The American company International Paper, the largest investor in the timber industry in Russia, is selling its business in the country. Its 50% stake in Ilim Group will be bought by Russian partners for $484 million, the company said in a statement. More than 15 years ago, an investor bought the property for $650 million.
The parties have already reached a deal to sell International Paper’s stake in Swiss Ilim SA, which controls the Ilim Group. It now needs to be approved by Russian regulators.
The American company itself intends to sell its stake in Ilim Group (it owns 2.39% of the shares), as well as get rid of other intangible residual shares belonging to the enterprise in Russia. The report states that Russian partners are interested in such a deal and may buy International Paper’s assets for $24 million.
International Paper first announced the possibility of leaving the Russian market in March 2022 following the start of Russia’s invasion of Ukraine. In the same month, the government approved a special procedure for transactions with non-residents of unfriendly countries, in order to prevent or slow down the mass exodus of foreign companies from the Russian market.
To sell a business in Russia, a foreign company must obtain permission from a government commission, providing information on the participants of the transaction, including beneficiaries. The commission may refuse the transaction or issue a permit subject to certain conditions.
International Paper bought Swiss Ilim Holding in 2007 for $650 million, through which it owned Russian Ilim. It became Russia’s largest investor in the timber industry.
Ilim is the largest pulp and paper producer in Russia. The enterprise produces 75% of this product in the country, as well as 20% of cardboard and 10% of paper. It also owns a pulp and paper mill in the Arkhangelsk and Irkutsk regions, as well as branches in Koryazma, Bratsk and Ust-Ilimsk. The company also owns logging enterprises and two corrugated plants in the Leningrad and Moscow regions.