Rayonier to Spin Off Performance Fibers to Be Two Companies

Rayonier Inc., a maker of specialty wood pulp used in cigarette filters, will spin off its performance-fibers business from its forest resources and real estate segments, creating two independent, public companies.

The separation will be complete by midyear, the Jacksonville, Florida-based company said in a statement today. The forest resources and real estate company will keep the Rayonier name, while the performance-fibers company has yet to be named, the company said.

The move recognizes the significant differences between the performance-fibers unit, which processes wood pulp into materials used in products including diapers and paint, and the business of managing forests and turning some of that land into commercial and residential developments, according to Paul Boynton, Rayonier’s chairman and chief executive officer.

“It’s an investor-friendly move,” Boynton, said today in a telephone interview. “It allows the two businesses to pursue unique growth opportunities. Each of them have a unique set of strategies that they’re trying to optimize. And each business has a unique investor base.”

Rayonier rose 9.7 percent to $45.18 at the close in New York, the biggest gain since April 2009.

Higher Multiples

Investors “are celebrating,” Chip Dillon, a New York-based analyst at Vertical Research Partners LLC, said today in a telephone interview. “There could be a belief that the performance-fibers business will get a higher multiple as a stand-alone company.”

Rayonier has fallen 23 percent since it warned Oct. 24 that prices for its specialty wood pulp may decline amid plentiful global supplies.

After the separation, Boynton will become CEO of the performance-fibers company, and chief financial officer Hans Vanden Noort will retain his position at Rayonier. Each company will be listed on the New York Stock Exchange and both expect to pay dividends, the company said.

Bank of America Corp. and Credit Suisse Group AG are acting as financial advisers. Wachtell, Lipton, Rosen & Katz is serving as legal adviser.

Before it's here, it's on the Bloomberg Terminal.