Shares of ITC rose 0.21% to Rs 410.65, while ABREL shed 0.68% to Rs 1,955.80 on the BSE.

ABREL operates its pulp & paper products business under the name of Century Pulp and Paper (CPP), which was established in 1984 at Lalkuan (Nainital, Uttarakhand). CPP is a well-established player in the Indian paper industry with an installed capacity of 4.8 lakh MT per annum. The turnover of the pulp and paper segment stood at Rs 3,375 crore in FY24.

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.

The ITC’s business expects to drive structural improvement in profitability of CPP through several value unlock interventions such as capacity debottlenecking, product quality upgrade, efficiency improvement leveraging TPM/Digital initiatives, supply chain optimisation, overhead rationalisation, and procurement efficiencies. The company is targeting a 30% to 40% increase in EBITDA per ton (over normalised levels) post 2 full years of operations and expects a high teen ROCE on investments in the medium term.

The said acquisition is expected to be consummated in about 6 months, subject to receipt of statutory approvals and fulfilment of the conditions laid down in the BTA

B Sumant, executive director, ITC, said, “The acquisition will strengthen the market standing of ITC’s paperboards and specialty papers business and engender new opportunities in the domestic and international markets. The acquisition aligns with the company’s strategy of driving the next horizon of growth in the paperboards and specialty papers business by expanding capacity at a new location considering that the existing facilities are already saturated. The strong linkages to afforestation and livelihood creation pursued by both the entities contribute meaningfully to national priorities. We are delighted to welcome CPP into the ITC fold and I am confident that together we will continue to set new benchmarks in customer satisfaction, operational excellence and sustainability.”

R. K. Dalmia, managing director, Aditya Birla Real Estate, said, 'The divestment of the Pulp and Paper undertaking by ABREL is a strategic portfolio choice and unlocks value for the shareholders of ABREL. The company has embarked on a transformational growth phase, and this move will further sharpen its focus on real estate to drive sustained value creation. Over the years, CPP has become synonymous with strong performance and high sustainability standards. To take it to the next level in size and value, the company is pleased to have found in ITC, a credible and well-established player.'

ITC is a diversified conglomerate with businesses spanning fast-moving consumer goods, hotels, paperboards and packaging, agribusiness and information technology.

Aditya Birla Real Estate (formerly known as Century Textiles and Industries) was established in 1897. It has a presence in the textiles, pulp & paper, and real estate sectors.