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Deltic Timber Corp. officially merged with Potlatch Corp. on Tuesday, bringing an end, at least in name only, to the El Dorado company's influence on Arkansas' timber industry and in the development of west Little Rock over the past 30 years.

Deltic and Potlatch, based in Spokane, Wash., announced an all-stock transaction last fall. Shares of the combined company -- now called PotlatchDeltic Corp. -- are trading on the Nasdaq stock market under the ticker symbol PCH.

Deltic closed Tuesday at $93.28 a share, and PotlatchDeltic shares rose 19 cents to close Wednesday at $52.

The combined company still owns thousands of undeveloped acres farther west of former Deltic woodlands now home to thousands of Little Rock residents and to restaurants, malls, retail stores and other commercial activities that serve them.

It also will have three sawmills -- two of which were operated by Deltic -- and a fiberboard manufacturing plant in Arkansas. Deltic's home office in El Dorado will be the new company's headquarters for its operations in the South.

"While corporate control is headed to Washington state, the new company's largest landholdings will continue to be in Arkansas," said Matthew Pelkki, a professor and an expert in forestry economics at the University of Arkansas at Monticello. "They'll be a very strong presence here and will continue to push themselves as a force in sawmills and timber."

Potlatch has a real estate investment trust subsidiary and, like Deltic, a real estate division. "It will be interesting to see how Potlatch looks for the highest value and best use" of its new holdings in western Pulaski County, Pelkki said.

Deltic got its start in 1907 when Charles S. Murphy Sr., founder of Murphy Oil Corp., began buying large swaths of pine acreage as an investment. In 1985, Deltic opened a real estate office, and the land rush across part of Deltic's 67,000 acres of western Pulaski County timberland was in full force within four years.

"I've said many times through the years, thank God for Deltic and its development," Jim Dailey, a former Little Rock mayor who is now director of the Tourism Division of the state Department of Parks and Tourism. "They brought rooftops and a tax base to west Little Rock and did it in a high-quality way."

Dailey also said the annexation of undeveloped Deltic acreage -- at the company's request -- likely prevented a new city from being developed on Little Rock's western edge by "some entity with the dollars, the political wherewithal and the political will."

"To those naysayers who think we did too much, I say we might have ended up with nothing," Dailey said. "I stand firm that we made the right moves."

"I still say the jury is out as to whether all that is good," said Jim Lynch, a longtime Little Rock activist and frequent critic of Deltic's operations and the company's relationship with the Little Rock City Board of Directors.

"The city, for sure, reneged on its public responsibilities," Lynch said, claiming that the city's four separate annexations of some 5,700 acres of Deltic's undeveloped land over some 10 years, without charging adequate impact fees for developers, was to the detriment of other neighborhoods.

"The city did this with no critical analysis of costs and benefits but only because Deltic wanted it," Lynch said. "I'm not alleging corruption, but I am saying there was an assumption that 'all growth is good, and so let's do it by sundown today.'"

The city, he said, acted too quickly in annexing the land and has gotten too little for it.

In its annual filing known as a 10-K with the federal Securities and Exchange Commission last March, Deltic said its work in Chenal Valley in west Little Rock has resulted in the development of 37 neighborhoods with 2,788 residences constructed or under construction.

"When fully developed, Chenal Valley could include approximately 4,600 single-family residences," the company said. "However, the actual number of residences in Chenal Valley will depend on final land usages and lot densities."

Lynch said the company's own numbers of homes constructed and homes planned show the city acted in haste. "They still have some 45 percent to go," he said. "I know they're high-end homes, but the city didn't need it all at once."

Lynch noted that the Coalition of Little Rock Neighborhoods was formed because of Deltic and the Little Rock city government. "And we're still here 30 years later," he said.

Craig Berry, a member of the Little Rock Planning Commission during Deltic's early days of developing west Little Rock who's now on his second stint on the panel, called Deltic "quite the political force" then.

"It seems they are doing a lot more 'infill' [between neighborhoods] recently than before," Berry said. "We'll always have an argument over low-density and high-density, but they met some needs on the high-end [of homes]. They didn't butcher the land. They had their plans, and they met them."

Mike Covey, the combined company's chairman and chief executive officer, said in a statement that Tuesday's closing "marks the beginning of a stronger PotlatchDeltic, positioned for growth."

Under the merger agreement, each outstanding share of Deltic Timber common stock immediately prior to the merger converted to the right to receive 1.80 shares of PotlatchDeltic common stock. About 22 million common shares of PotlatchDeltic will be issued to Deltic Timber shareholders, representing about 35 percent of total shares outstanding.

Last week, in its final quarterly report as an Arkansas-based company, Deltic reported a profit of $200,000, or 2 cents per share, compared with a profit of $3.1 million, or 26 cents per share, a year ago. Deltic reported net sales of $72.1 million for the fourth quarter of 2017, up 23 percent from $58.5 million for the same quarter in 2016.

Business on 02/22/2018

Print Headline: PotlatchDeltic debuts after merger

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