ITC Ltd has filed a notice with the Competition Commission of India (CCI) seeking approval to acquire the pulp and paper business of Aditya Birla Real Estate Ltd (ABREL) for a sum of Rs 3,498 crore. The proposed transaction involves the sale of Century Pulp and Paper (CPP), a well-established player in the Indian paper industry, as a going concern. Established in 1984, CPP has an installed capacity of 4.8 lakh metric tonnes per annum and is located in Lalkuan, Uttarakhand.
According to the notice filed with the CCI, the proposed transaction does not raise any competition concerns within the relevant markets, as the market is highly competitive and will not cause any appreciable adverse effect on competition. The acquisition is a result of ABREL’s decision to divest its pulp and paper undertaking to focus on its core business of real estate. The company had announced in March that its board had approved the execution of the business transfer agreement for the divestment of CPP to ITC Ltd.
The acquisition is expected to be a value-unlocking exercise for ABREL, enabling the company to pursue growth opportunities in its core business. For ITC, the acquisition is expected to strengthen its paperboards and packaging segment, which has been generating significant free cash flow. During FY20-24, the segment generated a free cash flow of Rs 4,000 crore, and the company expects this trend to continue going forward.
The deal is subject to approval from the CCI, which will review the proposed transaction to ensure that it does not adversely affect competition in the relevant markets. If approved, the acquisition will mark a significant expansion of ITC’s presence in the paper industry, and will provide the company with access to CPP’s manufacturing facilities and expertise. The transaction is expected to be completed for a lump-sum cash consideration of Rs 3,498 crore, which will be paid by ITC to ABREL.