June 7, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

PotlatchDeltic and CatchMark, two leading U.S. timberland investment managers, announced their agreement to merge through an all-stock transaction, forming a consolidated portfolio amounting to approximately 2.2 million acres across the U.S.

This deal, which has been unanimously approved by both company’s Board of Directors, brings together two leading timberland REITs. Spokane, Washington-based PotlatchDeltic came to the table owning 1.8 million acres in Alabama, Arkansas, Idaho, Louisiana, Minnesota, and Mississippi. Additionally, through its REIT subsidiary, it also operates six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business, and a rural timberland sales program. (PotlatchDeltic also just announced its plans to invest $131 million to modernize and nearly double capacity at its saw mill in Columbia County, Arkansas.)

CatchMark is headquartered in Atlanta, Georgia. It began operations in 2007 with a singular focus on timberland ownership and management. Today, the company owns interests in 350,000 acres of timber located in the U.S. South.

Following the close of the transaction, PotlatchDeltic will own approximately 2.2 million acres of diversified timberland including 626,000 acres in Idaho, and more than 1.5 million acres in core markets across six U.S. southern states.

Not only will this merger result in a highly diversified portfolio of holdings, but it is also expected to generate Cash Available for Distribution (CAD) annual synergies estimated to be $16 million, with an EBITDA contributed by CatchMark averaging $55 million per year over the first five years. It will also create a strengthened balance sheet with pro forma combined debt-to-enterprise-value of approximately 10 percent, which will enable PotlatchDeltic to have the flexibility to capitalize on further opportunities. 

“We are excited about growing shareholder value by combining PotlatchDeltic and CatchMark,” said Eric J. Cremers, president and CEO, PotlatchDeltic. “With CatchMark, we gain significant scale in three states and diversify our timberland holdings into some of the strongest markets in the U.S. South.”

“In addition,” Cremers continued, “the location of CatchMark’s land near large population centers provides attractive rural real estate sales opportunities. PotlatchDeltic will retain a strong balance sheet and liquidity after the merger is completed, providing a platform for continued growth. We also remain committed to responsible environmental, social, and governance strategies.”

Under the terms of the deal, CatchMark shareholders will receive 0.23 common share of PotlatchDeltic stock for each common share of CatchMark held, reflecting a price per share of $12.88, and a 55 percent premium to CatchMark’s common share price as of close of business on May 27, 2022. Once finalized, PotlatchDeltic stockholders will own approximately 86 percent of the combined company, and CatchMark stockholders will own approximately 14 percent.

“This partnership with PotlatchDeltic unlocks value for our stockholders and positions us well for sustainable success over the long term,” said Brian M. Davis, president and CEO, CatchMark. 

“By joining together our high quality assets and our dedicated and talented employees, we will greatly enhance the potential of PotlatchDeltic. We look forward to working together as we integrate our two companies and capitalize on the robust opportunities for growth and success.”

As it stands, based on the closing stock prices of PotlatchDeltic and CatchMark on May 27, 2022, this combined company is expected to have a pro forma market capitalization of more than $4 billion, and a total enterprise value exceeding $5 billion, including $557 million in net debt.

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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