Potlatch and Deltic Timber to combine to create leading timberland REIT
Investors - OCTOBER 24, 2017

Potlatch and Deltic Timber to combine to create leading timberland REIT

by Released

Potlatch Corp. and Deltic Timber Corp. have entered into a definitive agreement to combine in an all-stock transaction and create a leading domestic timberland owner and top-tier lumber manufacturer.

The combined company will be named PotlatchDeltic Corp. and its shares will trade on the Nasdaq Stock Market under the ticker PCH.

The combined company is expected to have a pro forma equity market capitalization of approximately $3.3 billion and a total enterprise value of more than $4 billion, including approximately $700 million in net debt. Following completion of the transaction, the combined company will have more than 1,500 employees serving more than 200 customers through operations across its extensive timberland and lumber manufacturing portfolio.

Following the close of the transaction, Potlatch stockholders will own approximately 65 percent of the combined company, and Deltic stockholders will own approximately 35 percent on a fully diluted basis.

The agreement also provides for Deltic to convert to a REIT structure, effective at the closing date of the transaction, ensuring the combined company achieves the most efficient tax structure. As part of the REIT conversion process, Deltic’s accumulated earnings and profits, which are estimated to be approximately $250 million, will be distributed to stockholders of the combined company through a dividend consisting of 80 percent stock and 20 percent cash by the end of 2018.

The combination brings together two leading timberland owners and lumber manufacturers. Together, the combined company will have a highly productive and diverse timberland portfolio of approximately 2 million acres, with approximately 1.1 million acres in the U.S. South, 600,000 acres in Idaho, and 150,000 acres in Minnesota. In addition, upon completion of the transaction, the company will operate eight wood products manufacturing facilities, including six lumber manufacturing facilities, one medium density fiberboard facility and one industrial plywood mill. In total, the combined company will have lumber capacity of 1.2 billion board feet, making it one of the leading producers in the U.S. Furthermore, the company’s lumber capacity will be heavily weighted toward high-margin southern yellow pine lumber, with over half of the company’s capacity being produced at its three southern mills. The transaction also combines two highly complementary and successful real estate businesses.

Forgot your username or password?