PotlatchDeltic And CatchMark To Combine To Create Integrated Timber REIT; Expected Pro Forma Market Cap Over $1B, Total Enterprise Value Over $5B

Author: Bill Haddad | May 31, 2022 06:32am

Combined Company Will Have Approximately 2.2 Million Acres of Diversified High-Quality Timberlands

Will Remain the Timber REIT with the Most Leverage to Lumber Prices

Creates Opportunities to Leverage Attractive Real Estate Portfolio

Compelling Synergies Expected to Drive Approximately $16 Million Increase in Pro Forma Cash Available for Distribution by End of First Year

Transaction Expected to Close in Second Half of 2022

Companies to Host Conference Call and Webcast Today at 5:30 a.m. Pacific Time / 8:30 a.m. Eastern Time

PotlatchDeltic Corporation (NASDAQ:PCH) ("PotlatchDeltic") and CatchMark Timber Trust, Inc. (NYSE:CTT) ("CatchMark") today announced that they have entered into a definitive agreement to combine in an all-stock transaction. The acquisition by PotlatchDeltic will strengthen and diversify a leading integrated timber REIT and continue to enhance shareholder value.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220531005306/en/

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

Under the terms of the agreement, which has been unanimously approved by the Board of Directors of both companies, CatchMark stockholders will receive 0.23 common shares of PotlatchDeltic stock for each common share of CatchMark that they own. This reflects a price per share of $12.88 for each common share of CatchMark, and a 55% premium to CatchMark's common share price as of the close of business on May 27, 2022. Following close of the transaction, PotlatchDeltic stockholders will own approximately 86% of the combined company, and CatchMark stockholders will own approximately 14% on a fully diluted basis.

The combination brings together two high quality timberland REITs resulting in PotlatchDeltic owning approximately 2.2 million acres of diversified timberlands including 626,000 acres in Idaho and over 1.5 million acres in strengthening markets in the U.S. South. PotlatchDeltic also remains the timber REIT with the most leverage to lumber prices, including 1.1 billion board feet of lumber capacity. The transaction also combines two successful and complementary real estate businesses.

Eric J. Cremers, President and Chief Executive Officer of PotlatchDeltic, said, "We are excited about growing shareholder value by combining PotlatchDeltic and CatchMark. 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, 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."

Brian M. Davis, President and Chief Executive Officer of CatchMark, said, "This partnership with PotlatchDeltic unlocks value for our stockholders and positions us well for sustainable success over the long term. 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."

PotlatchDeltic and CatchMark: Leveraging Two Great Timber REITs

The combination offers significant strategic and financial opportunities beyond what could be achieved by either company on a standalone basis, notably through:

• Complementary Timberland Portfolios. The combination will result in geographic diversity and scale, increasing PotlatchDeltic's U.S. South ownership to over 1.5 million acres of timberland in six states. The transaction adds approximately 350,000 acres of superior site index timberlands in Alabama, South Carolina, and Georgia. CatchMark's timberlands are in some of the strongest markets in the U.S. South with a deep base of well capitalized customers. PotlatchDeltic and CatchMark share a dedication to continue managing timberlands sustainably using best management practices and third-party certification.

• HBU Real Estate Opportunities. The combination will result in a diverse real estate portfolio with CatchMark's timberlands located close to large population centers. PotlatchDeltic will leverage its rural land sales expertise and strategy, along with CatchMark's local market knowledge, to maximize rural real estate sales opportunities. These opportunities include potential conservation and solar transactions.

• Compelling Synergies and Accretive to CAD. Cash Available for Distribution ("CAD") annual synergies are estimated to be $16 million, reflecting reduced overhead and the elimination of public company expenses, insourcing timberland management and reducing interest expense by refinancing CatchMark's debt. PotlatchDeltic expects the run rate synergies to be achieved by the end of the first full year after the merger closes. PotlatchDeltic expects the transaction will be accretive to Cash Available for Distribution ("CAD") per share in the first full year, excluding costs to achieve synergies and assuming the full synergies run rate.

• Meaningful Increase in Stable Cash Flows. EBITDDA contributed by CatchMark is expected to average $55 million annually over the first five years, assuming full synergies run rate.

• Growing Shareholder Value Through Balanced Capital Allocation. A strong balance sheet, with pro forma combined Debt to Enterprise Value of approximately 10% will enable PotlatchDeltic to remain flexible and take advantage of other capital allocation opportunities. The addition of CatchMark's cash flows and CAD synergies provide strong coverage for PotlatchDeltic's attractive and growing dividend.

Board Composition and Headquarters

The Board of Directors of the combined company will consist of nine Directors from PotlatchDeltic and one Director from CatchMark. The corporate headquarters will be maintained in Spokane, Washington. A regional office will be maintained in Atlanta, Georgia.

Posted In: CTT PCH