International Paper acquires majority stake in AP Paper Mills for Rs1,660 crore
15 Oct 2011
US-based International Paper, the world's largest paper company, today said it has completed the acquisition of a 75 per cent stake in Andhra Pradesh Paper Mills (APPM) for a total of $338 million (Rs1,660 crore).
The NYSE-listed company in March this year acquired 53.5 per cent of APPM shares from its promoters, the Bangur family and affiliates for approximately $226 million in cash and paid another $57 million in cash for not competing with their old business.
International Paper acquired an additional 21.5 per cent of APPM shares in a public tender offer, for approximately $105 million in cash, which was completed on 8 October.
When International Paper made its initial offer in March when the Indian currency was much stronger that would have cost International Paper a total of approximately $423 million including the non-compete fee, for the 75-per cent stake.
The currency fluctuation has reduced the size of the deal by around $35 million in dollar terms, although the deal value remains the same in Indian currency, according to VCCircle estimates.
"As we complete this phase of the process and move into majority ownership, International Paper is well-positioned to help serve a rapidly growing Indian market," said John Faraci, International Paper chairman and CEO.