(Bloomberg) — Rayonier Inc. (RYN) agreed to buy PotlatchDeltic Corp. (PCH) in an all-stock deal valued at about $3.4 billion that would create the second-largest publicly traded timber and wood products company in North America.

Under terms of the deal, PotlatchDeltic holders will receive 1.7339 shares of Rayonier for each of their shares, the companies said in a statement Tuesday. That would imply a 7.8% premium to PotlatchDeltic’s closing price.

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PotlatchDeltic shares were up 4.6% in premarket trading in New York, while Rayonier was down 0.4%.

The deal will create a new company with 4.2 million acres of land across 11 states. It will operate seven wood products manufacturing facilities, including six lumber mills with total capacity of 1.2 billion board feet and one industrial plywood mill.

The announcement comes on the same day that President Donald Trump’s sweeping tariffs on imported lumber and wood products take effect, with the intention of boosting domestic manufacturing. The biggest blow from the measures will fall on Canada, the top lumber supplier to the US.

Wood suppliers are facing what some describe as “the worst market conditions they have ever seen,” the US Lumber Coalition, a Washington-based lobbying group, wrote in a letter last month to Trump administration officials. In addition to weak demand for new housing, the industry has also struggled with a “massive oversupply” after Canadian and European producers “raced” earlier this year to ship product ahead of the increased duties and potential new tariffs, the group said.

The deal gives Rayonier shareholders 54% of the new entity and its president and chief executive officer, Mark McHugh, will take the same role in the combined business. Eric Cremers, currently the president and CEO of PotlatchDeltic, will be the executive chairman of the combined company for 24 months after the deal closes.

The corporate headquarters of the company, which will take a new name, will be located in Atlanta, Georgia with significant regional offices maintained in Spokane, Washington and Wildlight, Florida.

The deal will “create significant strategic and financial benefits beyond what could be achieved by either company independently,” Cremers said in the statement.

(Updates with share prices in third paragraph.)

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