Aditya Birla Real Estate divests paper unit to ITC for ₹3,500 cr
Aditya Birla Real Estate (formerly Century Textiles and Industries) has sold the pulp and paper undertaking at Lalkuan in Uttarakhand to ITC for ₹3,498 crore.
The board at its meeting held on Monday, approved the execution of the business transfer agreement for divestment of the pulp and paper undertaking at Uttarakhand by way of a slump sale to ITC, said ABREL in a statement on Monday.
The transfer of the business will be for a lump-sum cash consideration of ₹3,498 crore to be paid by ITC to ABREL, it added.
The divestment of the pulp and paper undertaking is a value unlocking exercise for ABREL and will further enable the company to pursue growth opportunities in its core real estate business, said ABREL.
Transformational growth phase
RK Dalmia, Managing Director, ABREL, said the company has embarked on a transformational growth phase and this move will further sharpen its focus on real estate to drive sustained value creation.
“Over the years, Century Pulp and Paper 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,” he added.
The lump sum consideration is subject to certain adjustments as per the agreement. The transaction is contingent on necessary statutory and regulatory approvals including approvals from the Competition Commission of India and shareholders.
JM Financial Ltd acted as the exclusive financial advisor and AZB & Partners acted as the legal advisor to ABREL for this transaction.
Established in 1984, the Century Pulp and Paper unit has an installed capacity of 4.8 lakh tonne per annum. India is the fifth-largest producer of paper and paperboards in the world with production capacity of about 23 MTPA and an annual turnover of over ₹80,000 crore. India is one of the fastest growing markets in the world with incremental demand of over 1 million tonne annually.
ITC’s Paperboards and Specialty Papers Business has four facilities with an annual throughput of over one million tonne. The acquisition will immediately add significant scale and economies to existing operations with potential for further expansion and proximity to key raw material sources, besides mitigating operational risks through multi-site operations, said ITC in a statement.
ITC expects to drive structural improvement in profitability of CPP through several value unlock interventions such as capacity debottlenecking, product quality upgrade, supply chain optimisation, overhead rationalisation and procurement efficiencies.
B Sumant, Executive Director, ITC said the acquisition aligns with the company’s strategy of driving the next horizon of growth by expanding capacity at a new location considering that the existing facilities are already saturated.
