Santa Fe Southern Pacific, the diversified railroad company in the throes of a major reorganization, said Monday that it had agreed to sell its Northern California timber business to Sierra Pacific Industries of Arcata, Calif.
Privately held Sierra Pacific will pay an undisclosed sum for the 520,000 acres of timberland owned by Santa Fe Pacific Timber, which was put on the block in June by the parent company. Securities analyst John E. Maack Jr. at S. G. Warburg & Co. estimated Monday, based on current market prices, that the timberland brought between $500 and $600 an acre for a total of $260 million to $312 million.
The sale took place amid what many industry experts have described as a glutted market for timberland. Besides SFSP's 520,000 acres, an estimated 8 million acres of timber--out of a total of 68.8 million nationwide--is also up for sale, according to the American Forest Council.
But there has been a rebound of sorts in the industry, Maack said. After bottoming out in 1983, lumber prices have nearly doubled and have reached $160 for 1,000 board feet, the analyst added. Still, prices are nearly half of what they were in the late 1970s.