10/24/2017 | By Sarah Borchersen-Keto
Timberland REIT Potlatch Corp. (NASDAQ: PCH) said Oct. 23 it will acquire Deltic Timber Corp. in an all-stock transaction valued at approximately $1.15 billion.
The combined company will operate as PotlatchDeltic Corp., and shares of its stock will retain Potlatch’s ticker symbol. Executives at both firms said PotlatchDeltic will benefit from operational synergies resulting from expanded harvest volumes and increased lumber production.
Under the terms of the transaction, Deltic stockholders will receive 1.8 common shares of Potlatch stock for each Deltic common share they own. Based on Potlatch’s closing share price on Oct. 20 of $53, the deal values Deltic shares at $95.40, a 7 percent premium on their Oct. 20 closing price. Potlatch stockholders will own approximately 65 percent of the combined company, with Deltic stockholders owning the remaining 35 percent.
Potlatch Chairman and CEO Mike Covey will hold the same position in the new company, and Potlach President and COO Eric Cremers will continue to serve in the same position in the combined company. John Enlow, currently president and CEO of Deltic, will serve as the company’s vice chairman and will lead the integration of the two businesses.
“The complementary businesses make us a natural fit. With Deltic, we gain significant scale, particularly through nearly 1 million acres in Arkansas, as well as substantially expanded sawmill capacity,” Covey said.
Together, the combined company will have a timberland portfolio of approximately 2 million acres, with approximately 1.1 million acres in the Southern United States. It will own 600,000 acres of timberland real estate in Idaho and 150,000 acres in Minnesota. In addition, the company will operate eight manufacturing facilities for wood products. According to the companies, synergies accruing from the deal are expected to total $50 million.
The transaction is expected to close in the first half of 2018.
Read more about Potlatch’s history and evolving strategy in REIT magazine’s recent feature story.