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May 25, 2017

Rayonier buying Tembec for US$320 million

A section of forest is harvested by loggers near Youbou, B.C.

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MONTREAL -- A Florida-based company is moving to buy Tembec Inc. in a friendly takeover deal that values the Quebec-based forestry company at US$807 million, including assumed debt.

Rayonier Advanced Materials Inc. of Jacksonville, Fla., says the proposed deal announced this morning would create a more diversified company with a Canadian headquarters in Montreal.

Tembec shareholders (TMB.TO) are being offered $4.05 in cash or 0.2302 of a Rayonier share, subject to a cap on the total amount of cash or shares that will be issued.

The purchase price is 37 per cent above Wednesday's closing price for Tembec on the Toronto Stock Exchange.

Former Quebec premier Jean Charest – a partner at law firm McCarthy-Tetrault, which provided counsel to Rayonier – believes that many companies are still waiting out a final decision on North American free trade.

“The number one thing I hear on the street in regards to this context is that a lot of companies are waiting to see what will happen,” Charest said.

“That is not good for the economy, it’s not good for Canada. It means that investment decisions are not being made [and] jobs are not being created because some other companies are just waiting it out to get a realistic reading of the tea leaves before they make major decisions on where they invest.”

Tembec is a diversified forestry company that produces lumber, paper, pulp for paper and specialty cellulose pulp that is used to make certain types of fabrics and other products.

Rayonier Advanced Materials is primarily a supplier of high purity cellulose, used in applications such as cell phones, computer screens, filters, textiles and pharmaceuticals. Its plants are in Florida and Georgia.

The proposed takeover requires approvals from courts, regulators and shareholders and is expected to close in the second half of 2017.

"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, Rayonier's chairman, president and CEO.

"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."

Tembec CEO James Lopez said Rayonier is an ideal partner, given the complementary nature of their products, expertise and resources.

"They are committed to our operations and employees in Canada and France and -- above all -- to the values we share," Lopez said in a joint statement issued by the companies before North American stock markets opened Thursday.

Rayonier shares closed Wednesday at US$13.25 on the New York Stock Exchange. Tembec shares closed at $2.95 in Toronto.

-- With files from BNN