An investigation on behalf of investors of Cellu Tissue Holdings, Inc. (NYSE:CLU) over potential breaches of fiduciary duty by the CLU board of directors in connection with the proposed takeover of Cellu Tissue Holdings, Inc. by Clearwater Paper Corporation was announced.

The investigation by a law firm concerns whether Cellu Tissue Holdings, Inc. and its Board breached their fiduciary duties owed to CLU investors in connection with the proposed takeover.

On Thursday, September 16, 2010, Cellu Tissue Holdings, Inc. (NYSE: CLU) announced that it entered into a merger agreement, which has been unanimously approved by its board of directors, with Clearwater Paper Corporation pursuant to which Clearwater Paper Corporation would acquire all of the outstanding common stock of Cellu Tissue Holdings in an all-cash transaction which values Cellu Tissue Holdings at approximately $502 million, including approximately $255 million of debt. Under the terms of the agreement, Cellu Tissue Holdings stockholders will receive $12.00 per share in cash for each share of common stock they own.

Shares of Cellu Tissue Holdings, Inc. (Public, NYSE:CLU) traded at roughly $8 per share before the announcement and increased in response to the takeover news to $11.87 per share or by almost 50%. The offer represents a premium, based on the closing price on September 15, 2010, of approximately 52.6% over the 30 day average closing trading price and 48.2% over the 90 day average closing trading price.

But the investigation by a law firm concerns whether the proposed deal, which is also conditioned upon Cellu Tissue Holdings stockholders approval of the proposed agreement by a majority of the outstanding shareholder of company common stock, is unfair to the minority shareholders of Cellu Tissue Holdings since the shareholder vote of the remaining minority shareholders would be practically needless since the Cellu Tissue Holdings largest shareholder and Cellu Tissue Holdings President and Chief Executive Officer representing, in the aggregate, approximately 56% of its outstanding shares, have already agreed to vote in favor of the transaction.

In addition investigation concerns also whether the Cellu Tissue Holdings Board of Directors breached their fiduciary duties to Cellu Tissue Holdings, Inc. (Public, NYSE:CLU) stockholders by failing to adequately shop Cellu Tissue Holdings, Inc. before entering into the transaction.