Russian authorities approve sale of International Paper's stake in Ilim to partners in JV

ST. PETERSBURG. March 28 (Interfax) - 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, which owns leading Russian pulp and paper producer Ilim Group, to its partners in the joint venture, Ilim reported.

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 $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 $24 million.

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