Potlatch Corp. plans to merge with a smaller rival, Deltic Timber Corp., in an all-stock deal that will create a company with 2 million acres of private timberland holdings.
Spokane-based Potlatch and Arkansas-based Deltic announced the deal Monday. The boards of directors for both companies have already approved the merger, which still requires a vote by shareholders of both companies and a regulatory review.
Potlatch is offering 1.8 shares of its stock for each share of Deltic stock. The combined company would be called PotlatchDeltic Corp. and would remain headquartered in Spokane.
Mike Covey, Potlatch’s chairman and CEO, said the proposed merger “unites two great timber companies.” Deltic was looking at merger opportunities and was pleased to find a company as compatible as Potlatch, said John Enlow, Deltic’s president and CEO. Both CEOs said the merger will increase opportunities for efficiencies. The transaction is expected to close in the first half of 2018.
The combined company will have about 1,500 employees and a market capitalization of more than $3 billion, with $700 million in debt. About half of the company’s timberlands would be in the South, mostly in Arkansas and northern Louisiana. The company also would have large timber holdings in Idaho and Minnesota.
After the merger, the combined company would have six lumber mills, a plywood plant and a fiberboard plant.
Covey would remain chairman and CEO after the merger. Enlow would become vice chairman, in charge of leading the integration of the two companies’ operations.
In other news, Potlatch reported improved net income of $33.7 million, or 82 cents per share, on sales of $190.4 million during the third quarter. The results compared with net income of $27.6 million, 68 cents per share, on sales of $174 million during the third quarter of 2016.
Higher prices for western sawlogs and record cedar prices helped boost Potlatch’s earnings, Covey said Monday.
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