Better Profitability Through Acquisition: Rayonier Advanced Materials

Situation: A High-Growth Business Looks to Get Bigger

Corporate Finance & Restructuring

January 7, 2019

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Based in Jacksonville, Florida, Rayonier Advanced Materials is a public company (RYAM) that manufactures a wide range of cellulose-based products for B2B applications. RYAM’s acetate and ether products are used in LCD screens, paints, industrial coatings, food, cosmetics and more.

However, in recent years, RYAM’s revenue growth rate had slowed and started to decline in the high-margin cigarette filter market. On the other hand, its revenues were growing at an annual rate of three to five percent in its smaller ethers division.

Ethers had narrow margins, but great growth potential, so, RYAM looked for opportunities to grow that portion of its business through acquisitions, turning its attention to Tembec, a Canadian company with a portfolio of forest products (pulp, paper, and chemicals) and specialty cellulose (ethers, acetate, nitrocellulose, and MCC).

With the advent of digital technology and consumers switching from print to digital; the paper and print industry has been in a steep decline pattern with several paper and pulp mills shuttering.

When RYAM approached Tembec in 2016 to buy its ether business, Tembec did not want to sell its ethers operation without having a buyer for its other, less profitable divisions.

In early 2017, RYAM tried again, this time making an offer for all Tembec operations. RYAM engaged FTI Consulting to perform due diligence on the planned Tembec acquisition.


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