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.