International Paper Co., the world’s biggest producer of pulp and paper, is selling a majority stake in its Indian unit– International Paper APPM Ltd, to West Coast Paper Mills for at least Rs 557 crore (USD 80 million), bidding adieu to the country eight years after becoming the only top-league paper company ever to enter India.
May 31, 2019
International Paper has entered into an agreement with West Coast Paper Mills Limited to sell its controlling interest in International Paper APPM Ltd., an India-based paper business. International Paper currently owns approximately 30 million shares, or 75 percent of the outstanding shares, of International Paper APPM Ltd.
West Coast Paper Mills Limited, which is part of SK Bangur Group, enjoys a pedigree standing over the past 61 years as premium brand in paper industry, widely acknowledged both in India and abroad. It is an acknowledged market leader in the manufacturing of commercial to premium grades of paper and boards, spread out across six different product segments that include writing & printing, business stationery, specialty, industrial and packaging.
In 2011, the NYSE-listed International Paper had acquired International Paper APPM Ltd. from its promoter LN Bangur Group—which operates independently of SK Bangur group—for approximately INR 1900 crore (USD 388 million then) in the first big-ticket inbound deal by a large paper company. International Paper had acquired what was then the fifth-largest paper company in the country under Andhra Pradesh Paper Mills in 2011.
The transaction is expected to be completed by the end of the year subject to satisfaction of customary closing conditions, including obtaining required governmental approvals and West Coast Paper Mills Limited’s (WCPM) launch of a tender offer. Pursuant to Indian securities law requirements, WCPM will launch a tender offer to acquire up to all of the APPM shares owned by public shareholders, which represents 25 percent of APPM’s outstanding shares.
The closing of IP’s transaction with WCPM will occur following the completion of the tender offer and receipt of antitrust clearance. Depending on the results of that tender offer, WCPM will acquire from IP between 51 percent and 60 percent of the outstanding APPM shares at a price per share of INR 275. Once this transaction closes, WCPM will be responsible for the operations of APPM, and International Paper will be a passive investor until such time that IP has sold its remaining shares in APPM.
“As part of our strategic assessment of the IP portfolio, we have decided to exit our position in IP APPM,” said Mark Sutton, Chairman and Chief Executive Officer. “This decision is a reflection of our continued focus on growing our global packaging and cellulose fibers businesses. Our paper business continues to perform well in India and we wish the team there the very best in the future.”