Leading timber real estate investment trust (REIT) -
Plum Creek Timber Company Inc.
) - penned a deal to acquire interest in around 255 million tons
of crushed stone production at 4 quarries from
Vulcan Materials Company
), 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
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
) carrying a Zacks Rank #1 (Strong Buy) and
) with a Zacks Rank #2 (Buy).
BOISE CASCADE (BCC): Free Stock Analysis
PLUM CREEK TMBR (PCL): Free Stock Analysis
RAYONIER INC (RYN): Free Stock Analysis
VULCAN MATLS CO (VMC): Free Stock Analysis
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