Timber real estate investment trust Rayonier Inc. entered into a definitive merger agreement with Pope Resources A Delaware LP.
The transaction values Pope Resources' limited partnership equity at $554 million, or $126.91 per unit.
Under the agreement, Rayonier will acquire all of the outstanding limited partnership units of Pope Resources for equity and cash.
The agreement states Pope Resources unit holders will have the right to elect to receive 3.929 Rayonier common shares; 3.929 units of Rayonier Operating Partnership LP or $125 in cash in exchange for each unit of Pope Resources, subject to a proration mechanism.
The deal will add fee ownership of 125,000 acres of timberlands to Rayonier's Pacific Northwest timberland portfolio. It also adds private equity timber fund business with three funds totaling 141,000 acres.
Rayonier expects the deal to result in annual cost synergies of $5 million while also being accretive to cash available for distribution per share in first full year.
Upon closing of the transaction, Rayonier Operating Partnership will own all of the assets of Rayonier, and Pope Resources and will become the operating partnership of Rayonier's umbrella partnership real estate investment trust.
The deal, expected to close in mid-2020, was unanimously approved by the respective boards of both companies.
Credit Suisse is the financial adviser for Rayonier, with Wachtell Lipton Rosen & Katz, serving as legal counsel.
For Pope Resources, Centerview Partners is financial adviser with Munger Tolles & Olson LLP serving as legal adviser to the special committee of its board. Davis Wright Tremaine LLP is legal counsel.