Plum Creek Timber (NYSE: PCL) had a rather curious announcement to make this afternoon: As of today, the forest products company owns an interest in four quarries with about 144 million tons of crushed stone production among them. According to the company, it bought interests in the quarries, which are located near Greenville and Spartanburg, S.C., for a combined $75 million, from rock products specialist Vulcan Materials Company (NYSE:VMC).
While it might seem unusual, for a company with "timber" right in its name to be buying an interest in rocks, Plum Creek Chief Executive Officer Rick Holley explained:
This is an attractive, cash-accretive investment in a familiar natural resource asset for Plum Creek.
Plum Creek further clarified that it is not actually buying the quarries themselves, which will continue to be owned and operated by Vulcan. All Plum Creek is buying is the right to receive royalty payments from the production and sale of crushed stone mined from the quarries -- for the next 25 years.
Plum Creek shares closed up 0.6%, at $47.04, on Thursday, ahead of the news. Vulcan shares were also up -- 1.9%, to $55.14.