Tembec acquisition deal clears yet another regulatory hurdle

MONTREAL (Scrap Monster): Tembec Inc. and Rayonier Advanced Materials Inc. have announced that their acquisition agreement has received clearance from the Chinese regulatory authority. This brings the acquisition one step closer to reality. The transaction involves acquisition of all outstanding shares of Tembec Inc. by Rayonier Advanced Materials.

According to Tembec press release, it has received notification from the Anti-Monopoly Bureau of the Ministry of Commerce of the People’s Republic of China, commonly referred to as MOFCOM, that it has cleared the proposed acquisition by Rayonier. The clearance is without any condition, Tembec noted. The deal now awaits necessary clearance from Canadian regulatory authorities. Subject to obtaining this and other related clearances, the transaction is expected to be completed in Q4 this year.

Earlier during the month, the Quebec Superior Court, after the final hearing which took place on August 7^th, had approved the deal. Prior to this, Tembec and Rayonier had obtained necessary clearance from Germany’s Federal Cartel Office. Also, the US Department of Justice and the Federal Trade Commission had notified that the Hart-Scott-Rodino premerger notification waiting period has been terminated as on July 31^st, 2017.

The initial offer by Rayonier to pay Tembec share holders $4.05 in cash or 0.2302 shares of the new entity for every single Tembec share had to be revised following opposition by two of the major shareholders- Oaktree Capital Management LP and Restructuring Capital Associates LP, who jointly hold more than one-third of the outstanding shares. They pointed out that the offer was too low and threatened to vote against the deal.

Later, Rayonier came up with a revised offer, agreeing to pay $4.75 in cash or 0.2542 of Rayonier shares for every Tembec share, subject to the condition that amount of cash to be paid will be limited to two-thirds of the deal. The revised deal received overwhelming support from over 95% of Tembec shareholders, including both Oaktree Capital Management LP and Restructuring Capital Associates LP.

The proposed acquisition is expected to help Rayonier in expanding its presence across geographies and diversifying its range of products. The acquisition is expected to boost the planned investment by Tembec towards modernization of its Quebec facilities. As per estimates, the combined entity is expected to generate sales of around 2 billion per year.

Rayonier Advanced Materials is a global supplier of high purity cellulose with plants in Florida and Georgia. Tembec is a leading manufacturer of forest products with operations in North America and France.