Rayonier Completes $870 Million Acquisition of Tembec

SEATTLE (Scrap Monster): The Jacksonville-based Rayonier Advanced Materials has completed the $870 million takeover of Tembec’s facilities. The specialty cellulose company will now own seven Tembec mill facilities located across Quebec and Ontario. The combined entity will operate under the name Rayonier Advanced Materials, but will maintain Tembec’s current headquarters at Montreal, said the company press release.

Paul Boynton, chairman, president and CEO of Rayonier Advanced Materials welcomed Tembec employees to the company and noted that the two companies are a perfect strategic and cultural fit. The diversified and experienced operations of both the companies will drive the growth of the new entity, he hoped. Boynton highlighted that the acquisition will further help the company to advance its strategic growth objectives. The purchase will help the companies to grow together as one company, Boynton added.

The big-ticket acquisition has effectively doubled the capacity of Rayonier. It must be noted that Tembec generates annual revenue of nearly $1.1 billion, slightly higher when compared with Rayonier’s estimated annual revenue of $852 million. In addition, the acquisition has resulted in diversification of Rayonier’s product offerings, through addition of Tembec’s wider range of integrated forest products including packaging.

As per estimates, the combined entity is likely to emerge as a global leader in high purity cellulose. It is expected to generate annual EBITDA earnings of nearly $400 million at annual sales of around $2 billion.

The acquisition deal was announced during end-May this year. Rayonier Advanced Materials and Tembec had initially agreed at an acquisition price of $4.05 per share. But the bid price was increased to $4.75 per share, following opposition from major shareholders including Oaktree Capital Management L.P. and Restructuring Capital Associates L.P., which together owned approximately 37% of Tembec’s outstanding shares.

Towards the end of July, the deal had received clearance from Germany’s Federal Cartel Office. The Quebec Superior Court had issued its approval following a final hearing during the month of August. Following this, the deal had received necessary clearance from Chinese and Canadian regulatory authorities.

According to reports, BofA Merrill Lynch acted as financial advisor to Rayonier, whereas Scotia Capital and National Bank Financial acted as financial advisors to Tembec and its board of directors.