Weyerhaeuser Co.'s plan to purchase Plum Creek Timber Co. for $8.44 billion will create the largest timber owner in both the United States and in Arkansas.
While the transaction may be good for the companies involved, it's part of a longstanding trend toward consolidation that's bad for private enterprise in general and small communities in particular, the chairman of Arkansas-based Anthony Timberlands Inc. said Monday. The deal was announced Sunday afternoon.
"It's never good for one outfit to own all or most of anything," John Ed Anthony said.
Weyerhaeuser said it will have a total of 13 million acres of timberland after the deal closes, making it the largest private landowner in the United States.
It also will be the largest landowner in Arkansas with more than 1.3 million acres of forestland, said Matthew Pelkki, who holds the George H. Clippert Endowed Chair of Forest Economics at the University of Arkansas at Monticello. Pelkki said Arkansas has a total of about 18.9 million acres of forestland, and 60 percent of that land is privately owned.
Pelkki called the deal a good move for Weyerhaeuser in the state because it will combine Weyerhaeuser's holdings in Southwest Arkansas with Plum Creek's properties in Southeast Arkansas.
"It's a good matchup because now Weyerhaeuser is going to have land across all of south Arkansas," Pelkki said.
Pelkki said he didn't expect many Arkansans, if any, would lose their jobs as a result of the transaction because Plum Creek runs a lean operation. Plum Creek's website says the company has approximately 45 employees in Arkansas.
When Weyerhaeuser announced its plan to buy Plum Creek, it said the company would have a combined worth of $23 billion at current share prices.
On Monday, Weyerhaeuser shares fell 90 cents, or 2.96 percent, to close at $29.50. Plum Creek jumped $6.97, or 17.3 percent, to close at $47.26.
As part of the transaction, Plum Creek shareholders will receive 1.6 shares of Weyerhaeuser for each share of Plum Creek held. Weyerhaeuser also said it would buy back $2.5 billion of company shares after the deal is completed.
The transaction requires approval by both Weyerhaeuser and Plum Creek shareholders and is expected to close in the first or second quarter of 2016.
The Weyerhaeuser announcement follows the Oct. 30 completion of Canfor Corp.'s purchase of El Dorado-based Anthony Forest Products Co. for $93.5 million. Anthony Forest Products was not affiliated with Anthony Timberlands.
Canadian companies like Canfor have been buying sawmills and lumber manufacturers in Southern states because a mountain pine beetle outbreak has decimated northern forests, Pelkki said.
The next foray into the region could come from Asia, Pelkki said.
"I would not be surprised to see a Chinese company looking to buy a forest products company in the South," Pelkki said.
He said both El Dorado-based Deltic Timber Corp. and Anthony Timberlands could be attractive acquisition targets.
Ray Dillon, Deltic's president and chief executive officer, did not return a phone call Monday. The company owns about 530,000 acres of timberland, operates two sawmills and a medium density fiberboard plant, and develops real estate. Last month, Deltic reported a profit of $38,000, or zero cents per share, for the third quarter because of what Dillon called a slower than expected recovery in the housing market and a decline in exports of U.S. logs and lumber.
Deltic shares fell 58 cents, or 0.93 percent, on Monday to close at $61.93.
Anthony, asked if he expected new offers for his family-owned company, said, "They come all the time. We're not for sale."
Anthony Timberlands, with headquarters in Bearden, manages 175,000 acres, three saw mills and three other manufacturing facilities, Anthony said.
He said Plum Creek had been a major supplier of the company's mills, and he expected the relationship would continue with Weyerhaeuser.
"I'm not against this merger," Anthony said. "I have no reason to think they'll be anything other than Plum Creek reincarnated. We'll make a market for their product just like we did for Plum Creek."
Anthony said his concern was with high estate tax rates, which he said force private business owners to sell to corporations that aren't subject to the levy.
"Our communities are drying up because you take away local management, local control, local banking," he said.
Business on 11/10/2015