For the moment, Potlatch Corporation’s merger with Arkansas-based Deltic Timber probably won’t budge prices of wood being sold to the combined company by landowners, Matthew Pelkki, economist for the University of Arkansas System Division of Agriculture, said in a news release.
Pelkki is associate director of the Arkansas Forest Resources Center and professor and George H. Clippert Endowed Chair at the University of Arkansas at Monticello.
On Monday, Spokane, Washington-based Potlatch and Deltic announced an agreement on an all-stock transaction that would create a combined company called PotlatchDeltic Corp.
Deltic, headquartered at El Dorado, owns about 530,000 acres of timberland. The company also has sawmills in Ola and Waldo and a wood fiberboard plant. Its operations are in Arkansas and northern Louisiana. Deltic has real estate developments in Little Rock at Chenal Valley and Chenal Downs and Red Oak Ridge in Hot Springs.
“In the near term, I don’t see major differences in the production of lumber or wood prices to landowners selling timber to either company,” Pelkki said Monday. “Deltic will be converted to a real estate investment trust, or REIT, which offers tax advantages but also limits the vertical integration of processing facilities.
“REITs are supposed to have the bulk of assets and income – greater than 75 percent — related to real estate and not manufacturing,” he said. “Thus, the ownership and operation of Deltic’s two sawmills could be in question. They may stay in operation as a subsidiary of PotlatchDeltic, or they may be sold and operate under new ownership.”
Pelkki said that with the demand for lumber increasing, he thinks that the two Deltic sawmills will continue operation, either under the new PotlatchDeltic name, or they will be acquired and operated independently.
“Canadian firms have purchased several Arkansas lumber mills and both these mills would be desirable for such acquisition,” he said.
PotlatchDeltic will maintain headquarters at Spokane, with its southern operation headquarters at El Dorado.
For details on forestry, visit the forest resources center at www.afrc.uamont.edu.
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