LT Group Inc., the publicly traded holding company of tycoon Lucio Tan, said on Friday it had agreed to sell liquor company Asian Alcohol Corp. to Victorias Milling Co. Inc. for 2.21 billion pesos.
LT Group said in a statement to the stock market unit Tanduary Distillers Inc. and two other minority shareholders have signed a share sale agreement with VMC involving the entire stake in AAC.
VMC said in a separate disclosure that the acquisition would provide cost synergy in terms of shared labor, information technology and supply chain. It will also allow VMV to have access to expertise that can streamline processes to optimize production, increase recovery and plant efficiency.
“The rehabilitation company has a mandate to continuously create measures to achieve sustainable financial stability. The horizontal integration will not only improve the group’s profitability and cash flow, it will also increase the group’s market share. in the ethanol industry, and by extension its contribution to the country’s energy security with the least negative impact on the environment,” VMC said.
LT Group is mainly engaged in banking and financial services, real estate, liquor and beverages. It also holds a 30% stake in VMC.
ACC is the second largest distillery in the Philippines operating in Negros Occidental. It has a distillation process that uses molasses, yeast, water, and other ingredients. It has a 10-hectare factory in Negros Occidental, which is the center of the country’s sugar industry.
It has a modern wastewater treatment plant that converts waste from the distillery into biogas energy for electricity needs. It has a nominal daily capacity of 210,000 liters of quality ethyl alcohol.
VMC said it would pay the purchase price in installments, subject to closing conditions. The company said it expected to complete the acquisition before the end of the year.
AAC recorded a net loss of 32.88 million pesos in 2021, a reversal of the net profit of 181.8 million pesos recorded in 2020, as sales fell 7.6% to 2.07 billion pesos from 2 .24 billion pesos.