Specifically, Plum Creek has agreed to acquire:
- 501,000 acres of industrial timberlands in Alabama, Georgia, South Carolina, Virginia, and West Virginia for $869 million;
- An investment in joint ventures consisting of 109,000 acres of high-value rural lands and development-quality lands near Charleston, S.C., for $152 million;
- Subsurface rights, mineral rights and wind power assets associated with the timberlands for $65 million.
“This transaction adds significant assets to our existing timber resource base and is expected to be cash flow accretive in the first 12 months. It also expands our portfolios of high-value rural land and non-timber resources,” said Rick Holley, CEO. “These timberlands have a long history of excellent forest management. The high stocking levels and older age of the timberlands make them particularly attractive. These assets should integrate seamlessly into our existing timberland ownership in the Southeast and add to our presence in key markets. The West Virginia timberlands are contiguous with our high-value hardwood lands in the state.”
“The joint-venture interests in high-value rural and development-quality lands are a good fit for Plum Creek, due to our experience in capturing value from these types of properties. Similarly, the mineral and wind power assets are familiar asset types.”
At closing, Plum Creek will pay the seller $226 million in cash and issue an $860 million ten-year installment note for the assets.
Following the completion of the transaction, the timber harvest from the acquired lands is expected to average nearly 3 million tons annually over the next 10 years, growing Plum Creek’s total annual harvest more than 15% from recent levels. The mineral and wind assets associated with the timberlands are expected to generate approximately $6 million of annual cash flow, assuming current commodity prices.
Upon completion of the transaction, through a 50/50 joint venture formed by Plum Creek and MeadWestvaco, the companies plan to pursue an entitlement and development strategy for 87,000 acres of high-value lands over the next several years in the Charleston, S.C., market. In addition, Plum Creek will hold a 5% interest (valued at $12.5 million) in approximately 22,000 acres of residential, commercial and industrial properties that are actively being developed in the same market.
Plum Creek is among the largest and most geographically diverse private landowners in the nation with approximately 6.3 million acres of timberlands in major timber producing regions of the United States and wood products manufacturing facilities in the Northwest.