Hyderabad: US-based International Paper is set to acquire Andhra Pradesh Paper Mills or APPM for as much as $423 million in an all-cash deal.
The deal involves the purchase of a 53.5% stake from the company’s promoters – L.N. Bangur and his family – for $257 million and making an open offer for 21.5% of the remaining holding in the paper maker for $104 million.
“In addition, International Paper has agreed to a $62 million non-compete payment to the sellers,” the US company said in a release on Tuesday.
The Memphis-headquartered paper maker aims to complete the transaction by 31 December. APPM is one of India’s leading integrated paper manufacturers and has two mills with a combined capacity of about 250,000 tonnes of uncoated freesheet paper a year.
The transaction will position International Paper as the first global paper and packaging company with a significant position in India’s fast growing-economy, the US company said.
“APPM is an excellent platform for International Paper to grow with the Indian paper and packaging markets,” said John Faraci, chairman and chief executive officer of International Paper.
APPM rose 6.75 % to close at Rs196.80 on the Bombay Stock Exchange on Tuesday. The announcement was made after the markets closed.
“We have built a strong business in India, and the next phase of growth requires a different set of resources and capabilities,’’ said Bangur, executive chairman, Bangur Group. “International Paper is the right company to take the business forward and deepen maturity of the sector in India.”