Shares of diversified conglomerate ITC Ltd. and realty player Aditya Birla Real Estate Ltd. traded mixed in the morning session on April 1, after ITC announced the acquisition of Century Pulp and Paper, the paper and pulp business under the Birla Group.
ITC will acquire Century Pulp and Paper for a lump-sum cash consideration of Rs 3,498 crore. In a filing with the exchanges, the Aditya Birla Group firm said, "The divestment of the Pulp and Paper undertaking is a value unlocking exercise for ABREL. It will further enable the Company to pursue growth opportunities in its core business: real estate."
At 9.20 am, shares of ITC were trading with mild losses at Rs 408.75, down 0.25 percent, while ABREL shares soared over 3 percent to quote Rs 2,019 apiece on the NSE.
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ITC stated that the acquisition is in line with its strategy to drive the next phase of growth in its Paperboards and Specialty Papers Business by expanding capacity at a new location, given the limited scope for expansion at the existing facilities.
"The acquisition will immediately add significant scale and economies to existing operations with potential for further capacity expansion, provide locational advantage for efficient customer servicing and proximity to key raw material sources, mitigate operational risks through multi-site operations and enhance resilience across industry cycles through portfolio diversification," said ITC in a statement.
Century Pulp and Paper is a well-established player in the Indian paper industry with an installed capacity of 4.8 lakh MT per annum. The move will also increase ITC's paper capacity immediately by 60 percent to 12.8 lakh MT per annum, from 8 lakh MT.
The deal depends on getting the necessary legal and regulatory approvals, including from the Competition Commission of India (CCI) and the shareholders.
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