International Paper Takes Large Stake in Indian Paper Company

International Paper (IP) has entered into an agreement with L.N. Bangur and related family members and affiliates to purchase about 53.5 percent of the outstanding shares of the Indian paper company Andhra Pradesh Paper Mills Ltd. (APPM) for about $257 million. In addition, IP has agreed to a $62 million non-compete payment to the sellers.

Bangur is executive chairman of the Bangur Group. APPM is a part of the Bangur Group.

Pursuant to Indian securities law, IP also will launch a mandatory public tender offer to acquire an additional 21.5 percent of the outstanding shares of APPM for about$104 million in cash. IP anticipates acquiring up to 75 percent of APPM's outstanding shares through the two transactions.

According to a release, once completed, the transaction will position IP as the first global paper and packaging company with a significant position in India.

"APPM is an established and highly respected company in India and is an excellent platform for International Paper to grow with the Indian paper and packaging markets," says John Faraci, IP’s chairman and CEO. "Both APPM and the India paper and packaging industry are growing at substantial rates, and we believe that IP's global operations and technical expertise can accelerate that growth and create value for customers as well as IP and APPM shareholders."

Bangur says, "We have built a strong business in India, and the next phase of growth requires a different set of resources and capabilities. International Paper is the right company to take the business forward and deepen maturity of the sector in India."

APPM has two mills in India with combined capacity of about 250,000 metric tons of uncoated freesheet paper per year.