Rayonier Advanced Materials and Tembec announced that they have entered into an amendment to the arrangement agreement under which Rayonier Advanced Materials has agreed to acquire Tembec for an increased consideration valued at CAD 4.75 per Tembec share. The revised terms were unanimously approved by the boards of directors of both companies.
Acording to the announcement, under the Amended Arrangement Agreement, Tembec shareholders will have the right to elect to receive either CAD 4.75 in cash or 0.2542 shares of Rayonier Advanced Materials common stock per Tembec common share, subject to proration so that approximately 67% of the aggregate consideration is paid in cash and approximately 33% is paid in Rayonier Advanced Materials common stock.
The increased consideration represents a 17% increase in value offered for the shares compared to the initial terms and a premium of 61% to the closing price of Tembec’s shares on May 24, 2017, the day immediately before the initial announcement concerning the Arrangement.
Rayonier Advanced Materials has entered into irrevocable support and voting agreements with each of Oaktree Capital Management L.P. and Restructuring Capital Associates L.P., who together represent approximately 37% of Tembec’s outstanding shares, pursuant to which they have agreed to vote in favor of the Arrangement.
Thу transaction is expected to be completed by the end of 2017, subject to obtaining the approvals of the holders of Tembec Shares and the Québec Superior Court and other necessary approvals and clearances, as well as the satisfaction or waiver of the conditions.
Paul Boynton, Chairman, President and CEO of Rayonier Advanced Materials, commented:
“This transaction advances our growth objective to pursue strategic acquisitions where we can leverage our core competencies to provide significant long-term shareholder return. We look forward to working with Tembec’s exceptional team, unions and other stakeholders to realize the abundant opportunities ahead.”
At the beginning of July 2017 Tembec obtained an interim order from the Superior Court of Québec authorizing the holding of a special meeting of the holders of common shares of Tembec. On July 13, 2017 the companies received notification of clearance from Germany’s Federal Cartel Office.
In 1Q2017 Rayonier Advanced Materials reported 7.8% decrease of net sales and 11.1% decrease of pro-forma EBITDA. Tembec for the same period decreased EBITDA margin to 9.3%.
The company is a manufacturer of forest products – lumber, pulp, paper and specialty cellulose. Its core operations are located in Canada and France. Annual sales total approximately CAD 1.5 billion. Tembec has around 3,000 employees.
About Rayonier Advanced Materials:
The company is the leading global supplier of high-purity, cellulose specialties natural polymers for the chemical industry. It engineers natural polymeric chemical chains to create dozens of customized high-purity performance fibers at its plants in Florida and Georgia. The company’s facilities can produce up to 675,000 metric tons of cellulose specialties products annually for use in a wide range of industrial and consumer products such as filters, cosmetics and pharmaceuticals. Upon completion of the previously announced strategic realignment of assets in Jesup, the company’s facilities will have the capacity to produce approximately 485,000 tons of cellulose specialties and approximately 245,000 tons of commodity products.