MONTREAL — Tembec's largest shareholder says it will vote against the sale of the forestry company to Rayonier Advanced Materials unless the offer price is raised.
In an open letter to shareholders sent Friday, Oaktree Capital Management says Tembec's shareholders are not receiving a fair value.
Tembec shareholders (TSX:TMB) are being offered C$4.05 in cash or 0.2302 of a share in Rayonier Advanced Materials, subject to a cap on the total amount of cash and shares that will be issued.
The friendly offer is 37 per cent above where Tembec's shares traded before the offer, however it lags the $4.21 the shares traded for Friday on the Toronto Stock Exchange.
Oaktree holds a 19.9 per cent stake in Tembec.
Patrick McCaney, Oaktree's managing director and portfolio manager, says if the offer is not raised, Tembec (TSX:TMB) shareholders would be better off to remain independent.
He adds that Florida-based Rayonier is the big winner because it faces a challenging future unless it is able to add Tembec to reposition its business away from the declining acetate market.
Tembec declined to comment while Rayonier couldn't be reached for comment.
Meanwhile, proxy advisory firm Institutional Shareholder Services recommended Friday that Tembec shareholder approve the deal at a vote on July 27. It says the deal has "sound strategic rationale" and gives shareholders the flexibility of receiving cash or Rayonier shares.