Forest products company Temple-Inland, which is under pressure from activist investor Carl Icahn, said Monday that it would sell 1.55 million acres of timberland to Campbell Group for $2.38 billion and then issue a $1.1 billion special dividend.
The sale is part of a plan that Temple-Inland announced in February, which also includes spinning off two businesses, financial services and real estate. At that time, it had said it expected to return the majority of the proceeds from the sale to shareholders.
Icahn, which has a more than 8 percent stake in the company, at the beginning of the year began urging it to make changes, such as selling assets.
Temple-Inland said it was on track to complete the reorganization by the end of the year, after which it would own only packaging and building products.
The company said Campbell Group, a timberland investment management company in Portland, Oregon, would buy the land with installment notes, which will be pledged as collateral for a nonrecourse loan within 30 days of the sale.
Temple-Inland then expects to use some of its expected $1.8 billion in sale proceeds to pay a special dividend estimated at $1.1 billion, or $10.25 per share. It will use the remaining $700 million to reduce debt.
The company expects the deal to close in the fourth quarter.
The transaction includes a 20-year fiber supply agreement for pulpwood and a 12-year fiber supply agreement for sawtimber, both of which can be extended.
Many timber companies, including International Paper and Weyerhaeuser, have made similar forestland sales, streamlining operations in an effort to become more profitable.
Goldman Sachs and Citigroup were financial advisers to Temple-Inland.
Shares of Temple Inland initially rose to $56.04 before backing off and were recently up 35 cents at $54.25 in morning New York Stock Exchange trading.