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The Tembec softwood lumber plant is seen in Senneterre, Quebec in this file photo.Jacques Boissinot/The Canadian Press

Shareholders in Quebec forestry firm Tembec Inc. overwhelmingly endorsed a friendly takeover offer by Rayonier Advanced Materials Inc., a chemical-products company based in Florida.

About 95 per cent of shareholders who voted were in favour of the deal, valued at $1.1-billion – well more than the two-thirds support required.

The agreement, which is subject to regulatory approvals, is expected to close by the end of year.

Although Rayonier is not constrained by any written guarantees, it has committed to maintain a Canadian head office and further invest in the company, which is good news for employees, outgoing Tembec chief executive James Lopez said.

"They are going to accelerate and spend that money faster and probably spend more, so it's going to be a stronger company," he said after the vote.

The transaction, announced in May, was at risk of being rejected until Rayonier raised its offer in response to threats from Tembec's two largest shareholders that they would vote against it.

Oaktree Capital Management LP and Restructuring Capital Associates LP had raised concerns the offer was too low, but agreed to support the deal after the bid was raised.

Mr. Lopez said he was confident a deal would get done despite a week of uncertainty.

"I knew that the probability was high that they were going to find a place in the middle," he added.

Rayonier agreed to pay $4.75 or 0.2542 of a Rayonier share for each Tembec share, subject to a cap that limits the amount of cash to be paid to two-thirds of the deal. The value of the transaction includes debt.

An earlier bid was for $4.05 in cash or 0.2302 of a Rayonier share, subject to a limit of 63 per cent on the cash portion of the offer.

The transaction comes as Tembec, like other Canadian forestry companies, finds itself in the crosshairs of the United States over softwood lumber. It was slapped with retroactive preliminary countervailing and anti-dumping duties totalling around 27 per cent on softwood shipments south of the border.

Tembec is less exposed to the U.S. softwood battle than it was a decade ago the last time the dispute erupted after selling its two mills in British Columbia and three in Quebec.

Forest products would account for about 16 per cent of the combined company's $2-billion (U.S.) in annual sales and 3.2 per cent of its operating profit.

The U.S. has hit Canada with an additional 6.87 per cent in softwood lumber tariffs, leaving the industry facing average duties of about 27 per cent. Prime Minister Justin Trudeau says he is focused on getting a deal for Canadians.

The Canadian Press

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