Tembec-Rayonier acquisition deal receives nod from Federal Cartel Office

VANCOUVER (Scrap Monster): Tembec Inc. and Rayonier Advanced Materials Inc. has announced that it has received clearance from Germany’s Federal Cartel Office in connection with the transaction by which Rayonier AM is scheduled to acquire all of the outstanding shares of Tembec. The approval is considered to further boost the plans to complete the entire acquisition transaction before the end of 2017.

The Jacksonville-based Rayonier AM had earlier come up with an $807 million take-over offer, which was accepted by Tembec during early last month. The deal, announced in May, was inclusive of assumption of $487 million of Tembec’s debt. According to the deal, Rayonier AM had promised to maintain and upgrade all of Tembec’s existing facilities to make it competitive. Also, Rayonier AM had offered Tembec shareholders 0.2302 shares of the new entity for every single share that they own.

The Boards of Directors of Tembec and Fairfax Financial which holds almost 20% shares of Tembec have already approved the transaction. Fairfax had announced mid-June this year that it has sold its remaining position in Tembec at an average price of approximately $4.30 per share Meantime, another key shareholder, Los Angeles-based Oaktree Capital Management LP, said that it would vote against the acquisition of the Canadian forest products company by Rayonier AM. Opposing the deal, Oaktree called upon Rayonier AM to increase the offer. According to them, the current offer of $0.2302 of a Rayonier share for each Tembec share does not sufficiently share the benefits of the deal with Tembec’s shareholders.

The letter sent by Oaktree to the Boards of Directors of Tembec and Rayonier warned that it would vote against the transaction in the special shareholders’ meet which is scheduled to be held on July 27^th. Earlier this month, Tembec had received an interim order from the Supreme Court of Quebec authorizing the holding of a special meeting of common share holders of the company. Accordingly, the meeting is scheduled to be held at 10:00 AM ETD at the offices of Stikeman Elliott LLP located at 1155 René-Lévesque Blvd. West in Montréal, Québec.

The transaction is considered to be beneficial for both the companies. It is expected to help Rayonier AM to diversify its product line and expand across geographies. Also, it would help Tembec to bolster its balance sheet and allow it to go ahead with the planned multi-dollar investment plans at Quebec facilities. The combined entity is expected to deliver better results, with annual revenues projected at $2 billion. The transaction is currently awaiting approval by regulatory bodies.