Jacksonville-based Rayonier Advanced Materials Inc. and Montreal-based Tembec Inc. this week announced a definitive agreement under which Rayonier will acquire Tembec, providing the combined company with leading and complementary positions in key high purity cellulose end-uses and diversified earning streams from packaging, paper, high-yield pulp and forest products businesses.
With its expanded geographic reach, enhanced R&D capabilities and broader, more flexible asset base, the combined company will offer customers exceptional product breadth across the spectrum of high purity cellulose products and create additional growth opportunities in packaging and forest products.
The transaction received the unanimous approval of the boards of directors of both companies.
The purchase price was listed as approximately $807 million in US dollars. Rayonier intends to finance the cash portion of the transaction with a combination of cash on hand and committed bank financing.
The combined company expects to retain Canadian headquarters in Montreal, Québec and a presence in Ontario, and continue all Tembec operations. The company will also proceed with Tembec’s recently announced four-year investment plan for its Québec facilities and make additional investments in other key facilities and operations to further enhance the company’s growth potential and competitiveness, according to a joint statement.
The acquisition is a win or both parties, executives say.
For Tembec, it will establish the company as part of a larger, more competitive organization with the resources to invest in its growth and a commitment to continue all operations and maintain a strong presence in Québec, Ontario and France.
For Rayonier, the move will position it as a stronger, more balanced company with a further diversified customer and operational base. It will also benefit from enhanced economies of scale and establish a global manufacturing footprint to grow its competitiveness in international markets and expand its pipeline of innovative products through R&D facilities in the U.S. and France.
“This transaction advances our growth objective to pursue strategic acquisitions where we can leverage our core competencies to provide significant long-term shareholder return,” said Paul Boynton, Chairman, President and Chief Executive Officer of Rayonier Advanced Materials (NYSE: RYAM).
“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 revenues of $2 billion, (US), 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.
“Following the transaction, our solid capital structure will enable us to make high-return investments to support the growth of Tembec’s attractive businesses and product development capabilities to better serve customers,” Boynton said.
“We look forward to working with Tembec’s exceptional team, unions and other stakeholders to realize the abundant opportunities ahead.”
James Lopez, President and Chief Executive Officer of Tembec, called Rayonier “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.”
Rayonier Advanced Materials is a leading global supplier of high purity cellulose, a natural polymer commonly used in applications such as cell phones, computer screens, filters, textiles and pharmaceuticals. The company engineers dozens of customized products at its plants in Florida and Georgia. With approximately 1,200 employees and revenues of $870 million, Rayonier is routinely ranked among the nation’s top 50 exporters, shipping products to five continents, 35 countries and 80 ports around the world. More information is available at www.rayonieram.com
Tembec is a manufacturer of forest products – lumber, paper, pulp and high purity cellulose – and a global leader in sustainable forest management practices. Principal operations are in Canada and France. Tembec has approximately 3,000 employees and annual sales of approximately $1.5 billion (Canadian). Tembec is listed on the Toronto Stock Exchange as TMB. More information is available at www.tembec.com