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MERGER WITH POTLATCHDELTIC CORPORATION | 3 Months Ended
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Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
MERGER WITH POTLATCHDELTIC CORPORATION | MERGER WITH POTLATCHDELTIC CORPORATION On January 30, 2026, the Company acquired 100% percent of the outstanding common shares of PotlatchDeltic Corporation (“PotlatchDeltic”), a Delaware corporation and real estate investment trust, pursuant to the Agreement and Plan of Merger dated October 13, 2025. PotlatchDeltic owned approximately 2.1 million acres of timberlands in Alabama, Arkansas, Georgia, Idaho, Louisiana, Mississippi, and South Carolina and operated six sawmills, an industrial-grade plywood mill, a residential and commercial real estate development business, and a rural timberland sales program. PotlatchDeltic's operations were organized into three business segments: timberland, wood products, and real estate. The merger created a combined entity with approximately 4.1 million acres of timberlands, providing additional scale and more geographic diversity across highly attractive and productive regions. The transaction added seven wood products manufacturing facilities, positioning the Company as a leading lumber producer. The combined platform creates a diversified portfolio positioned to capture higher and better use value and land-based solutions opportunities across an expanded geographic footprint. Pursuant to the Merger Agreement, each share of PotlatchDeltic common stock issued and outstanding immediately prior to the effective time was converted into the right to receive 1.8185 Rayonier common shares and $0.61 in cash. The Company issued approximately 140.9 million common shares in connection with the merger. The following table summarizes the total consideration transferred by Rayonier in the merger:
Cash Consideration: |  |
Number of PotlatchDeltic common shares outstanding as of January 30, 2026 | 77,466,233 |  |
Cash consideration per PotlatchDeltic common share | $0.61 |  |
Total Cash Consideration Transferred |  | $47,254 |
Equity Consideration: |  |
Number of PotlatchDeltic common shares outstanding as of January 30, 2026 | 77,466,233 |  |
Exchange Ratio (a) | 1.8185 |
Shares of Rayonier Inc. common stock issued for PotlatchDeltic’s outstanding common stock | 140,872,342 |  |
Rayonier share price (b) | $22.74 |  |
Equity Consideration for elections |  | $3,203,437 |
PotlatchDeltic’s replacement awards (c) |  | 24,983 |
Total Equity Consideration Transferred |  | $3,228,420 |
Total Consideration |  | $3,275,674 |
(a)The exchange ratio was was adjusted from 1.7339 to 1.8185 in accordance with the Merger Agreement. This adjustment accounts for the stock component of the one-time $1.40 per share special dividend declared by Rayonier to its shareholders of record on October 24, 2025. (b)The closing price of Rayonier common stock on the NYSE on January 30, 2026. (c)Represents the portion of the fair value of Rayonier replacement equity awards, issued in exchange for outstanding PotlatchDeltic equity awards held by grantees, attributable to precombination services. The remaining fair value of $21.1 million, attributable to postcombination services, will be recognized as compensation expense over the remaining requisite service periods. See Note 19 — Incentive Stock Plans for additional details. The following table contains the amounts of cash transferred in the merger and net cash consideration shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2026:
| March 31, 2026
Cash consideration transferred | $47,254 |
Less: Cash assumed in merger | (22,485) |
Net cash consideration shown in Consolidated Statements of Cash Flows | $24,769 |
We recognized approximately $70.4 million of merger-related costs during the first quarter of 2026. See Note 21 — Integration and Merger-Related Costs for descriptions of the components of merger-related costs. Equity issuance costs directly attributable to the share issuance of $0.9 million were capitalized as a reduction of Common Stock. BASIS OF ACCOUNTING The merger has been accounted for using the acquisition method in accordance with ASC 805, Business Combinations ("ASC 805"), with Rayonier as the legal and accounting acquirer. Assets acquired and liabilities assumed have been recorded at their fair values as of the acquisition date. The preliminary allocation will be finalized as soon as practicable, but no later than one year after the acquisition date. The financial statements will not be retrospectively adjusted for any provisional amount changes; rather, such adjustments will be recognized in the reporting period determined, together with the effect on earnings of changes in depletion, depreciation, amortization, or other income effects calculated as if the accounting had been completed at the acquisition date. Our consolidated financial statements as of and for the three months ended March 31, 2026 include results of operations for PotlatchDeltic from January 31, 2026 through March 31, 2026. The preliminary fair value estimates required the use of significant assumptions, including projected harvest volumes and log pricing, future expected cash flows, applicable discount rates, and replacement cost estimates for manufacturing facilities and equipment. These estimates are preliminary and subject to change as additional information is obtained during the measurement period. The most significant areas for which the allocation remains open include timberlands; property, plant and equipment; higher and better use timberlands and real estate development investments; inventory; long-term debt; pension and other postretirement benefit obligations; environmental liabilities; intangible assets; and tax-related matters. The preliminary fair value estimates represent Level 3 measurements under ASC 820, Fair Value Measurements ("ASC 820"), with the exception of certain assumed long-term debt instruments valued using observable market inputs classified as Level 2. The initial carrying amounts of certain other assets acquired and liabilities assumed approximated their fair values due to their short-term nature. See Note 10 — Fair Value Measurements for further information on the fair value hierarchy. The fair value methodologies used were as follows: Income Approach — Estimates fair value based on the present value of projected cash flows, discounted at rates reflecting the relative risk and time value of money. This approach was primarily used to value acquired timberlands, including the allocation of value among bare land, pre-merchantable timber, and merchantable timber across each geographic region. Cost Approach — Estimates fair value based on current replacement cost, adjusted for physical deterioration and functional and economic obsolescence. This approach was primarily used for property, plant, and equipment. Market Approach — Estimates fair value based on observable prices from recent comparable transactions. This approach was primarily used for higher and better use timberlands, real estate development investments, certain land and building assets, and long-term debt instruments. PRELIMINARY PURCHASE PRICE ALLOCATION The preliminary allocation of purchase price to the identifiable assets acquired and liabilities assumed, based on preliminary estimates of fair value as of January 30, 2026, is as follows:
