Plum Creek Timber (PCL)

[DewDiligence]

PCL is trading very close to—but slightly below—1.6 times the share price of WYE, which is the exchange ratio in the all-stock merger. (As I’m typing, PCL is @50.74 and WY is @32.16, so the ratio right now is 1.578.)

There’s close to a zero chance of another company making a better offer, IMO.

I do have confidence in the management team and BoD of the combined company: PCL’s Tom Lindquist will become head of real estate, 5 of the 13 directors will come from PCL, and PCL’s CEO, Rick Holley will become Chairman of the Board.

Although the post-merger WY will not be quite as safe a stock as PCL, I would submit that any company who derives most of its profit from timberlands is still one of the safest places you can put your money in these uncertain times. If you’re not comfortable holding your entire position, I would suggest keeping at least the majority of it as a long-term core holding. Regards, Dew