The largest paper manufacturer in the world sold its business in Russia

The world's largest pulp and paper company International Paper has agreed to sell a 50% stake in the Ilim holding to its Russian partners for $484 million.But this deal still needs to be approved by the authorities.

The American company International Paper has agreed to sell 50% of the Swiss Ilim SA, which owns Ilim, the largest producer of pulp and paper products in RUSSIA. This is stated in a press release published on the International Paper website.

The deal will amount to $484 million, but it must be approved by the Russian authorities. The cost of the entire company is estimated at approximately $3.5 billion, based on a multiple of 3.1 to EBITDA in 2022 (according to preliminary unaudited data, this figure was $1.11 billion), the price also includes net debt of $2.45 billion , the message says.

The buyers will be Russian partners of International Paper in this joint venture - the remaining 50% of Ilim SA belongs to the chairman of the board of directors of the Ilim group, Zakhar Smushkin, and brothers Boris and Mikhail Zingarevich. “We are pleased with the results of joint activities and would like to maintain our effective partnership. But under certain circumstances, our partners made their decision, ”said Smushkin (his words were reported by the press service of Ilim). He confirmed the agreements reached on the acquisition of the Americans' share in the joint venture.

International Paper acquired 50% of Ilim Holding in 2007 for $650 million, making it the largest foreign investor in the Russian timber industry. Ilim owns pulp and paper mills in the Arkhangelsk and Irkutsk regions (branches in Koryazhma, Bratsk and Ust-Ilimsk), two corrugator plants in the Leningrad and Moscow regions, as well as the Sibgiprobum Institute in Irkutsk. “Last year our joint venture turned 15 years old. This is one of the most successful examples of the implementation of joint projects in the timber industry. During this time, the volume of production has doubled, and the total value of the company has almost tripled,” says Smushkin.

International Paper is the world's largest pulp and paper company. It specializes in the production of corrugated cardboard packaging, as well as pulp for diapers, paper napkins and other personal care products. The company's headquarters is located in Memphis ( usa ). The company's manufacturing facilities are located in North America, Latin America, North Africa and Europe.

International Paper announced the possibility of selling a stake in Ilim in March 2022, after the start of Russia's military special operation in Ukraine and the imposition of international sanctions.

In Russia, International Paper also owned Svetogorsk PPM (SvetoCopy paper manufacturer) in the Leningrad region until 2021. It was then placed under the management of Sylvamo Corporation, set up by International Paper to run the global paper business. In October 2022, Sylvamo Corporation sold Svetogorsk Pulp and Paper Mill to its local management for $420 million.

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Mondi did not agree on the sale of a papermaker in Russia for €1,5 billion Business

The Austrian Mondi also announced plans to leave the Russian market. In August 2022, it agreed to sell its main asset in Russia, the Syktyvkar timber complex in the Komi Republic, for €1.5 billion. The buyer was to be Augment Investments Limited, owned by Pharmstandard co-owner Viktor Kharitonin. But the Russian authorities did not agree on this deal. A government official told RBC that it was rejected by the Federal Antimonopoly Service, where Kharitonin's structures applied for permission. Another RBC source said that the government commission for the control of foreign investment did not give its approval because of its inconsistency with approaches to the sale of assets of international companies in Russia. According to him, the Russian authorities do not coordinate transactions with the assets of foreign investors, leaving Russia, the value of which exceeds three annual EBITDA. Finance Minister Anton Siluanov spoke about this rule in June 2022 at the congress of the Russian Union of Industrialists and Entrepreneurs.