ITC Ltd [NSE: ITC] announced acquiring the pulp and paper business of Aditya Birla Real Estate Ltd. [NSE: ABREL], operating as Century Pulp and Paper, on March 31, 2025. ABREL’s board of directors approved this all-cash deal worth ₹3,498 Cr., allowing ITC to take charge of all its assets, liabilities, contracts, and employees. When finalising this deal, ABREL indicated its shifting focus towards its core business, i.e., real estate. While this takeover will have multiple social and environmental benefits to offer to consumers, the deal might show some unexpected reflections on the share prices.
Both parties have signed the Business Transfer Agreement (BTA) specifying all conditions related to the slump sale basis deal, which is likely to be executed in the next six months, subject to certain adjustments and statutory approvals.
What Made ITC Acquire ABREL’s Century Pulp and Paper?
Century Pulp and Paper is into manufacturing, distributing, and selling paper (writing and printing both), tissue paper, paper board, paper grade pulp, rayon grade pulp, and many other paper-based products. ITC, an ace with varied segments from FMCG to IT, expanding its horizon to paper and pulp unit seems to be a strategic acquisition move to prove its serious approach towards making sure only eco-friendly and sustainable materials reach its consumers.
ABREL’s paper and pulp division’s total revenue from operations stood at ₹3,375 Cr. for the year ending in March 2024, which alone accounted for 93% of the contribution to the company’s total revenue from operations for the entire FY24. This, therefore, became one of the major reasons behind the ITC expansion strategy.
In addition, ITC, through its paperboards and specialty business, has recorded an annual throughput of almost 1 million tonnes already, which will only multiply with the latest acquisition of ABREL’s Uttarakhand-based pulp and paper division with the latter having an installed capacity of 4.8 lakh million tonnes per annum, increasing ITC’s paper capacity by 60%.
Why did ABREL Approve this Deal?
ABREL held a press release on March 31, 2025, where it stated that it approved the acquisition deal as part of its strategy to unlock value for shareholders and have its complete focus on the core segment of real estate. ABREL’sMD, RK Dalmia, also added that it is their transformational growth phase and their only motive is to drive “sustained value creation.” The company also confirmed that its shareholding patterns will not change even after the deal is executed.
What Does this Deal Mean for Investors?
Though the deal seems to expand the paper capacity, the shrinkage in the margin is expected. As soon as the acquisition details were announced, ITC shares instantly dropped to 22% from the peak level in 2024, which was ₹528.
ITC witnessed its paperboard business to near 590 basis points with 11.4% YoY shrinkage in the operating margins for the first nine months of the financial year 2025. This drop in the operating margin reflected the weakness of ITC, thereby boosting imports of paper and related products into India. This, in turn, also led to an increase in the prices of domestic wood. Such performance of the company might be a reason behind the loss of trust of the investors, which caused such a significant drop in the share prices of the company.
On April 1, 2025, the share performance of both ABREL and ITC seemed to reflect the mixed emotions of the investors. While the ITC shares suffered a decline of 0.25%, accounting for a loss worth ₹408.75, the Aditya Birla Real Estate shares showed an upward movement of 3%, taking the price to ₹2,019 per share on the NSE.
Conclusion
Though the BTA has been signed by both ITC and ABREL to take the acquisition of the latter’s Century Pulp and Paper forward, the deal will remain subject to the statutory approvals and necessary adjustments per the contract. The execution will, in addition, also include the consent of the Competition Commission of India (CCI) and its shareholders. With the final execution of this deal, the market might see some unexpected fluctuations with respect to how the companies and their performance would affect investor sentiment.
