ITC announces acquisition of Century Pulp and Paper for Rs 3,498 crore

Bengaluru: Indian conglomerate ITC Ltd on Monday announced the acquisition of Century Pulp and Paper Undertaking (CPP) of Aditya Birla Real Estate Limited (ABREL) for Rs 3,498 crore. This acquisition has been made as part of the company’s expansion plan for its paperboards and specialty paper business segment.

“The acquisition aligns with the company’s strategy of driving the next horizon of growth in the paperboards and specialty papers business by expanding capacity at a new location, considering that the existing facilities are already saturated,” said Executive Director B Sumant.

Uttarakhand-based CPP is a well-established player in the paper industry with an installed capacity of 4.8 lakh metric tonnes (MT) per annum. It has a wide presence in North India, which complements ITC’s presence in South India. Its previous five-year revenue average (excluding fiscal year 2021) stood at Rs 2,958 crore, while earnings before interest, tax, depreciation, and amortisation (EBITDA) was Rs 506 crore.

“The divestment of the pulp and paper undertaking is a value unlocking exercise for ABREL. It will further enable the company to pursue growth opportunities in its core business—real estate,” the Birla company said in an exchange filing.

Speaking on the transaction, RK Dalmia, managing director of ABREL, said, "The divestment of the pulp and paper undertaking is a strategic portfolio choice and unlocks value for the shareholders of ABREL. Over the years, CPP has become synonymous with strong performance and high sustainability standards. To take it to the next level in size and value, the company is pleased to have found in ITC, a credible and well-established player."

The paperboards, paper, and packaging segment is expected to continue generating robust free cash flow (which stood at over Rs 4,000 crore between financial year (FY) 2020 to FY2024) going forward.

The transaction is expected to be consummated in approximately 6 months, subject to the fulfilment of necessary closing conditions and receipt of statutory approvals (including transfer of land lease, clearance from the Competition Commission of India, and shareholders). The transfer of the business will be for a lump-sum cash consideration.

JM Financial Limited served as the financial advisor, and AZ & Partners offered legal guidance to ABREL for this deal.

ITC recently also acquired Prasuma, a frozen foods brand.