Corporate News Blog - Oaktree Capital Set to Vote against Sale of Tembec to Rayonier Advanced Materials
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LONDON, UK / ACCESSWIRE / July 18, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Oaktree Capital Group, LLC (NYSE: OAK), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=OAK. The Company, which is the largest shareholder in Canadian lumber, and paper producer Tembec, Inc., stated on July 14, 2017 in a letter sent to both Companies' Boards, that it will vote against a proposed takeover by Rayonier Advanced Materials, Inc. (NYSE: RYAM) ("Rayonier"), if the purchase price is not elevated. Oaktree Capital owns a 19.9% stake in Tembec, where it sent a letter on July 14, 2017, highlighting its arguments against the deal. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Oaktree Capital stated that it understands the strategic rationale behind the deal, but is not in favor of the terms of the transaction. According to the Company, Rayonier's current offer significantly undervalues Tembec. Rayonier Advanced initially agreed to buy Tembec for about $319 million in May 2017, in an attempt to extend its geographical reach and expand product offerings. The purchase price of about $807 million includes the assumption of $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. Rayonier stated that the transaction would produce about $50 million in cost savings over three years. Under the terms of the deal, Tembec's shareholders are entitled to receive 0.2302 of a share of Advanced Materials, or C$4.05 in cash per share of Tembec, representing a 37% premium to its closing price prior to the deal's announcement.
Oaktree believed that the offer, as it seems, delivers value to Rayonier's shareholders, rather than Tembec's with the vast majority of the value created through the transaction. Rayonier is a well-known name in the production of specialty cellulose for use in different products, namely, filters and liquid-crystal display screens. The deal is set to significantly reduce Rayonier's dependence on its top three customers, which accounts for 56 percent of its sales, and allow the Company to reduce taxes by shifting income to Canada. Rayonier views this acquisition as a strategic step because it faces a challenging future unless it is able to add Tembec to reposition its business away from declining acetate market.
Company Growth Prospects
Post the agreement, Tembec is set to be established as part of a larger, more competitive organization with resources to invest in its growth and maintain a strong presence in Quebec, Ontario, and France.
The agreement is set to be accretive to Rayonier's earnings and shareholder value, immediately. The agreement will enable the Company to establish a global manufacturing footprint to enhance its competitiveness in international markets and expand its pipeline of innovative products through facilities in the US and France.
The proposed combined Company, according to the May 25, 2017, release, is expected to generate about $2 billion in revenue annually and $400 million in EBITDA, including full synergies, where Tembec's operations complement Rayonier's world-class facilities in Georgia and Florida.
Last Close Stock Review
Oaktree Capital's share price finished yesterday's trading session at $47.75, marginally up 0.10%. A total volume of 102.02 thousand shares has exchanged hands. The Company's stock price rallied 3.58% in the last three months, 16.18% in the past six months, and 3.67% in the previous twelve months. Additionally, the stock surged 27.33% since the start of the year. Shares of the Company have a PE ratio of 13.55 and have a dividend yield of 5.95%. The stock currently has a market cap of $7.44 billion.
At the closing bell, on Monday, July 17, 2017, Rayonier Advanced Materials' stock slightly climbed 0.92%, ending the trading session at $15.40. A total volume of 657.78 thousand shares has exchanged hands, which was higher than the 3-month average volume of 613.16 thousand shares. The Company's stock price surged 20.41% in the last three months and 3.70% in the previous twelve months. The stock is trading at a PE ratio of 13.38 and has a dividend yield of 1.82%. The stock currently has a market cap of $658.61 million.
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