What happened 

Shares of Rayonier Advanced Materials Inc. (NYSE:RYAM) jumped as much as 15.9% in Monday morning trading after the chemical company announced an updated offer to buy Tembec. At 12:13 p.m. EDT shares were still up 8.8% on the day. 

So what

Rayonier, which specializes on cellulose-based products, increased its bid for the Canadian paper company by 17% to 4.75 Canadian dollars per share. Large Tembec stakeholders Oaktree Capital Management and Restructuring Capital Associates have both signed agreements to support the new offer, meaning 37% of voting shares are already on board. 

Pile of lumber recently cut.

Image source: Getty Images.

In May, shares of Rayonier jumped when the original offer was announced; now that these major shareholders are on board, it looks like the purchase will finally go through. 

Now what

Buying Tembec will diversify Rayonier's business into more forest-related products, giving the company a broader set of material offerings for customers, and potentially leveraging the company's sales operations. Now that the two companies appear definitively headed toward a merger, the market is getting excited about the potential of the new materials giant they will form. 

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.