Russian government approves sale of International Paper stake in Ilim Group

RUSSIA – A subcommittee of the Russian government commission for control over foreign investment has given the green light for U.S. company International Paper to sell its 50% stake in Swiss holding company Ilim SA.

The buyers of the stake are International Paper’s Russian partners Zakhar Smushkin and Boris Zingarevich. Smushkin and brothers Boris and Mikhail Zingarevich also control the other 50% of Ilim SA.

The deal is at the final stage and the parties expect to close it in April 2023, but the process is taking place in a “changing political and regulatory environment,” which could affect the timing, Ilim said.

Ilim SA owns 96.37% of JSC Ilim Group. International Paper acquired its stake in Ilim SA in 2007 for US$650 million.

The U.S. company also owned 2.39% of shares in the group directly, and the parties have also agreed on the sale of these shares for US$24 million.

It was reported earlier that the deal would be worth US$484 million. All of Ilim Group is valued at about US$3.5 billion based on a multiplier of 3.1 times EBITDA for 2022, which according to preliminary unaudited data totaled US$1.11 billion. The price takes into account net debt of US$2.45 billion.

Ilim exports 70% of its products, and according to the company it has a 75% share of the Russian commercial pulp market, and 20% and 10%, respectively, of the cardboard and paper markets.

The group is headquartered in St. Petersburg and its production facilities are located in Arkhangelsk, Irkutsk, Leningrad and Moscow regions.

International Paper, the world’s largest pulp and paper company, manufactures corrugated cardboard packaging, as well as pulp for diapers, tissue and other personal care products.

The company’s headquarters are in Memphis, Tennessee and its manufacturing operations are located in North America, Latin America, North Africa and Europe.

The move comes a few days after Smurfit Kappa completed its exit from the Russian market, selling its operations in the country to local management.

Smurfit Kappa’s Russian operations form part of its Europe segment and include three plants in and around St Petersburg, as well as a major corrugated packaging plant in Moscow.

Since the beginning of the war in Ukraine, Western forest-based companies have sold 13 factories in Russia.

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