West Coast Paper Mills to buy majority stakes in International Paper

West Coast Paper Mills (WCPM) has entered into a share-purchasing agreement with World’s largest pulp and paper firm, International Paper (IP). Under the agreement, WCPM will be acquiring 51 to 60 per cent stakes in NYSE-listed International Paper’s (IP) Indian unit, International Paper APPM Ltd. 

WCPM will launch an open offer to acquire APPM’s shares held by the public which amount to 25 per cent of APPM’s outstanding shares. The percentage of stakes to be acquired will depend on the open offer that will be opened at Rs 450 apiece. The resultant percentage of shares – 51 to 60 per cent – will be acquired at a price per share of Rs 275.
 
“It is a negotiated price and various factors were taken under consideration at the time of negotiation,” said Rajendra Jain, Executive Director & CFO, West Coast Paper Mills Ltd. He added, “The factors taken into consideration included the plant, which is quite old and a lot capital investment will be needed in it. Even, the machine is very small in size and we will have to invest in the plant. In fact, the paper industry is capital intensive and a lot of money will be required for the purpose.”

Under the deal, which is pursuant to regulatory approvals and an open offer, WCPM would be paying around Rs 558-658 crores to International Paper.

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In a regulatory filing, WCPM has said that the stake will be acquired from existing promoters, International Paper Investments (Luxembourg), SARL Luxembourg and IP International Holdings Inc, US. The deal is expected to be completed by end of the year.  

International Paper APPM Ltd is one of the largest integrated paper and pulp manufacturers in India. Established in 1964, the company produces writing, printing and copier papers for foreign and domestic markets. The company's production facilities at Rajahmundry and Kadiyam have a total production capacity of 240,000 TPA. Headquartered in Hyderabad, the company employs around 2,500 employees.