US firm to takeover AP Paper Mills
March 29: US-based paper and packaging major International Paper has agreed to acquire a 53.5 per cent stake in Hyderabad-based Andhra Pradesh Paper Mills (AP Paper) from its Kolkata-based promoters LN Bangur Group. The deal is valued at $257 million (nearly Rs 1,150 crore). “They (the promoters) have executed an agreement to sell their entire shareholding in the company (AP Paper) to IP Holding Asia Singapore Pte Ltd, a subsidiary of International Paper Company, USA,” AP Paper said in a filing to stock exchanges.
“AP Paper is an excellent platform for International Paper to grow in India,” Mr John Faraci, International Paper chairman and CEO, told reporters in New Delhi. In addition to $257 million, the US paper major has agreed to a $62-million non-compete payment to the sellers. The acquirer would also launch a mandatory public tender offer to acquire up to an additional 21.5 per cent of the target company for $104 million, International Paper said in a statement. The share purchase and public tender are expected to be completed as early as the third quarter of 2011.
Following the news, the company’s stock closed 6.75 per cent higher at Rs 196.8 on the BSE on Tuesday. Earlier, AP Paper was rumoured to be an acquisition target of ITC Group, the number one paper manufacturer in the country. However, both the companies had denied the reports. According to Mr L.N. Bangur, the chairman of the diversified Bangur Group, which has interests in paper and tea, International Paper would help the company to achieve the next phase of growth.
The company has three divisions in Rajahmundry, MR Palem in East Godavari district, Serinarasannapalem in Krishna district and produces 2.5 lakh tonne paper per annum.
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