Rayonier Advanced Materials Inc. on Thursday morning announced a merger with a Canadian company that will significantly increase its size and geographic reach.
Rayonier AM agreed to buy Montreal-based Tembec Inc. for a combination of cash and stock. The deal is worth $807 million, including the assumption of $487 million in debt.
Both companies produce cellulose specialty products. The merger will increase Rayonier AM’s annual revenue from about $870 million to more than $2 billion.
“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,” Rayonier AM Chief Executive Paul Boynton said in a news release.
“With pro forma revenue of $2 billion, 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,” he said.
The merged company will keep its corporate headquarters in Jacksonville but also retain a Canadian headquarters in Montreal.
Tembec has about 3,000 employees with operations in Canada and France. Rayonier AM has about 1,200 employees, with operations in Northeast Florida and Southeast Georgia.
Rayonier AM split with timber and real estate company Rayonier Inc. three years ago and has produced a string of disappointing quarterly earnings reports since then, which has depressed its stock price.
The company said the merger will be immediately accretive to earnings
The companies hope to complete the merger in the second half of this year.