Weyerhaeuser Real Estate Co. to its shareholders. That business will become a Tri Pointe subsidiary. Weyerhaeuser shareholders will receive approximately 80.5 percent of the combined company, with pre-transaction TRI Pointe shareholders owning the balance.
Certain assets of Weyerhaeuser Real Estate won't be included in the transaction and will be kept by Weyerhaeuser.
Tri Pointe said that it will acquire five brands in the deal, including Pardee Homes, Trendmaker Homes, Maracay Homes, Winchester Homes and Quadrant Homes.
The company, which will continue to be based in Irvine, Calif., said that the transaction makes it a stronger regional homebuilder concentrated and gives it access to markets including Las Vegas, Southern California, Houston, and the Washington D.C. metro area.
Tri Pointe said that it will expand its board from seven to nine members. Weyerhaeuser will choose four directors for appointment, with Tri Pointe selecting five members.
Barry S. Sternlicht will continue as Chairman of the TRI Pointe board, while Doug Bauer will remain Tri Pointe's CEO and Mike Grubbs continues as chief financial officer. Tri Pointe's Tom Mitchell will remain as president and chief operating officer.
Tri Pointe and Weyerhaeuser will continue to run separately until the transaction is complete.
The deal is targeted to close by the end of 2014's second quarter. It still needs approval from Tri Pointe shareholders.
Weyerhaeuser shares finished at $30.34 on Friday, while Tri Pointe shares ended the week at $15.38.