ITC acquires Century Pulp & Paper from Aditya Birla for ₹3,498 Cr

ITC Limited has announced the acquisition of Century Pulp and Paper (CPP) from Aditya Birla Real Estate Limited (ABREL) for ₹3,498 crore. This acquisition is expected to significantly bolster ITC’s Paperboards and Specialty Papers Business, marking a pivotal moment in the company’s growth trajectory.​

Details of the Acquisition

Established in 1984 and located in Lalkuan, Uttarakhand, CPP boasts an installed capacity of 480,000 metric tonnes per annum. This acquisition will immediately augment ITC’s paper production capacity by 60%, elevating it from 800,000 metric tonnes to 1.28 million metric tonnes annually. The deal is structured as a slump sale, with ITC paying a lump-sum cash consideration of ₹3,498 crore, subject to regulatory approvals, including those from the Competition Commission of India (CCI).

Strategic Implications for ITC

The acquisition aligns with ITC’s strategy to drive the next phase of growth in its Paperboards and Specialty Papers Business. By integrating CPP’s operations, ITC aims to achieve several strategic objectives:​

Enhanced Scale and Economies: The addition of CPP’s capacity provides ITC with significant scale advantages, allowing for more efficient operations and cost synergies.

Geographical Diversification: With CPP’s location in Uttarakhand, ITC gains a strategic foothold in Northern India, facilitating better customer service and proximity to key raw material sources. ​

Operational Resilience: The multi-site operations resulting from this acquisition mitigate operational risks and enhance resilience across industry cycles.

Financial Performance and Market Position

Prior to the acquisition, ITC’s Paperboards, Paper, and Packaging segment faced challenges from low-priced imports and fluctuating raw material costs. The integration of CPP’s assets is expected to strengthen ITC’s market position by expanding its product portfolio and improving cost efficiencies.​

Market Reactions and Analyst Insights

Following the announcement, ITC’s shares remained relatively stable, reflecting investor confidence in the strategic rationale behind the acquisition. Analysts have noted that the deal’s valuation, at an 18x EV/EBITDA multiple for FY25, is higher than initial estimates, indicating the premium nature of the asset. ​

Legal and Advisory Roles

Cyril Amarchand Mangaldas advised ITC on the transaction, providing legal counsel for the acquisition process. The completion of the deal is contingent upon obtaining necessary statutory and regulatory approvals, including those from the CCI and shareholders.

ITC’s acquisition of Century Pulp and Paper represents a strategic endeavor to fortify its position in the paper and packaging industry. By expanding capacity, diversifying geographically, and enhancing operational resilience, ITC is poised to capitalize on growth opportunities in the sector. As the company integrates CPP’s operations, stakeholders will closely monitor the realization of anticipated synergies and the impact on ITC’s overall growth story.