U.S. Markets closed

Corporate News Blog - Potlatch Acquires Deltic Timber in An All-Stock Transaction

LONDON, UK / ACCESSWIRE / October 25, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Potlatch Corp. (NASDAQ: PCH), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=PCH. The Company announced on October 23, 2017, that it has signed an agreement to acquire Deltic Timber Corp. (NYSE: DEL). The two Companies will merge into a single Company via a stock-swap. The Board of Directors of both Companies have approved the deal. For immediate access to our complimentary reports, including today's coverage, register for free now at:


At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on PCH and DEL. Go directly to your stock of interest and access today's free coverage at:



Commenting on the acquisition, Mike Covey, Chairman and CEO of Potlatch, said:

"Together, we can realize significant productivity improvements by sharing best practices across both businesses, implementing optimal silvicultural practices, increasing harvest levels and improving lumber manufacturing volumes."

John Enlow, President and CEO of Deltic, added:

"This partnership with Potlatch not only maximizes value for our stockholders but also provides them with the opportunity to participate in the significant upside potential of this combination."

Transaction details

The merged entity following the completion of the transaction will be known as PotlatchDeltic Corporation and will be listed on the NASDAQ Stock Exchange under the ticker "PCH". The transaction is expected to close in H1 2018 and is subject to receiving shareholders and regulatory approvals and other closing conditions.

As per the terms of the agreement, Potlatch will give Deltic Timber's shareholders 1.80 Potlatch's share for each share of Deltic Timber they own. Once the transaction is complete, Potlatch's stockholders will own approximately 65% stake and Deltic Timber's stockholders will own balance 35% in PotlatchDeltic.

PotlatchDeltic 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, this includes net debt of approximately $700 million. The values are based on the closing price of Potlatch's and Deltic Timber's shares on October 20, 2017. PotlatchDeltic will have approximately 1,500 employees and over 200 customers from timberland operations and lumber manufacturing portfolio.

The agreement also stipulates that Deltic Timber be converted into a Real Estate Investment Trust (REIT) before the close of the transaction to get maximum tax benefits for the merged Company. The process requires Deltic Timber to distribute its accumulated earnings and profits of approximately $250 million to the shareholders of PotlatchDeltic by way of dividend. This dividend will be 80% in stock and 20% in cash which would be paid by end of FY18.

Management and operations of Potlatch/Deltic

Once the merger is finalized, PotlatchDeltic top management team will include Mike Covey as Chairman and CEO; and Eric Cremers will be the President and COO. The current President and CEO of Deltic Timber, John Enlow, will be the Vice Chairman and has been tasked with the integration of the businesses of the two Companies. PotlatchDeltic's Board of Directors will have a total of 12 members out of which eight members will be from Potlatch and four members from Deltic Timber.

PotlatchDeltic will be headquartered in Spokane, Washington with its southern operational headquarters at El Dorado, Arkansas.

The merged Company is expected to have a timberland portfolio of approximately 2 million acres, with approximately 1.1 million acres in the US South, 600,000 acres in Idaho, and 150,000 acres in Minnesota. The merged Company will also have eight wood products manufacturing facilities, including six lumber manufacturing facilities, one medium density fiberboard (MDF) facility, and one industrial plywood mill. This translates to lumber manufacturing capacity of 1.2 billion board feet making PotlatchDeltic one of the leading lumber producers in the US.

Benefits of merger

The merger of Potlatch and Deltic Timber allows both Companies access to opportunities otherwise not achievable on a standalone basis. Some of the strategic and financial benefits of the merger are listed below.

  • The merger brings together two highly complementary and successful real estate businesses.
  • The merger brings together approximately 933,000 acres in Arkansas and northern Louisiana, as well as sawmill capacity of 630 million board-feet (MMBF) within Arkansas.
  • The merger allows the expansion of harvest volumes and increased lumber production which is expected to result in operational synergies and efficiencies through integrating systems and resources.

The merger transaction is expected to result in savings of approximately $50 million due to after-tax cash synergies and operational efficiencies. More than half of the said amount would be realized from increase in lumber production and harvest volumes and the balance from savings from overhead costs and tax benefits resulting from changing Deltic into an REIT. Cash available for distribution ("CAD") per share will be accretive in the first full year after the close of the merger and in year two the CAD will be accretive by 5%. Potlatch and Deltic expect realized-run-rate synergies from the second year of the completion of the transaction and with additional long-term synergies in the later years.

The merged Company is expected to maintain a robust financial profile and investment grade credit rating. Shareholders of both Companies can expect better return on their investments. Potlatch has already announced that its annual dividend per share will increase from $1.50 to $1.60 from Q4 2017 onwards.

Spokane, Washington based Potlatch is a REIT with approximately 1.4 million acres of timberland in Alabama, Arkansas, Idaho, Minnesota, and Mississippi. The Company also operates five manufacturing facilities that produce lumber and panel products through its REIT subsidiary.

El Dorado, Arkansas based Deltic Timber owns approximately 530,000 acres of timberland, operates two sawmills and a medium density fiber-board plant, and is engaged in real estate development.

Last Close Stock Review

On Tuesday, October 24, 2017, the stock closed the trading session at $51.25, declining 2.38% from its previous closing price of $52.50. A total volume of 928.36 million shares have exchanged hands, which was higher than the 3-month average volume of 304.22 thousand shares. Potlatch's stock price soared 5.89% in the last three months, 10.22% in the past six months, and 31.07% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 23.05%. The stock is trading at a PE ratio of 25.37 and has a dividend yield of 2.93%. At Tuesday's closing price, the stock's net capitalization stands at $2.10 billion.

Deltic Timber's share price finished yesterday's trading session at $91.90, slightly down 0.94%. A total volume of 361.48 thousand shares have exchanged hands, which was higher than the 3-month average volume of 69.80 thousand shares. The Company's stock price soared 24.54% in the last three months, 14.20% in the past six months, and 55.55% in the previous twelve months. Additionally, the stock rallied 19.24% since the start of the year. Shares of the Company have a PE ratio of 133.38 and have a dividend yield of 0.44%. The stock currently has a market cap of $1.11 billion.

Earnings Update: In a separate communication on the same day, Potlatch also announced its Q3 2017 results for the quarter ended on September 30, 2017

Pro-Trader Daily:

Pro-Trader Daily (Pro-TD) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and Canadian stocks. PRO-TD has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles, and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

PRO-TD has not been compensated; directly or indirectly; for producing or publishing this document.


The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst [for further information on analyst credentials, please email contact@protraderdaily.com. Rohit Tuli, a CFA® charter-holder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by PRO-TD. PRO-TD is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.


PRO-TD, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. PRO-TD, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, PRO-TD, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.


This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither PRO-TD nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://protraderdaily.com/disclaimer/.


For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: contact@protraderdaily.com

Phone number: (917) 341.4653

Office Address: Mainzer Landstrasse 50 Frankfurt am Main, Germany 60325

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Pro-Trader Daily