Plum Creek Timber Company and Georgia-Pacific Corporation announced in July they have signed a definitive agreement to merge Plum Creek Timber Company and The Timber Company, a separate operating group of Georgia-Pacific Corporation, creating the world's preeminent pure timber company.

Following completion of the transaction, Plum Creek will become the second largest private timberland owner in the United States, with over 7.9 million acres in 19 states. (See map) Plum Creek will remain headquartered in Seattle.

``With this strategic acquisition, Plum Creek will generate greater value by combining the resource and land management expertise of both entities with a larger base of highly productive and more geographically diverse timberlands,'' said Rick R. Holley, Plum Creek's President and CEO. ``We are excited because this transaction not only meets our strict financial and operating criteria, it adds significantly to the underlying value of our business. Specifically, we expect it to be accretive immediately to cash flow and earnings, and it will enhance our operating flexibility.''

Under the agreement, The Timber Company shareholders will receive 1.37 shares of Plum Creek Timber Company stock (currently paying an annual dividend of $2.28 per share) for each share of The Timber Company stock. Based on Plum Creek's closing stock price of $27.375 on July 17, the overall transaction is valued at approximately $4.0 billion, including $1.0 billion of The Timber Company debt. The transaction is anticipated to be tax-tree to holders of both The Timber Company and Plum Creek common stock.

A.D. (Pete) Correll, Chairman and CEO of Georgia-Pacific Corporation, said The Timber Company transaction represents a major departure from the traditional ownership and operation philosophies of integrated forest products manufactures. ``Since the separation of our timber business as an operating group in 1997, we have proven the merits of independently operating timber assets and demonstrated that manufacturers don't have to own timberlands to be competitive. We can efficiently procure wood and fiber for our manufacturing base independently, on the open market, from which more than 80 percent of our raw material needs are already supplied. This transaction will enable us to advance Georgia-Pacific's strategy toward the value-added segments of the industry supply chain.''

``We are acquiring some of the most productive timber assets in the United States,'' noted Holley. ``Together, we will have the scale, structure and combined management capabilities to optimize the potential of these assets, while maintaining an industry leading commitment to environmental stewardship.'' Plum Creek and The Timber Company are recognized for their innovative approach to environmental stewardship and the combined timberlands will be managed under the guidelines of Plum Creek's Environmental Principles. The new lands will also be included in Plum Creek's ongoing independent third party audit program under the Sustainable Forestry Initiative (SFI)

Plum Creek will assume a 10-year wood supply agreement between Georgia-Pacific and The Timber Company, ensuring continued access to fiber for Georgia-Pacific's manufacturing facilities and providing Plum Creek with a stable, long-term customer for The Timber Company's southeastern timberlands.

Up to three new members will be added to the Plum Creek Board of Directors including two to be agreed upon by Plum Creek and Georgia-Pacific. Mr. Holley will remain President and CEO, and Donald L. Glass, currently President and Chief Executive Officer of The Timber Company, will become Chief Operating Officer and a member of the Board of Directors or the combined company. Plum Creek intends to retain substantially all of The Timber Company's employees as well as its Atlanta office.

The transaction is subject to approval by the shareholders of Plum Creek and The Timber Company, and receipt of a ruling from the Internal Revenue Service that the transaction is tax-free to Georgia-Pacific and Plum Creek, and to the shareholders of The Timber Company. the transaction is also subject to receipt of applicable governmental approvals and the satisfaction of customary closing conditions. Closing is expected by the end of the first quarter of 2001.

Plum Creek Timber Company, a publicly traded Real Estate Investment Trust (REIT), is one of the largest timber companies in the nation, with ownership and manufacturing facilities in the Northwest, Southern, and Northeast United States.

Headquartered in Atlanta, The Timber Company is a separate operating group of Georgia-Pacific Corporation and its performance is reflected in one of the corporation's two common stocks. The Timer Company manages 4.7 million acres of timberland in the United States and sells timber and wood fiber to industrial wood users, with approximately 60 percent of its annual harvest sold to Georgia-Pacific Corporation.