PotlatchDeltic and Rayonier Announce All-Stock Merger. What It Means for the Timberland Owners.

U.S. timberland owners PotlatchDeltic and Rayonier unveiled plans to combine in an all-stock merger. (Pixabay)

Key Points

• PotlatchDeltic and Rayonier are merging in an all-stock deal, creating a forestry company with an $8.2 billion enterprise value.
• PotlatchDeltic shareholders will receive 1.7339 Rayonier shares for each of their shares, an 8.25% premium to Friday’s closing price.
• The combined entity will manage a timberland portfolio exceeding 4 million acres and will operate under a new name.

Shares of PotlatchDeltic fell Tuesday, paring earlier gains, after the company said it was merging with fellow timberland owner Rayonier in an all-stock deal.

Under the terms of the agreement, PotlatchDeltic shareholders will receive 1.7339 common shares of Rayonier for each share of PotlatchDeltic, representing an implied price of $44.11 per PotlatchDeltic share, and a premium of 8.25% to the stock’s closing price Friday.

The deal will create a forestry giant with an enterprise value of $8.2 billion, including debt. The combined company will operate under a new name and oversee a timberland portfolio comprising over 4 million acres.

PotlatchDeltic stock gained in premarket trading before falling 0.3% to $41.50. After trading flat, Rayonier tumbled abruptly, dropping 5.1% to $24.59. The benchmark S&P 500 was down 0.6%.

PotlatchDeltic generates revenue through the sale and management of land as well as the production of lumber and plywood through its seven manufacturing facilities. Rayonier, too, operates through multiple business segments, which include land real estate, forestry, and land resources.

The merger announcement came as President Donald Trump’s 10% tariffs on softwood lumber and timber imports went into effect Tuesday. These levies add to existing tariffs on imports from Canada, which are now taxed at more than 45%.

The Trump administration styled the tax rate hike as an effort to “strengthen manufacturing” and stoke demand for domestic timber.

However, the U.S. remains reliant on suppliers like Canada and imports more forest products than it exports, according to data from the U.S. International Trade Commission.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com