International Paper considers offloading its stake in Ilim to JV partners

RUSSIA – Fiber-based packaging, pulp and paper product producer, International Paper has agreed to sell 50% stake in Ilim Group to its joint venture (JV) partners for a US$484 million equity value.

The transaction is subject to regulatory approvals in Russia and values the company at US$3.5 billion.

International Paper has also received an indication of interest from its JV partners to purchase all of the company’s shares (constituting a 2.39% stake) in JSC Ilim Group for US$24 million.

The company intends to pursue an agreement to sell the JSC Ilim Group shares and to divest other non-material residual interests associated with Ilim, to its JV partners.

Meanwhile, Ilim is a 50/50 joint venture between International Paper and Ilim Holding. It is one of the largest integrated manufacturers of pulp and paper in Russia.

With production facilities in the Leningrad, Arkhangelsk and Irkutsk regions, the company is also the largest foreign-domestic alliance in the country’s forestry products sector.

It has branches in Koryazhma, Bratsk and Ust-Ilimsk, as well as forestry branches that supply raw materials to its production facilities. Ilim also has two corrugated cardboard plants in the Leningrad and Moscow regions.

Last month, the company completed the first water run of the XcelLine kraft linerboard (KLB) machine at its new KLB Mill in Ust-Ilimsk.

The sale comes at a time when several companies are deciding to exit from Russia due to the country’s war with Ukraine.

Last month, Amcor completed the sale of its three factories in Russia to Russian-based investor HS Investments.

The firm’s Russian business produces flexible and cartons packaging from one site in St. Petersburg and two sites in Novgorod and employs approximately 900 people. Amcor’s three sites in Russia generated approximately 2% of total Amcor sales in fiscal 2022.

According to Amcor cash proceeds from the divestment are expected to be used primarily to make debt repayment and share repurchases.

In the same month, packaging and paper company Mondi also offloaded its packaging converting operations in Russia to conversion manufacturer Gotek.

The three packaging converting operations included a corrugated solutions plant and two consumer flexible plants. These plants produce a range of packaging solutions for the domestic Russian market.

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