7/12/06 (The Edge News)  - IOI Corporation Bhd is poised to emerge as the world’s largest vegetable oil based fatty acid producer following its proposed acquisition of two palm oil refinery and oleochemical companies for RM423 million cash.

On Dec 7, IOI Corp proposed the acquisition of Pan Century Edible Oils Sdn Bhd and Pan Century Oleochemicals Sdn Bhd from India’s Aditya Birla Group and minority shareholders.

The companies, based in Pasir Gudang, collectively own one of the largest single-location vertically integrated palm oil refinery and oleochemicals complex in the world with an installed refinery production capacity of one million tonnes per annum (TPA).

The companies recently expanded capacities, with fatty acid production increasing to 350,000 tonnes TPA from 230,000 TPA and soap noodle plant capacity to 120,000 TPA from 55,000 TPA.

IOI Corp said the move was to expand and consolidate its position in the oleochemical industry after having operated at full capacity in the last two years.

Upon completion of the acquisition, IOI Corp will become the world’s largest vegetable oil based fatty acid producer with a capacity of 700,000 tonnes per annum.

Its executive chairman, Tan Sri Lee Shin Cheng, said the acquisition presented the company synergistic benefits and cost savings in research and development, logistics, marketing and operating overheads.

“We will further leverage on combined technical know-how, supply chain and risk management capabilities to better serve our downstream customers globally,” he said.

Lee said the location of the Pan Century companies’ plant and refinery in Pasir Gudang was located adjacent to IOI Corp's specialty fats cum refinery and the acquisition would provide the latter with a combined site of 22.62 ha.

He said this would provide IOI Corp with a competitive edge in terms of logistics, product quality and more strategic options to optimise utilisation of palm oil fractions in response to the changing market scenarios.