Rayonier makes US$807M friendly takeover offer for Tembec

Rayonier Advanced Materials Inc. on Thursday morning announced a merger with a Canadian company that will significantly increase its size and geographic reach.

The deal, which would see Rayonier assume $487 million U.S. of Tembec's debt, would keep Tembec's headquarters in Montreal and maintain its existing facilities.

The merged entity would keep a Canadian headquarters in Montreal, with the main corporate office in Jacksonville, Fla., both firms said in a joint statement Thursday.

Tembec is a diversified forestry company that produces lumber, paper, pulp for paper and specialty cellulose pulp that is used to make certain types of fabrics and other products.

Last month, Tembec was hit with a 19.88 per cent preliminary duty on shipments of softwood lumber that it sends to the U.S.

"Rayonier Advanced Materials is the ideal partner for us, given the complementary nature of our products, expertise, and resources", Tembec CEO James Lopez said.

Tembec is less exposed to the US softwood battle than it was a decade ago the last time the dispute erupted after selling its two mills in B.C. and three in Quebec. Tembec shares closed at $2.95 in Toronto.

"This transaction advances our growth objective to pursue strategic acquisitions where we can leverage our core competencies to provide significant long-term shareholder return", said Paul Boynton, Rayonier's chairman, president and CEO.

That didn't totally satisfy Unifor, which represents 900 workers at Tembec. During the same period in the prior year, the company posted $0.36 earnings per share.

The proposed takeover has the unanimous approval of each company's board of directors.

Lopez tried to calm such concerns, saying that most of Tembec's large shareholders are already US investment funds while investment plans by Rayonier Advanced Materials will support Tembec's facilities and employment.

The buyout deal is structured so as to give Tembec shareholders the option to take either C$4.05 in cash or 0.2302 shares of RYAM for each share of TMB held, subject to a cut-off point of 63% of total Tembec shares being exchanged for cash or 37% of the total being exchanged for Rayonier stock.

Rayonier Advanced Materials Inc.and Tembec Inc. announced a definitive agreement under which Rayonier will acquire Tembec, providing the combined company with its operations in packaging, paper, high-yield pulp and other forest products.

Tembec has about 3,000 employees with operations in Canada and France.

Rayonier Advanced Materials operates plants in Fernandina Beach and Jesup, Ga., that process softwood cellulose fiber - meaning trees - into a high-tech fiber that has a variety of uses, from a food thickener to coatings on television screens.

Latest News