Anderson-Tully Company and The Forestland Group announce merger agreement

Memphis, Tennessee (October 5, 2005) – Anderson-Tulley Company (“ATCO”) and Heartwood Forestland Fund V, L.P., an affiliate of The Forestland Group, LLC (“TFG”), today announced that they have entered into a definitive merger agreement.  Under the terms of this agreement, which was unanimously approved by  ATCO’s Board of Directors, TFG will acquire all of the outstanding shares of ATCO for approximately $500,000 per common share in cash, implying an enterprise value for the company for approximately $465 million dollars.

At closing, shareholders are expected to receive approximately $450,000 per share in cash (assuming conversion of ATCO’s preferred shares).  An additional $50,000 per share in cash will be held in escrow and, upon resolution of certain matters, any remaining funds would be distributed to shareholders.  In addition, the purchase price is subject to adjustment (upward or downward) at closing for, among other things, an appraisal of ATCO’s commercial real estate and pre-closing timber inventory.

Completion of the transaction is subject to a shareholder vote, clearance under the Hart-Scott-Rodino Antitrust Improvement Act, approval under the Mississippi River Timberlands Control Act and other customary closing conditions.  Upon completion of the timber inventory, ATCO plans to distribute a proxy statement to its shareholders that will contain the final purchase price, as adjusted, and a more detailed description of the terms and conditions of the transaction.  The transaction is expected to close in early 2006.

Chip Dickinson, President and CEO of ATCO said “TFG” is the only timberland investment management organization (“TIMO”) focused on investing in naturally regenerating hardwood timberland.  TFG and ATCO share excellent reputations for environmentally responsible forest management and long-term investment philosophies.  Aligning ATCO’s management, timberlands and sawmills with TFG and its substantial capital resources will allow for continued sustainable management of the timberlands and provide ATCO greater opportunities for expansion.”

Chris Zinkham, Managing Director of TFG said “We have great respect for ATCO’s legacy.  The existing synergy between it Vicksburg sawmills, worldwide marketing organization and timberlands are important elements to the overall business value.  Our cultures and values, especially with respect to sustainable management of forest and wildlife resources, are compatible, and we don’t anticipate major changes in the ATCO business.”

ATCO is a real estate investment trust and owner of over 323,000 acres of hardwood timberland in Tennessee, Mississippi, Louisiana and Arkansas.  Founded in 1889 and headquartered in Memphis, Tennessee, it also operates North America’s largest hardwood sawmill complex in Vickburg, Mississippi.  As the recognized leader in hardwood timber management, in 2000 ATCO received certification that its forests were responsibly managed in accordance with the strict internationally-agreed Forest Stewardship Council (FSC) Principles of Responsible Forest Management.

TFG manages over 1.8 million acres in sixteen states in the eastern United States.  TFG, based in Chapel Hill, North Carolina was formed in 1995 to pursue investments primarily in naturally regenerating hardwood and pine forests for institutional, family and individual investors.  In 2005 TFG earned FSC certification and is the only TIMO in the world to have its entire portfolio certified according to the strict FSC standards.

Goldman, Sachs & Co. servered as financial advisor and Skadden, Arps, Meagher & Flom LLP served as legal advisors to TFG in connections with this transaction.