|  | Total
Cash and cash equivalents |  | $22,485 |
Trade and other receivables |  | 45,254 |
Inventory |  | 113,788 |
Other current assets |  | 8,845 |
Timber and timberlands |  | 3,630,527 |
Higher and Better Use Timberlands and Real Estate Development Investments |  | 59,563 |
Property, plant, and equipment |  | 564,282 |
Other assets |  | 135,229 |
Total identifiable assets acquired |  | $4,579,973 |
Accounts payable |  | 7,817 |
Current maturities of long-term debt |  | 27,500 |
Accrued taxes |  | 5,728 |
Current liabilities |  | 78,853 |
Long-term debt |  | 1,009,500 |
Pension and other post-retirement benefits |  | 63,888 |
Deferred income tax liabilities |  | 75,668 |
Other non-current liabilities |  | 35,345 |
Total liabilities assumed |  | $1,304,299 |
Total net assets acquired |  | $3,275,674 |
The fair value of trade and other receivables assumed in the merger was $45.3 million. The gross contractual amounts receivable approximated fair value, and the Company's best estimate of contractual cash flows not expected to be collected at the acquisition date was not material. The preliminary allocation did not result in the recognition of goodwill or a bargain purchase gain, as the fair value of identifiable net assets acquired approximated the total consideration transferred. No material contingent liabilities were recognized at the acquisition date, and we have not identified any material unrecorded pre-merger contingencies where the related asset, liability, or impairment is probable and the amount can be reasonably estimated. These estimated fair values are preliminary and subject to adjustments, which could be material. Our valuations will be finalized once additional information has been obtained and reviewed. Prior to finalization, if information becomes available indicating that such events had occurred and the amounts can be reasonably estimated, the related items will be included in the final purchase price allocation. See Note 22 — Income Taxes for discussion of the release of a portion of the Company's deferred tax asset valuation allowance resulting from the merger. REVENUE AND EARNINGS OF POTLATCHDELTIC SINCE ACQUISITION The following table presents the revenue and net income (loss) of PotlatchDeltic included in the Company's Consolidated Statements of Income and Comprehensive Income (Loss) from the acquisition date of January 30, 2026 through March 31, 2026:
| March 31, 2026
Revenue | $158,594 |
Net loss | ($6,440) |
UNAUDITED PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information presents the combined results of operations of Rayonier and PotlatchDeltic as if the merger had occurred on January 1, 2025. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results that would have been achieved had the merger actually occurred on January 1, 2025, nor is it indicative of future results of operations.
| Three Months Ended March 31,
| 2026 | 2025
Revenue | $350,156 |  | $351,181 |
Income (loss) from continuing operations | 47,890 |  | (123,262) |
Income (loss) from discontinued operations, net of tax | — |  | 2,507 |
Net income (loss) | 47,890 |  | (120,755) |
Rayonier Inc. |  |
Net income (loss) attributable to Rayonier Inc. | $47,625 |  | ($120,301) |
Basic earnings (loss) per share - continuing operations | $0.16 |  | ($0.42) |
Diluted earnings (loss) per share - continuing operations | $0.16 |  | ($0.42) |
Basic earnings (loss) per share - discontinued operations | — |  | $0.01 |
Diluted earnings (loss) per share - discontinued operations | — |  | $0.01 |
Basic earnings (loss) per share attributable to Rayonier Inc. | $0.16 |  | ($0.41) |
Diluted earnings (loss) per share attributable to Rayonier Inc. | $0.16 |  | ($0.41) |
Rayonier L.P. |  |
Net income (loss) attributable to Rayonier L.P. | $47,890 |  | ($121,140) |
Basic earnings (loss) per share - continuing operations | $0.16 |  | ($0.42) |
Diluted earnings (loss) per share - continuing operations | $0.16 |  | ($0.42) |
Basic earnings (loss) per share - discontinued operations | — |  | $0.01 |
Diluted earnings (loss) per share - discontinued operations | — |  | $0.01 |
Basic earnings (loss) per share attributable to Rayonier L.P. | $0.16 |  | ($0.41) |
Diluted earnings (loss) per share attributable to Rayonier L.P. | $0.16 |  | ($0.41) |
The unaudited pro forma financial information above reflects the following material nonrecurring pro forma adjustments: • Incremental depletion and depreciation expense resulting from the preliminary fair value step-up of acquired timber, timberlands, and property, plant, and equipment; • Cost of sales adjustments related to the preliminary fair value step-up of acquired wood products inventory and the elimination of PotlatchDeltic's last-in, first-out (LIFO) inventory reserves, which do not carry over under purchase accounting; • Reclassification of merger-related and integration costs of approximately $105.3 million ($70.4 million incurred by Rayonier and $34.9 million incurred by PotlatchDeltic prior to the acquisition date) from the three months ended March 31, 2026 to the three months ended March 31, 2025, as these costs are directly attributable to the merger and are nonrecurring; • Stock-based compensation expense adjustments associated with Rayonier replacement equity awards issued in exchange for outstanding PotlatchDeltic equity awards; and • Income tax effects of the pro forma adjustments at a blended statutory rate of 25%. FINANCING In connection with the merger, the Company entered into a Second Amended and Restated Credit Agreement to consolidate and refinance debt. The Credit Agreement allows for an additional $200 million expansion of the revolver and further incremental term loans subject to leverage ratios. See Note 8 — Debt for additional details.

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