PCL Buys Stake in Vulcan Quarries - Analyst Blog


Leading timber real estate investment trust (REIT) - Plum Creek Timber Company Inc. ( PCL ) - penned a deal to acquire interest in around 255 million tons of crushed stone production at 4 quarries from Vulcan Materials Company ( VMC ), positioned at metro Atlanta, Ga. for $154 million. The move comes as Plum Creek focuses on leveraging on the construction material production in the lucrative southeastern markets.

As per the deal, the leading producer of construction aggregates - Vulcan - will continue operating the quarries while Plum Creek will enjoy royalty payments from the production and sale of crushed stone, mined from the quarries over the next 25 years, starting this October.

As a matter of fact, Plum Creek is aiming at diversifying its revenue stream and as a part of this, the company is making efforts to boost its natural resource businesses. Earlier this year, Plum Creek acquired an interest in four S.C.-based quarries from Vulcan for $75 million to receive royalty payments from the production and sale of crushed stone, mined from the quarries for the next 25 years.

Such deals are a strategic fit and are expected to be accretive to the company's earnings going forward, on the back of Vulcan's market-leading skills and high-potential prospects of the southeastern markets.

In fact, Plum Creek forms strategic alliances with industry-specific leaders to focus on natural resource opportunities, such as mineral extraction, natural gas production as well as communication and transportation.

Plum Creek plans to maximize revenues from such investments while limiting the total capital investment in such business. Such deals are also beneficial for Vulcan as the company can infuse capital in its business and enhance its balance sheet.

Plum Creek currently has a Zacks Rank #3 (Hold). However, a number of promising stocks include Boise Cascade Company ( BCC ) carrying a Zacks Rank #1 (Strong Buy) and Rayonier Inc. ( RYN ) with a Zacks Rank #2 (Buy).

BOISE CASCADE (BCC): Free Stock Analysis Report

PLUM CREEK TMBR (PCL): Free Stock Analysis Report

RAYONIER INC (RYN): Free Stock Analysis Report

VULCAN MATLS CO (VMC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BCC , PCL , RYN , VMC



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