Combined earnings of both companies before interest, tax, depreciation and amortisation in 2014 was US$2.2bn.

Following closing of the deal, Weyerhaeuser and Plum Creek shareholders will own approximately 65% and 35%, respectively, of the combined company’s common stock. Weyerhaeuser intends to execute a US$2.5bn share repurchase shortly after closing.

"These two companies are already best-in-class timberland managers with a relentless focus on sustainable resource management," said Rick Holley, chief executive officer for Plum Creek.

"The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalise fully on the improving housing market, continue to capture Higher and Better Use land values across the combined portfolio, and create additional opportunities to build lasting value," added Mr Holley.

Doyle Simons, president and chief executive officer of Weyerhaeuser, said customers would benefit from the deal, as the new company would form a winning team with common values and "unparalleled expertise in timber, land and manufacturing".