International-Andhra Paper deal prompts BILT to defer UK IPO

The Thapars have put on hold their plans for a $330-million initial public offer of their UK subsidiary, BILT Paper Plc, on the London Stock Exchange, anticipating a sharp rise in valuations following the US-based International Paper's surprise Rs1,485-crore purchase on 29 March of a majority stake in the Bangur-owned Andhra Pradesh Paper Mills at a steep premium to the market price.

International Paper has also offered to acquire up to 21.5 per cent from minority shareholders of Andhra Paper, raising the potential cost of the buyout to $423 million.

The Andhra Paper deal has convinced Ballarpur Industries - which holds a 79.5 per cent stake in BILT Paper through its wholly owned subsidiary Ballarpur International Holdings BV (BIH) - to press for a higher valuation for its paper venture.

Ballarpur Industries is India's largest paper maker, while Andhra Paper is ranked third.

''It is important to study the impact of this acquisition valuation over the next few months, and the potential re-rating possibilities, against the IPO valuation in London at this time which is dependent on the current UK IPO market sentiments,'' Ballarpur Industries, India's largest paper maker, said in a statement on Friday. Ballarpur will reconsider plans to list its BILT Paper unit in the next two to three months.

''We have to wait for one-two months to see the implications of the International Paper deal. The deal will lead to a re-rating of Indian paper companies. If re-rating happens at a significantly higher level, we cannot list the company at a lower valuation,'' group finance director B Hariharan told the media. He added the deal had come as a ''blessing in disguise'' for BILT.