International Paper has officially exited the Russian market after months of waiting for regulatory approval to sell its stake in a joint venture pulp and paper company, called the Ilim Group.
The deal, announced Monday, is worth a collective $508 million. IP sold its 50% stake in Ilim SA, a holding company for the joint venture, to a company owned by partners Zakhar Smushkin and Boris Zingarevich for $484 million. IP also sold its remaining shares in Ilim (2.39%) for $24 million and is “divesting other non-material residual interests associated with Ilim.”
IP formed the joint venture Ilim Group in 2007 with an approximately $650 million investment. Ilim, which operates three mills and two corrugated box plants, now describes itself as “the leader of the Russian pulp and paper industry.” According to the company, it “accounts for 77% of all market pulp, 16% of packaging materials, and 25% of white papers produced” in Russia.
IP announced plans for this sale in January, but faced an uncertain timeline for regulatory approval in Russia that limited its ability to forecast a closing date. For the first half of this year, IP reported $89 million in equity earnings net of taxes and $13 million in cash dividends from its Ilim investment — with both metrics down substantially year over year.