A timber company with deep Arkansas ties and a headquarters in El Dorado is being acquired in a $1.18 billion deal by Potlatch Corporation. The Spokane, Washington-based operation, now to be known as PotlatchDeltic Corporation, will have 1,500 employees combined, 2-million acres of timberland, and is estimated to be worth $4 billion. Deltic’s contribution is 530,000 acres in Arkansas and Louisiana.
Potlatch CEO Mike Covey will stay at the helm of the combined company. He told investors on Monday that he expects more activity out of south Arkansas forests and mills.
“There is an opportunity to increase harvest levels on Deltic’s timberland by 30 to 40 percent and to convert older mature, natural stands of timber into faster growing plantations.” Covey continued, “Deltic has been operating its sawmills below a full two shift basis. This transaction enables an increase in output.”
The president and CEO of Deltic, John Enlow, will serve as vice chairman of the new company.
Potlatch Chief Operating Officer Eric Cremers said the company also hopes to expand Deltic’s real estate arm.
“The great news is that Deltic is well over halfway through developing that Chenal property. There’s a lot of momentum in west Little Rock to continue developing that property,” said Cremers.
He went on to say Potlatch can add value to Deltic’s real estate efforts through a track record of selling about 20,000 acres of small, rural plots a year. Company officials noted promise in land surrounding Heber Springs.
Importantly for Deltic, it will convert its tax structure to be a Real Estate Investment Trust rather than a C-corporation, enabling it to avoid certain federal income taxes. To do so it has to shed $250 million in accumulated earnings to its stockholders. Potlatch shareholders will own 65-percent of the new combined company, Deltic shareholders will receive 1.8 shares of Potlatch for every stock held.
The deal is expected to be finalized in the first half of 2018. Its subject to approval from shareholders. Both company’s boards of directors unanimously approved the deal.