Two of the Biggest U.S. Timberland Owners Near Deal to Combine
Rayonier could unveil all-stock acquisition of PotlatchDeltic Tuesday
Two of the biggest U.S. timberland owners, Rayonier RYN 1.81%increase; green up pointing triangle and PotlatchDeltic PCH 2.18%increase; green up pointing triangle, plan to combine in an all-stock deal that would create a more than $7 billion forestry giant, according to people familiar with the matter.
The details
A deal between the two could come together as soon as later Tuesday, the people said.
PotlatchDeltic shareholders are expected to receive 1.7339 common shares of Rayonier for each share of PotlatchDeltic common stock, the people said. That implies a price of $44.11 per PotlatchDeltic share, and would value the newly combined entity at $7.1 billion, or $8.2 billion including debt, they said.
Rayonier shareholders would be set to own about 54% of the merged company following the deal’s close, with PotlatchDeltic shareholders owning the rest.
Rayonier had a market value of roughly $4 billion as of Monday. PotlatchDeltic was valued at about $3.2 billion, after its shares closed at $41.64 Monday.
Both timber companies are structured as real-estate investment trusts, which don’t pay much corporate income tax and instead pass most of their profits on to shareholders as dividends.
In addition to timberlands, PotlatchDeltic owns mills in Arkansas, Idaho, Michigan and Minnesota. A combined company would own roughly 4.2 million acres of U.S. timberland, second only to industry leader Weyerhaeuser, which is the country’s largest private landowner with more than 10 million acres and a market value exceeding $17 billion.
Nearly a million of the Rayonier-PotlatchDeltic acres are in the Northwest, where demand is high for logs from private land due to the yearslong decline in timber harvested from the region’s vast federal lands. The remainder are in the U.S. South, where a glut of pine trees has depressed log prices but made the region the most profitable place in North America to make lumber.
Rayonier President and Chief Executive Officer Mark McHugh is expected to lead the combined entity postmerger, the people familiar with the matter said. The new board of directors is expected to be split evenly with five people from each company.
The context
Lumber prices have been on a roller coaster this year, lifted by higher import taxes and pulled lower by deteriorating housing and construction markets. The climb from September’s low has been propelled by President Trump’s 10% tariff on imported softwood lumber, which becomes effective Tuesday, as well as recent sawmill curtailments.
The new tariff is on top of much higher duties on Canadian lumber, which are the result of a decadeslong trade dispute. The combined duty rate rose in August to about 35% for most of Canada’s producers, from roughly 15%.
PotlatchDeltic’s sawmills are among those that analysts expect to benefit from higher trade barriers, which should also boost U.S. timberland owners.
Both Rayonier and PotlatchDeltic have also benefited from surging demand from solar-power generators for swaths of land, especially in the South. They each have options and lease agreements with solar developers covering tens of thousands of acres at rates that are upward of 10 times more profitable than growing pine trees.