Shareholders of Tembec Inc. (TSE:TMB) are entitled to receive either C$4.05 in cash or 0.2302 of a Rayonier Advanced Materials common share for each Tembec share held
SmallCapPower | May 25, 2017: Tembec Inc. (TSX: TMB) shares surged 41% to $4.17 on Thursday after the forest products manufacturer announced that it has agreed to be acquired by Rayonier Advanced Materials Inc. (NYSE: RYAM) for a purchase price of approximately US$807 million, including the assumption of US$487 million of debt net of cash, representing a multiple of 4.6 times LTM pro forma EBITDA after expected synergies or 6.3 times before synergies.
Tembec shareholders are entitled to receive either C$4.05 in cash or 0.2302 of a Rayonier Advanced Materials common share for each Tembec share held.
Related: 5 Canadian Lumber Stocks That Could Get Thumped by Trump
For Tembec investors looking for another Canadian forest products stock to substitute in their portfolio, here are two possibilities:
Western Forest Products Inc. (TSX: WEF): Its stock is up 14% year to date to its current price of $2.17 a share. It is the fifth-largest Canadian lumber producing company with sales exceeding $1 billion annually for each of the past three years. Western Forest Products shares are currently yielding about 4%.
West Fraser Timber Co. Ltd. (TSX: WFT): Its share value has increased 24% year to date to its present price of $59.49. West Fraser is North America’s largest lumber producer and has grown through strategic acquisitions as well as year over year log and lumber demand growth from China. The Company bought back more than $200 million worth of its shares in 2016, and its stock is currently yielding about 0.5%. Since June 2006, West Fraser Timber’s shares have returned 12.6% annually on average, more than twice that of the Toronto Stock Exchange.
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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