Rayonier to buy Pope Resources

Deal expected to close mid-year

Rayonier, Inc., will acquire 125,000 acres of timber owned by Pope Resources, which has some 46,500 acres in Jefferson County, for $554 million.

The two companies announced Wednesday that they had entered into a definitive merger agreement that is expected to close by the middle of this year.

With the purchase of Poulsbo-based Pope Resources, which developed a resort at Port Ludlow, Rayonier Inc.’s footprint in its Pacific Resource Unit, which is in Washington state and Oregon, will grow to 504,000 acres, Rayonier spokesperson Alejandro Barbero said in an interview Friday.

“It’s a great company,” he said of Pope.

“We share roots because both our companies started in Washington, but we are only 93 years old.”

Barbero said Rayonier’s priorities for the next six months are on building a relationship with Pope, gaining a deeper understanding of the company operations and integrating the company with Rayonier.

“We are very early in the process-of-closing process for us to speculate on the plans will be in the future and personnel,” he said.

“We are in the process of developing those plans.”

The transaction requires approval of a majority of the Pope Resources unitholders and is subject to customary closing conditions and regulatory approvals.

Tom Ringo, president and CEO of Pope Resources said the move will increase value for unitholders.

It is unclear now what the move will mean for Pope Resources employees or public access to the company’s forests.

“Rayonier is the leading pure-play timberland REIT (real estate investment trust), with a well-diversified portfolio of timberlands and an established track record of creating long-term value from its assets,” Ringo said in a press release.

“This transaction will provide our unitholders with the opportunity to defer capital gain recognition and participate in Rayonier’s long-term upside potential.

“Like Pope Resources, Rayonier has a rich heritage of sustainably managing timberlands, and we look forward to working closely with them to realize the benefits of this combination on behalf of our unitholders.”

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies as well as the special committee of Pope Resources’ board composed solely of independent directors, Pope Resources unit holders will have the right to elect to receive 3.929 common shares of Rayonier, 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 as described below.

The combination of the two companies will result in an “innovative tax-deferred UPREIT (umbrella partnership real estate investment trust) structure,” said David Nunes, president and CEO of Rayonier.

He said the deal will add 57 MMBF (million board feet) to the company’s sustainable yield and increase its proportion of Douglas-fir inventory.

“Pope Resources has a strong track record as a best-in-class Pacific Northwest timberland operator and possesses an excellent set of assets in high-quality markets.

Pope Resources’ land portfolio includes several real estate development opportunities, including projects in Gig Harbor, Port Gamble, Kingston and Bainbridge Island in the west Puget Sound area, according to Rayonier.

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