May 25, 2017 / 12:06 PM / 7 months ago

UPDATE 2-Rayonier Advanced Materials to buy Tembec in forest products push

* Deal valued at $807 mln including debt

* Offer at premium of 37 pct to Tembec’s Wednesday close

* Tembec’s shares surge nearly 36 pct (Adds details, shares)

May 25 (Reuters) - Rayonier Advanced Materials said it would buy Canada’s Tembec Inc for $807 million including debt to expand its business into packaging and forest products, sending Tembec’s shares to a five-year high on Thursday.

Tembec shareholders will get C$4.05 ($3.02) in cash, or 0.2302 of a Rayonier share, for every Tembec share they own, the companies said.

The offer price is at a premium of 37.3 percent to Tembec’s Wednesday close. The deal includes $487 million in debt.

The deal comes at a time when Canada is resisting a move by the United States to impose tariffs on Canadian lumber imports.

Rayonier, which supplies cellulose commonly found in cellphones, computer screens, filters and pharmaceuticals, said it would finance the cash portion of the deal with cash in hand and debt.

Tembec’s shares surged nearly 36 percent to $4.02, while Rayonier’s were up 2.8 percent.

BofA Merrill Lynch is Rayonier’s financial adviser and Wachtell, Lipton, Rosen & Katz, McCarthy Tétrault LLP and Hogan Lovells is its legal adviser.

Scotia Capital and National Bank Financial is Tembec’s financial adviser and Stikeman Elliott LLP, Cahill Gordon & Reindel LLP, Dechert LLP and Slaughter and May is its legal adviser.

$1 = 1.3428 Canadian dollars Reporting by Yashaswini Swamynathan and Ahmed Farhatha in Bengaluru; Editing by Martina D'Couto

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