ITC Expands Paper Business with Century Pulp and Paper Acquisition

Market Performance

Shares of ITC Ltd. and Aditya Birla Real Estate Ltd. displayed mixed trends during early trading on April 1, following ITC's announcement of acquiring Century Pulp and Paper, a pulp and paper business under the Birla Group.

At 9:20 AM, ITC's stock saw a slight dip, trading at Rs 408.75, reflecting a 0.25 per cent decline. Meanwhile, Aditya Birla Real Estate shares rose over 3% to Rs 2,019 on the NSE.

Acquisition Announcement

ITC has announced the acquisition of Century Pulp and Paper for a total cash consideration of Rs 3,498 crore. The company stated that this acquisition aligns with its strategic objectives of expanding its Paperboards and Specialty Papers Business. The limited expansion opportunities drive the decision to acquire a new facility at its current locations.

The transaction involves Aditya Birla Real Estate's divestment of the pulp and paper operations. Aditya Birla Real Estate described the sale as part of its strategy to unlock value and concentrate on its core real estate business.

Company and Industry Impact

Century Pulp and Paper has an installed production capacity of 4.8 lakh MT annually. With this acquisition, ITC's total paper production capacity will increase by 60 per cent, reaching 12.8 lakh MT per annum from the existing eight lakh.

ITC emphasized that the acquisition will improve operational efficiencies by leveraging economies of scale, increasing capacity, and ensuring proximity to key raw material sources. Additionally, the move aims to enhance risk mitigation through a multi-location operational strategy while broadening the company's industry footprint.

Regulatory Approvals

The transaction's completion is contingent on obtaining necessary legal and regulatory clearances, including approval from the Competition Commission of India (CCI) and the company's shareholders.

Summary

ITC's acquisition of Century Pulp and Paper is expected to significantly expand its paper production capacity while offering strategic advantages such as operational scalability, improved supply chain efficiency, and portfolio diversification. The deal remains subject to regulatory approvals before finalization.