Bilt Paper, owned by India’s largest paper manufacturer Ballarpur Industries, has put on hold, its Initial Public Offering (IPO) following the acquisition of rival firm Andhra Pradesh Paper Mills at almost three times it market value.
The Gautam Thapar-promoted Ballarpur Industries was planning to raise about $330 million (R1,470 crore) from the IPO which was to be listed on the London Stock Exchange by April 20.
The company, however, has decided to hold back its listing plans after the US-based International Paper, the world’s largest paper manufacturer, on March 29, 2011 agreed to pay $361 million for a 75% stake in AP Paper Mills. The deal valued the company at 32 times its 2009-10 earnings and 17 times 2009-10 ebitda. The higher price paid by the US company triggered a rally in stock prices of all paper manufacturers on the expectation that the sector could get re-rated. Ballarpur believes the deal will set a benchmark for the valuation of paper companies in India and has decided to wait to study the impact of this acquisition on valuations.
?The company believes it is important to study the impact of this acquisition valuation over the next few months, and the potential re-rating possibilities, as against the IPO valuation in London at this time which dependent on the current UK IPO market sentiments,? Ballarpur Industries said in a statement on Friday.
While the Ballarpur Industries stock fell 2.2% to close at R35.5 on BSE on Friday, it gained 16% on March 30, a day after the announcement of the AP Paper Mills acquisition. The shares of AP Papar have risen almost 60% since March 29.