International Paper Forms Joint Venture With Russian Timber Company

Alliance will invest $1.2 billion in Russia's Ilim Pulp mills.

International Paper announced Wednesday the establishment of a 50-50 joint venture with Ilim Pulp, the largest forest products company in Russia.

The partnership would be the biggest foreign-domestic alliance in the Russian forest market.
Under the agreement, International Paper would purchase a 50 percent equity interest in Ilim Holding, whose total value in the joint venture is about $1.3 billion.

The joint venture's board of directors is to be headquartered in St. Petersburg and would have equal representation from International Paper and Ilim Pulp.

Ilim Pulp has an annual production of almost 2.5 million of market pulp, uncoated papers and packaging, at four pulp and paper mills located in the European and Siberian regions of Russia.

As part of the joint venture program, approximately $1.2 billion will be invested in the four mills over five years. The funds will be used to upgrade equipment, increase production capacity 40 percent (about 1 million tons), and develop new products.

"This joint venture would be attractive to both International Paper and Ilim Pulp because it would unite the unique capabilities of both companies and enable us to create more value together than we could individually," International Paper chairman and chief executive officer John Faraci said. "Beyond that, a joint venture should benefit Russia by significantly propelling the development of a globally competitive sustainable forest products industry in Russia."