West Coast Paper To Buy Majority Stake In International Paper’s India Unit

West Coast Paper Mills Ltd. will buy a controlling stake in the India unit of International Paper.

The Kolkata-based paper maker will buy 51-60 percent in International Paper APPM Ltd. from its promoters—International Paper (Luxembourg) and IP Holdings (USA) which together hold 75 percent in the company—at Rs 275 apiece, a discount of 36 percent to its closing market on Wednesday, according to a filing on the BSE. The deal, subject to regulatory approvals, will cost Rs 558-656 crore.

West Coast Paper Mills will launch an open offer to acquire all the shares held by the public, but at a higher price. West Coast Paper will buy the 25 percent stake from public shareholders at Rs 450 apiece, about 5 percent premium to the closing price, International Paper APPM said in a separate filing. ICICI Securities is the manager to the open offer, the filing said.

“The purchase price was arrived upon after considering various factors such as the need to update the product, cost effectiveness and scale of operations,” Chief Financial Officer Rajendra Jain told BloombergQuint. “This is an old plant and we have to make a lot of capital investment there.”

The share purchase agreement was signed on Wednesday and Jain expects completion of all formalities in another four months.

Incorporated in 1964, International Paper manufactures paper, pulp and paper boards. The revenue of its India business grew at an annualised rate of 8 percent over the last two years at Rs 1,442 crore. Its operating margin stood at 26 percent in the financial year ended March 2019.