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Pending Merger With Deltic
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
Pending Merger With Deltic

NOTE 2. Pending Merger with Deltic

On October 22, 2017, Potlatch, Portland Merger, LLC (Merger Sub), a wholly-owned subsidiary of Potlatch, and Deltic Timber Corporation (Deltic) entered into an Agreement and Plan of Merger (Merger Agreement) pursuant to which Deltic will merge with and into Merger Sub. Following the merger, Potlatch will be renamed PotlatchDeltic Corporation. Under the terms of the Merger Agreement, Deltic shareholders will receive 1.80 shares of Potlatch common stock for each share of Deltic common stock at the closing date. Deltic owns approximately 530,000 acres of timberland, operates two sawmills and a medium density fiberboard plant and is engaged in real estate development primarily in Arkansas.

 

Because the exchange ratio was fixed at the time of the Merger Agreement and the market value of our common stock will continue to fluctuate, the total value of the consideration exchanged will not be determinable until the closing date. The number of shares to be issued with respect to Deltic stock awards will not be determinable until the closing of the transaction.

 

We estimated that approximately 22 million shares of our common stock will be issued to Deltic shareholders in the merger based on the 1.80 exchange ratio and the number of shares of Deltic common stock issued and outstanding as of January 31, 2018.

 

The Merger Agreement provides that, upon termination of the Merger Agreement by a party under certain circumstances, such party may be obligated to pay the other party a termination fee equal to $66 million with respect to the fee payable by Potlatch and $33 million with respect to the fee payable by Deltic.

 

Subsequent to the completion of the transaction, as part of the REIT conversion process, Deltic’s earnings and profits are expected to be distributed to shareholders of the combined company through a dividend or special distribution consisting of 80% stock and 20% cash.

 

The closing of the merger is subject to approval by the shareholders of Deltic and Potlatch and other conditions specified in the Merger Agreement. The respective shareholder meetings are scheduled for February 20, 2018, as published in the joint proxy statement/prospectus dated January 18, 2018. If approved by the shareholders, the merger is expected to close the same day.