Spokane-based PotlatchDeltic merges with Florida company

Officials from PotlatchDeltic announced Tuesday that the Spokane-based timber and wood products company is merging with Rayonier, which is based in Wildlight, Florida, to become the second-largest publicly traded wood commodities company in North America.

The all-stock merger, expected to close early next year, is based on closing stock prices from Oct. 10. The combined company is expected to have a market capitalization of about $7.1 billion, including $1.1 billion in net debt.

The merged businesses will operate under a new name, which has not yet been announced.

“This merger is a watershed moment for both companies,” Eric Cremers, president and CEO of PotlatchDeltic, said in a news release. “We look forward to working together to ensure a seamless transition and to capitalize on exciting opportunities for optimization and growth.”

PotlatchDeltic owns about 2.1 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi and South Carolina. It also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business and a rural timberland sales program.

As of earlier this year, Rayonier owned or leased about 2 million acres of timberlands located mostly in the South. It also owns or leases about 307,000 acres in the Pacific Northwest.

The merger would create a company with about 4.2 million acres of timberland across 11 states, with 3.2 million of those in the South and about 931,000 acres in Idaho and the Northwest. It would also operate seven wood products-manufacturing facilities, including one industrial-plywood mill and six lumber mills with the capacity of 1.2 billion board feet.

“We are excited to announce this strategic merger of equals, combining two exceptional land resources companies to deliver enhanced value for our shareholders and other stakeholders,” Mark McHugh, Rayonier’s president and CEO, said in the release. “Rayonier and PotlatchDeltic share a commitment to sustainability and a legacy of excellence in delivering land resources to their highest and best use.”

In addition to wood products, the transaction will also combine the two company’s real estate businesses that mostly has developed projects in Arkansas, Florida and Georgia.

Under the terms of the agreement, which has already obtained unanimous approval from the boards of directors from both companies, PotlatchDeltic shareholders will receive 1.73389 common shares of Rayonier for each share owned of PotlatchDeltic.

The exchange ratio represents an implied price of $44.11 per PotlatchDeltic share and a premium of 8.25% of the company’s closing stock price on last Friday.

Upon closing the deal, Rayonier shareholders will own about 54% and PotlatchDeltic shareholders will own about 46% of the combined company.

As part of the deal, Cremers will become the executive chair of the board of directors of the combined company for two years after closing.

The board of directors of the merged businesses will include five existing directors from Rayonier, including McHugh, and five existing directors from PotlatchDeltic. Rayonier will later designate the independent director for the combined company.

In addition, the corporate headquarters will be located in Atlanta with “significant regional offices maintained in Spokane” and Wildlight, Florida, which is north of Jacksonville.

“Our complementary assets and shared vision will unlock opportunities to create significant strategic and financial benefits beyond what could be achieved by either company independently,” Cremers said in the release.