After several months of trying to find a buyer for its home building business, a subsidiary of Weyerhaeuser Co. (NYSE: WY) has signed a definitive agreement to combine with TRI Pointe Homes Inc. (NYSE: TPH) in a reverse merger transaction valued at $2.7 billion.

Weyerhaeuser will either spin-off or split-off its Weyerhaeuser Real Estate Co., known as WRECO, in a transaction that will be followed immediately by a merger of WRECO with a subsidiary of TRI Pointe. Weyerhaeuser shareholders will hold about 80.5% of the new company and TRI Pointe shareholders will hold the rest. Weyerhaeuser also pockets $700 million in cash when the transaction is completed, now expected for sometime in the second quarter of 2014.

We noted late last month that, as a builder, Weyerhaeuser was not among the top ten in the United States. Its value as a builder is really a function of its land holdings. The company owns about 27,000 building lots, some 17,000 of which are located in California. TRI Pointe builds homes in California and Colorado.

The deal is a good one for TRI Pointe, which is controlled by Starwood Capital Group and has been a publicly traded company only since January. A week before TRI Point’s initial public offering, Starwood Capital and Starwood Capital Trust Inc. (NYSE: STWD) paid $1.05 billion for distressed property firm LNR Property. Real estate mogul Barry Sternlicht controls Starwood Capital and TRI Pointe, and he will remain as chairman of Tri Pointe’s board of directors.

We were skeptical that this deal would be attractive enough for Weyerhaeuser, but apparently the company wants out of the home-building business as soon as possible.

Early reaction in Monday’s pre-open trading declared TRI Pointe the winner. Shares were up more than 4%, at $16.00 in a 52-week range of $13.43 to $21.25.

Weyerhaeuser’s shares were up about 1.3%, at $30.73 in a 52-week range of $24.75 to $33.24.

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