NEW YORK (TheStreet) -- Plum Creek Timber Co. (PCL)  shares are flying high, up 12.46% to $45.31 in Monday's pre-market trading session, after Weyerhaeuser Co. (WY) said it would buy the timberland owner and manager for $8.4 billion, creating the largest private owner of timberland in the U.S.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio, commented on the merger saying: "It is a terrific combination because the possibility of a distribution just coming from the synergies is terrific."

Under the terms of the agreement, the new company will keep the Weyerhaeuser name, and Plum Creek stockholders will get 1.6 shares of Weyerhaeuser for each share they own.

The combined company is expected to have an equity value of $23 billion, the companies noted. 

"The breadth and diversity of our combined land and timber assets uniquely position the new company to capitalize 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," Plum Creek CEO Rick R. Holley stated.

Additionally, the new company will manage more than 13 million acres of timberland in the U.S.

Shares of Weyerhaeuser are slumping 4.12% to $29.15 in pre-market trading on Monday. 

Based in Seattle, WA, Plum Creek Timber is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the U.S.

Separately, TheStreet Ratings team rates PLUM CREEK TIMBER CO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate PLUM CREEK TIMBER CO INC (PCL) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PCL's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 10.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PLUM CREEK TIMBER CO INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 63.9% when compared to the same quarter one year prior, rising from $61.00 million to $100.00 million.
  • Net operating cash flow has increased to $195.00 million or 46.61% when compared to the same quarter last year. In addition, PLUM CREEK TIMBER CO INC has also vastly surpassed the industry average cash flow growth rate of -24.80%.
  • 44.20% is the gross profit margin for PLUM CREEK TIMBER CO INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 24.15% trails the industry average.
  • You can view the full analysis from the report here: PCL