CCI Approves ITC's ₹3,498 Crore Acquisition of ABREL's Paper Unit

Introduction

The Competition Commission of India (CCI) has officially approved ITC Ltd.'s proposal to acquire the pulp and paper business of Aditya Birla Real Estate Ltd (ABREL) for a total consideration of ₹3,498 crore. This regulatory clearance paves the way for a significant transaction in the Indian paper industry, allowing ITC to expand its footprint in a core segment while enabling ABREL to sharpen its focus on its primary real estate operations.

Details of the Transaction

The deal involves the transfer of Century Pulp and Paper (CPP), ABREL's paper manufacturing undertaking, to ITC through a slump sale. This means the entire business is being sold as a going concern for a lump-sum cash payment. The CPP facility, located in Lalkuan, Uttarakhand, was established in 1984 and has grown into a major player in the domestic market. It currently has an installed production capacity of 4.8 lakh metric tonnes per annum, manufacturing a diverse range of products including writing paper, kraft paper, tissue paper, and multi-layer boards.

Strategic Rationale for ITC

For Kolkata-headquartered ITC, this acquisition is a strategic move to bolster its Paperboards and Specialty Papers division. This segment has been a consistent performer for the conglomerate, generating a substantial free cash flow of ₹4,000 crore between the financial years 2020 and 2024. By integrating CPP's assets and capacity, ITC aims to enhance its market leadership, scale its operations, and leverage synergies to support its fast-moving consumer goods (FMCG) and packaging businesses. The acquisition aligns with the company's broader strategy of investing in and expanding its core, high-potential business verticals.

A Value-Unlocking Move for ABREL

From Aditya Birla Real Estate's perspective, the divestment is a strategic decision described as a "value-unlocking exercise." Selling the pulp and paper business allows the company to exit a non-core area and redeploy capital and management focus towards its primary real estate ventures. This move is expected to provide ABREL with significant liquidity to pursue new growth opportunities and strengthen its position in the competitive real estate market. The transaction reflects a clear strategic realignment for the Aditya Birla group company.

The Regulatory Green Light

Before the deal could proceed, it required clearance from the CCI, India's fair-trade regulator. The commission's role is to ensure that such mergers and acquisitions do not create a monopoly or have an appreciable adverse effect on competition. Both ITC and ABREL had contended that the Indian paper market is highly fragmented and competitive, and this transaction would not disrupt market dynamics. The CCI's approval, announced via a post on the social media platform X, confirms this assessment and removes the final regulatory hurdle for the acquisition. A detailed order from the commission is expected to follow.

Market Impact and Financial Context

The announcement of the proposed deal had a positive impact on the market. Following the news, shares of Aditya Birla Real Estate Ltd. reportedly rose by 3%, reflecting investor approval of the company's strategic refocus. ITC's shares also saw a gain of over 1%, indicating that the market views the acquisition as a positive step for its long-term growth. The acquisition is backed by ITC's strong financial position. For the first quarter of FY26, the company reported a consolidated net profit of ₹5,244.20 crore on a total income of ₹23,811.56 crore, showcasing its capacity to fund significant strategic investments.

Key Transaction Details

Conclusion

The CCI's approval for ITC's acquisition of Century Pulp and Paper marks a pivotal moment for both companies. It allows ITC to consolidate its position in the paper and packaging industry, a critical component of its diversified business portfolio. Simultaneously, it provides ABREL with the resources to double down on its core real estate operations. This deal exemplifies a broader trend of corporate India where large conglomerates are strategically realigning their portfolios to enhance shareholder value and focus on core competencies.