Potlatchdeltic Corp., a real-estate investment trust focused on owning timberland, has agreed to buy rival CatchMark Timber Trust Inc. in an all-stock deal that values CatchMark at more than $600 million.
The combined company is expected to have a market valuation of more than $4 billion. It will own about 2.2 million acres of timberlands, including 626,000 acres in Idaho and over 1.5 million acres in the U.S. South.
PotlatchDeltic shareholders will own about 86% of the combined company, the two REITs said. CatchMark shareholders will receive 0.23 shares of PotlatchDeltic stock for each share of CatchMark stock they own.
Based on Friday's closing prices, the deal reflects a price of $12.88 for each share of CatchMark, a 55% premium, the companies said.
"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," PotlatchDeltic Chief Executive Eric Cremers said. "In addition, the location of CatchMark's land near large population centers provides attractive rural real estate sales opportunities."
The deal is expected to close in the second half of 2022.
Filing of Form 425 by PotlatchDeltic
PotlatchDeltic Corporation ("PotlatchDeltic") issued the following to employees relating to the proposed transaction contemplated by that certain Agreement and Plan of Merger, dated as of May 29, 2022 (the "Merger Agreement"), by and among PotlatchDeltic, Horizon Merger Sub 2022, LLC, a wholly owned subsidiary of PotlatchDeltic, CatchMark Timber Trust, Inc. and CatchMark Timber Operating Partnership, L.P.
Date: May 31, 2022
To: PotlatchDeltic Employees
From: Eric Cremers, President and CEO
Subject: PotlatchDeltic and CatchMark Combine
Today, we announced that PotlatchDeltic has agreed to combine with CatchMark, an Atlanta-based timber REIT with approximately 350,000 acres. This transaction marks a significant milestone for the two companies, and it will drive value for both sets of stockholders, customers, partners, and employees. The combination is structured as a merger valued at approximately $919 million based on the closing price of PotlatchDeltic's stock on May 27, 2022, including $273 million of CatchMark's net debt. It will broaden our geographic footprint and customer base in the southeastern U.S. through the addition of high quality, sustainably managed timberlands. The combined company will continue to be named PotlatchDeltic, and headquartered in Spokane, Washington. A regional office will be maintained in Atlanta, Georgia and we plan to establish timberland offices in southwest Georgia and central South Carolina.
CatchMark's timberlands are located in Georgia, South Carolina, and Alabama, which are some of the strongest wood baskets in the U.S. South. These wood baskets are either in balance or under supplied and should benefit from tightening supply/demand fundamentals and higher log prices. CatchMark also has an active higher and better use (HBU) real estate sales initiative and owns land near larger urban centers. This program will complement our maximum-value-seeking real estate business, which currently focuses on real estate development in Little Rock, Arkansas, and rural land sales across our ownership. I hope you share my excitement for the many opportunities that lie ahead for us through this acquisition.
Today's announcement is just the first step towards completing the transaction, which we expect will close in the second half of 2022. Until that time, both companies will continue to operate independently. On closing, PotlatchDeltic will add one new Director from CatchMark to our Board of Directors.
Without your continued dedication to make PotlatchDeltic successful, this acquisition would
not have been possible. With the help of your efforts, we have been very successful in each of our business units these past few years leading to strong earnings and an excellent balance sheet that has allowed us to focus on growth.
If you have any questions, please speak with your supervisor or HR representative. You can also visit the investor page on our website for an investor presentation, which we will review with investors later this morning.
This is an exciting combination, and we look forward to realizing the many benefits it will produce.
/s/ Eric J. Cremers
Important Additional Information about the Proposed Transaction
This communication is being made in respect of the proposed merger transaction involving PotlatchDeltic Corporation ("PotlatchDeltic) and CatchMark Timber Trust, Inc. ("CatchMark"). This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. In connection with the proposed transaction, PotlatchDeltic plans to file with the Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4 that constitutes a prospectus of PotlatchDeltic and will also include a proxy statement of CatchMark. After the Registration Statement has been declared effective, CatchMark will mail the definitive proxy statement/prospectus to its stockholders. The proxy statement/prospectus to be filed with the SEC related to the proposed merger will contain important information about PotlatchDeltic, CatchMark, the proposed transaction and related matters. Investors are urged to carefully read the proxy statement/prospectus and other documents to be filed with the SEC (or incorporated by reference into the proxy statement/prospectus) in connection with the proposed merger, when available. Investors will be able to obtain free copies of the proxy statement/prospectus, when it is filed with the SEC, through the website maintained by the SEC at sec.report. In addition, investors will be able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by the parties on PotlatchDeltic's website at www.potlatchdeltic.com (which website is not incorporated herein by reference), for documents filed with the SEC by PotlatchDeltic, or on CatchMark's website at www.catchmark.com (which website is not incorporated herein by reference), for documents filed with the SEC by CatchMark.
Participants in the Solicitation
PotlatchDeltic and CatchMark and their respective directors and officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from stockholders of CatchMark in connection with the merger transaction. Certain information about the directors and executive officers of PotlatchDeltic is set forth in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 17, 2022, and its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on March 29, 2022, and will be contained in the proxy statement/prospectus described above when it is filed with the SEC. Certain information about the directors and executive officers of CatchMark is set forth in its Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 3, 2022 and its proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on April 15, 2022, and will be contained in the proxy statement/prospectus described above when it is filed with the SEC. You can obtain free copies of these document from PotlatchDeltic and CatchMark using the contact information above.