FEDERAL WAY, WA-  Weyerhaeuser's (NYSE: WY) homebuilding subsidiary, Weyerhaeuser Real Estate Company, will combine with a subsidiary of TRI Pointe Homes, Inc. (NYSE: TPH) in a $2.7 billion deal.

Weyerhaeuser shareholders will own 80.5% of the combined company.  TRI Pointe gets $700 million in the deal. 

"The separation of our homebuilding division allows us to focus on driving performance in our forest products businesses," said Doyle Simons, Weyerhaeuser CEO, in the announcement of the deal. 

Ownership of homebuilding businesses creates a natural market for lumber firms, but the housing recovery presents greater opportunities for Weyerhaeuser in its core business, forestry, logging, sawmills and manufacturing panel and lumber for wood products businesses and homebuilders.

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