In May 2019, West Coast Paper Mills (WCPM) entered into an agreement with US-based International Paper to acquire about 51-60% stake in its (IP) Indian unit, International Paper APPM for Rs 558-656 crore. West Coast PM’s FY 2018 turnover was Rs. 1728 crore. Our readers will recall that Andhra Pradesh Paper Mills (APPM) was acquired by International Paper, the world’s largest paper company in 2011. IP took up a stake of about 75% in APPM for around $388 million, about Rs. 1,900 crore based on the dollar Rupee exchange rate at the time. It was the first global paper and packaging company taking up a significant position in India.
In order to conclude the deal, the shares will be acquired from existing promoters of International Papers APPM, International Paper Investments (Luxembourg), SARL Luxembourg and IP International Holdings, US. The rest of APPM’s outstanding shares amounting to 25% held by public will be acquired by WCPM in an open offer, as per the requirements of Indian securities regulations. Depending on the open offer, WCPM will acquire between 51-60% of APPM’s shares at Rs. 275 per share from IP. The deal will be closed after the completion of the open offer and receipt of anti-trust clearances. According to WCPM, the deal is expected to be completed by the end of this year after obtaining government approval and the launch of WCPM’s open offer to the public.
After the acquisition, WCPM will be responsible for the operations of APPM and IP will be a passive investor till it sells its remaining shares. Bank of America-Merrill Lynch was the adviser to IP on the deal. WCPM has appointed ICICI Securities to manage the open offer.
Commenting on the divestiture, Mark Sutton, chairman and chief executive officer of IP was quoted by the Economic Times, saying, “As part of our strategic assessment of the IP portfolio, we have decided to exit our position in IP APPM. 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.”