This morning timber resources management and timberland and natural resource property ownership company Pope Resources A Delaware LP (POPE:NASDAQ) announced that it has entered into a definitive merger agreement to be acquired by Rayonier Inc. (RYN:NYSE), a leading timberland real estate investment trust. Under the terms of the agreement, Rayonier will acquire all of the outstanding limited partnership units of Pope Resources for consideration consisting of equity and cash.
The transaction sets a valuation for Pope Resources LP equity at $554 million, or $126.91 per unit. An additional $10 million in consideration is expected to be paid to the General Partners entities for their interest raising the total to $564 million.
The report indicated that the agreement has already been unanimously approved by the boards of directors of both companies as well as the special committee of Pope Resources' board composed solely of independent directors. The transaction is expected to close in mid-2020, requires approval of a majority of the Pope Resources unitholders and is subject to customary closing conditions and regulatory approvals.
The agreement specifies that "Pope Resources unitholders will have the right to elect to receive (i) 3.929 common shares of Rayonier, (ii) 3.929 units of Rayonier Operating Partnership LP, or (iii) $125 in cash in exchange for each unit of Pope Resources, subject to a proration mechanism described in the report."
Rayonier's President and CEO David Nunes commented, "We are delighted to be combining two premier pure-play timber organizations using an innovative tax-deferred UPREIT structure...Pope Resources has a strong track record as a best-in-class Pacific Northwest timberland operator and possesses an excellent set of assets in high-quality markets. Our two organizations have very compatible cultures, a complementary set of assets and a shared dedication to value maximization through intensive silvicultural practices and higher-and-better-use real estate operations. The addition of these high-quality Pacific Northwest timberlands increases Rayonier's ownership in the region to 504,000 acres, adds 57 MMBF to our sustainable yield, increases our proportion of Douglas-fir inventory and offers a complementary age-class fit. We look forward to completing this transaction by mid-year, which continues our strategy of adding high-quality timberlands in strong log markets and building long-term value for our shareholders through prudent capital allocation."
Tom Ringo, president and CEO of Pope Resources, added, "This transaction is the culmination of a thorough process undertaken by Pope Resources' board to maximize value for our unitholders...Rayonier is the leading pure-play timberland REIT, with a well-diversified portfolio of timberlands and an established track record of creating long-term value from its assets. This transaction will provide our unitholders with the opportunity to defer capital gain recognition and participate in Rayonier's long-term upside potential, benefitting from a well-managed and diversified timberland portfolio while still enjoying a strong dividend yield. Like Pope Resources, Rayonier has a rich heritage of sustainably managing timberlands, and we look forward to working closely with them to realize the benefits of this combination on behalf of our unitholders."
Rayonier is a leading timberland real estate investment trust (REIT) with a market cap of around $4.2 billion headquartered in Yulee, Fla., which is located about 25 miles north of Jacksonville. The company stated that it has assets located in some of the most productive softwood timber growing regions in both the U.S. and New Zealand and as of September 30, 2019, it owned, leased or managed a total of approximately 2.6 million acres of timberlands in those countries.
Pope Resources is a publicly traded limited partnership that is engaged primarily in managing timber resources on its own properties, as well as those owned by others. The company owns and manage 125,000 acres of timberland and higher-and-better-use properties in the state of Washington. The firm advised that it also co-invests in and consolidates three private equity timber funds that own 141,000 acres of timberland in Washington, Oregon and California.
Pope Resources began the day with a market capitalization of around $407 million and approximately 4.36 million outstanding shares. POPE shares opened nearly 30% higher today at $120.15 (+$26.70, +28.57%) over yesterday's $93.45 closing price and established a new 52-week high price this morning of $138.99. The stock has traded today between $120.15 and $138.99 per share and is currently trading at $125.62 (+$32.17, +34.42%).
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