Investors that bought in to Tembec, Inc. (TSX:TMB) any time after July 2011 got a return on their investment Thursday morning. In a move to expand and diversify sales channels through complementary operations and geographies, Jacksonville, Florida-based Rayonier Advanced Materials (NYSE:RYAM) said it will pay US$807 million, inclusive of roughly US$490 million in debt assumption, for the Montreal-based manufacturer of forest products.
The buyout deal is structured so as to give Tembec shareholders the option to take either C$4.05 in cash or 0.2302 shares of RYAM for each share of TMB held, subject to a cut-off point of 63% of total Tembec shares being exchanged for cash or 37% of the total being exchanged for Rayonier stock. The buyout represents a 37% premium to the value of Tembec at Wednesday closing bell.
With operations mainly in Canada and France, Tembec makes things like lumber, paper, pulp and high purity cellulose, a natural polymer used in a variety of applications, including cell phones, computer screens and pharameuticals. Rayonier is also a supplier of high purity cellulose.
The merged company will have more than $2 billion in annual sales and roughly $400 million in EBITDA once synergies, estimated at $50 million annually, are fully realized over the next three years.
Late in 2015 and throughout 2016, shares of TMB fell on several instances to lows in the C$0.80's before going on a surge off the October low to a two-year high of C$3.12 in February. As the lunch break approaches, shares of TMB are trading at C$4.10.
