KUALA LUMPUR, Dec 7 (Reuters) - Malaysian palm-oil and property firm IOI Corp Bhd has agreed to buy two unlisted downstream palm-oil firms for 423 million ringgit ($120 million), IOI said on Thursday.

IOI was buying Pan Century Edible Oils Sdn Bhd and Pan Century Oleochemicals Sdn Bhd, which together had installed annual refinery-products capacity of 1 million tonnes, IOI said.

IOI bought the two firms from Indian conglomerate Aditya Birla group, which has been operating in Malaysia for more than 27 years.

"The group's decision to move out of this business has been driven by its limited presence in the palm value chain, which constrains both growth and competitiveness," Kumar Mangalam Birla, chairman of the Birla group, said in a statement.

But Birla said it would not quit Malaysia after all.

"The group is keen to look at opportunities in Malaysia in their core businesses. They are actively looking at east Malaysia," it said.

Birla's core businesses include cement, fertilisers, non-ferrous metals, textiles and telecommunications.

IOI, Malaysia's most-valuable oil-palm plantation firm, said the deal would turn it into the world's largest vegetable oil-based fatty acid producer.

"The proposed acquisition is an excellent strategic fit to IOI's group's positioning as a global integrated palm oil player," it said in a statement.

It will fund the deal via existing cash reserves and borrowings, the company said.

IOI shares closed down 0.5 percent at 18.80 ringgit ($5.31). The stock has risen 15 percent in the past three months. 8/12/06 (The Times of India) MUMBAI: The Aditya Birla group has decided to sell its Malaysian palm oil business to IOI Corporation Bhd of Malaysia, for a consideration of $175 million.

The Malaysian palm oil business of the Birlas is vested in two companies — Pan Century Edible Oils and Pan Century Oleochemicals. IOI Corporation is the world's biggest publicly traded palm oil producer. It posted a net profit of 255.7 million ringet on revenues of 1.9 billion ringet in the first quarter ended September 30.

Aditya Birla group executive president and business head Ravi Kastia said the Malaysian palm oil business has been sold at a PE (price to earnings ratio) valuation of 12."The business had reported a record profit of $18 million in the last fiscal. It was doing well and this was the correct time to sell," Kastia added.

The Birlas decided to exit the business as it had become highly commoditised and margins were low. Other companies which were eying Birlas' Malaysian palm oil business included SIME Darby, Kulim Malaysia BhD, among others. The total turnover between Pan Century Edible Oils and Pan Century Oleochemicals is around $500 million and profit is around $25 million.

TOI had reported in June 26 edition that IOI Cor was in fray for the Birlas' Malaysian palm oil business. The group commanded a quarter of Malaysia's palm oil market. Meanwhile, the group has decided to retain its palm oil business in Philippines under Palm Surfactant - a recent acquisition of the Birlas. Kastia said Palm Surfactant has got into the fatty alcohol business which is in great demand in countries like Japan and China, where it caters to clients such as Unilever and P&G.

Of the Malaysian palm oil companies, Pan Century is located at Johor and is the world's single largest refinery and manufacturing complex at a single location. It was established in 1978 with an initial capacity of 70,000 tpa. The company now has a palm oil refining capacity of one million tonne and brings out a range of speciality products like soap noodles, glycerine, fatty acids, among others.

Its refined products include palm oil, palm olein, stearin and PFAD. The company further expanded its product range to include various grades of fatty acids, pharmaceutical grade glycerine, opaque and translucent soap noodle and other speciality products.
Pan Century Oleochemicals Sdn Bhd, on the other hand, is one of the leading producers of fatty acids and glycerine derived from vegetable sources in Malaysia. From an initial capacity of 68,000 tpa, the company has increased its capacity to 125,000 tpa.