Rayonier Advanced Materials has agreed to acquire Montreal, Canada-based Tembec for about $807m.
The deal offers the combined company with complementary positions in important high purity cellulose end-uses and diversified earning streams from packaging, paper, high-yield pulp and forest products businesses.
The combined firm will have extended geographic reach, enhanced R&D capabilities and more flexible asset base.
It will provide customers better product breadth across the spectrum of high purity cellulose products and create further growth opportunities in packaging and forest products.
The purchase price includes $487m of debt net of cash. Shareholders of Tembec will receive either C$4.05 ($3.01) in cash or 0.2302 of a share of Rayonier Advanced Materials common stock, for each Tembec common share.
Tembec could retain its Canadian headquarters in Montreal, Quebec and presence in Ontario and will continue all its operations.
It will also go ahead with the recently announced four-year investment plan for its Quebec facilities and make additional investments in other key facilities and operations to further enhance its growth potential and competitiveness.
Rayonier Advanced Materials expects to become a more balanced company with a further diversified customer and operational base. Economies to scale and cost synergies of about $50m are expected to realize.
Rayonier Advanced Materials chairman, president and CEO Paul Boynton said: "This transaction advances our growth objective to pursue strategic acquisitions where we can leverage our core competencies to provide significant long-term shareholder return. By joining forces, we are diversifying our product offering in high purity cellulose and expanding into the adjacent packaging and forest products markets with significant scale.
“With pro forma revenue of $2bn, the combined company will be poised to compete effectively in any market, benefit from greater product and geographic diversity, and provide an attractive value proposition for our shareholders."
Boynton said after the transaction, Rayonier's solid capital structure will allow it to make high-return investments to support the growth of Tembec's attractive businesses and product development capabilities to better serve customers.
Tembec president and CEO James Lopez said, "Rayonier Advanced Materials is the ideal partner for us, given the complementary nature of our products, expertise, and resources. They are committed to our operations and employees in Canada and France and—above all—to the values we share.
“This combination will enable us to sustainably grow our business for the benefit of our customers, employees and communities. We are pleased that our shareholders will be able to participate in the company's future success through an ongoing equity ownership."
Image: Left: Rayonier Advanced Materials’ chairman, president and CEO, Paul G. Boynton and right: Tembec’s president and CEO, James Lopez. Photo: Courtesy of PR Newswire Association LLC.