international paper Ltd.
intellectual property -1.92%
It said it had signed a deal to sell its profitable Russian pulp business. latest US companies Leaving Russia since Moscow invaded Ukraine.
Said to sell the IP Holds 50% stake in Ilim Group Sold to joint venture Russian partner for $484 million. The Memphis, Tenn., company said those partners, led by Ilim chairman Zakhar Smushkin, have also expressed interest in buying a stake in his IP in an affiliated entity for his $24 million. IP said it intends to sell its shares and his remaining interest in Ilim.
Western companies Forced to cut diplomatic ties with Russia Even if doing so would cost billions of dollars and cut off critical cash flows since the 2022 invasion. IP executives said they would pull out of Russia soon after the war broke out, but it took nearly a year to cut off U.S. forest products companies from Russian interests.
IP invested in Ilim about 15 years ago. Ilim is a government-licensed pulp and paper organization that cuts forest strips in Siberia and the western taiga, totaling roughly the size of South Carolina. Ilim has three factories in Russia, among which he has his one factory in Bratsk, where he sells toilet paper and paper. He sells pulp for towels to China. increase.
Even though it’s a venture it was hard at first, Ilim became highly profitable. The IP more than quadrupled the roughly $720 million he spent buying half of Ilim. Through his three quarters of 2022, Ilim has brought about $250 million in profits to IP. That’s about 14% of the company’s total, and in March he paid out a $204 million dividend.
IP expects to report fourth quarter and full year results on January 31st.
Given that Ilim has become a money maker, investors and analysts are wondering whether the company can maintain the dividend payout that attracts investors to its stock without IP. deceleration from pandemic box boom.
The IP’s stock pays 5% compared to the S&P 500’s 1.59% dividend yield. The company’s stock has fallen 24% over the past year, and the stock index has fallen 8.9% of his.
IP executives, who declined to comment further on the sale, said they were committed to keeping payments.
Truist Securities analyst Michael Roxland said the selling price looks low given Ilim’s profitability, but it doesn’t match the valuation of other packaging companies on the US stock market.
“Although positive on the sale, the IP has lost a steady source of cash flow and likely used it to fund some of its dividends,” Roxland said in a note to clients.
He said intellectual property should be able to keep paying by reducing share buybacks, reducing spending on working capital and factories, and using savings from newly cheaper inputs. rice field. Natural gas When old cardboard Recycled into a new box.
Write to Ryan Dezember: [email protected]
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