RAYONIER INC: A New Era – Transformative Merger Completed

Rayonier Inc. has completed a landmark merger, fundamentally reshaping its future and creating a new leader in the timberland industry. This summary provides a clear overview of this significant event, as reported in an SEC 8-K filing.

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The Big News: Rayonier's Transformative Merger

Rayonier Inc. (NYSE: RYN), a leading timberland REIT, has completed a transformative merger with PotlatchDeltic Corporation (NASDAQ: PCH), creating a new powerhouse in the timberland industry. This is a strategic move, not just a minor adjustment.

What happened? PotlatchDeltic Corporation merged into a Rayonier subsidiary, making Rayonier Inc. the surviving public company. This move significantly expands Rayonier's scale and operational footprint.

When did it happen? The merger closed and became effective on December 31, 2023, following the definitive agreement announced on August 15, 2023.

For Shareholders: PotlatchDeltic shareholders received 0.85 shares of Rayonier common stock for each PotlatchDeltic common share they owned. They are now shareholders in the larger, combined Rayonier entity.

Why This Merger Matters: A Strategic Power Play

This bold strategic merger aims to create a more resilient, efficient, and profitable company. Key drivers include:

• Unprecedented Scale: The combined company now owns and manages approximately 3.5 million acres of timberland across the U.S. South, Pacific Northwest, and New Zealand, becoming one of the largest and most geographically diverse timberland REITs globally.
• Enhanced Diversification: The expanded land portfolio offers greater exposure to diverse timber markets, reducing reliance on any single region and providing a more stable revenue base.
• Significant Cost Synergies: The company projects achieving approximately $50 million in annual cost synergies within the first two years post-closing. These savings will come from optimizing operational efficiencies, streamlining corporate functions, and leveraging combined purchasing power.
• Stronger Financial Profile: The merger will result in a stronger balance sheet, enhanced cash flow generation, and improved access to capital markets, supporting future growth initiatives and dividend stability. The combined company's pro forma (as if the merger had always happened) annual revenue is expected to exceed $2.2 billion, with pro forma Adjusted EBITDA (a measure of operating profitability) projected around $700 million.

Financial Impact & Investor Implications

This merger fundamentally alters Rayonier's financial landscape:

• Shareholder Value: The combined company expects its increased scale, synergies, and diversified asset base to drive long-term shareholder value.
• Dividend Policy: Rayonier has indicated its commitment to maintaining a competitive dividend, consistent with its REIT structure and enhanced cash flow profile. Investors should monitor future dividend declarations for specifics.
• Balance Sheet: The combined company expects to maintain a strong balance sheet, targeting a pro forma net debt to Adjusted EBITDA ratio of approximately 4.0x, which provides financial flexibility.

Leadership, Governance, and Integration

• New Leadership: As part of the integration, Wayne Wasechek was appointed Executive Vice President and Chief Financial Officer (CFO) of the combined Rayonier. His compensation package, including a base salary of $535,000, significant annual bonuses, and long-term equity incentives, reflects his critical role in the company's financial strategy and integration efforts.
• Board Structure: The new Board of Directors consists of 11 members, with 6 directors from the former Rayonier board and 5 directors from the former PotlatchDeltic board, ensuring balanced representation and expertise.
• Integration Focus: The company's immediate priority is seamlessly integrating operations, systems, and personnel to realize projected synergies and optimize the combined asset base.

Key Risks to Consider

While the merger offers significant upside, investors should be aware of potential risks:

• Integration Challenges: The successful integration of two large companies is complex and carries risks, including potential disruptions to operations, cultural clashes, and the failure to fully realize anticipated synergies.
• Market Volatility: The combined company remains exposed to fluctuations in timber prices, real estate markets, and interest rates, which can impact profitability and land values.
• Regulatory & Environmental Risks: Operating vast timberlands involves ongoing regulatory compliance and exposure to environmental factors, including natural disasters and climate change impacts.
• Debt and Dilution: While the combined company aims for a strong balance sheet, the transaction's financing could impact leverage, and issuing new shares to PotlatchDeltic shareholders diluted existing Rayonier shareholders.

Looking Ahead: The Path Forward

The combined Rayonier is now focused on executing its long-term strategy, which includes:

• Optimizing Timberland Management: Leveraging best practices from both companies to enhance sustainable timber production and maximize returns from its vast landholdings.
• Strategic Land Sales: Continuing to selectively monetize non-strategic land assets to generate additional capital and enhance portfolio quality.
• Capital Allocation: Prioritizing investments that drive growth, improve efficiency, and support a stable and growing dividend.

For Investors: This merger fundamentally shifts Rayonier's trajectory. Investors should closely monitor future earnings calls, presentations, and SEC filings for updates on integration progress, synergy realization, and the combined company's financial performance. Understanding the new, larger company's strategic direction and financial profile is crucial for informed investment decisions.