Wilmar International says Malaysian subsidiary PGEO Group Sdn Bhd has entered into a sale and purchase agreement to acquire a 91.38% stake in Natural Oleochemicals Sdn Bhd from Bursa Malaysia-listed Kulim (Malaysia) Berhad for 450 million ringgit ($192 million).

Funding for this acquisition will come from internal sources and bank borrowings.

Based in Pasir Gudang, Johor, Natoleo is one of the world’s largest oleochemicals producers with significant market share in Europe and Asia and a growing presence in the US.

Natoleo’s main feedstocks are crude palm kernel oil and palm stearin. Its products such as glycerine, soap noodles, fatty acids, and esters are widely used in diverse industries such as detergents, home care, cosmetics and toiletries, plastics, pulp and paper, pharmaceuticals, food additives, grease and lubricants, paints and coatings, rubber and latex and polyolefins.

The remaining 8.62% of Natoleo is owned by the National Land Finance Co-operative Society, an independent third party.

Wilmar says the oleochemical industry is experiencing steady growth due to sustained economic development and increased global demand for an eco-friendly functional product which is viewed as a sustainable alternative to petrochemical products.

In 2009, Malaysia accounted for 25% of the world’s production capacity of fatty acids and Natoleo accounted for 20% of Malaysia’s production capacity.

Wilmar believes that the acquisition of Natoleo allows it to consolidate its leading position in the global fatty acids market and entrenches Wilmar as Asia’s dominant oleochemicals company with a market share of almost 35% of Asian fatty acid production capacity.

The acquisition of Natoleo also adds Malaysia to Wilmar’s existing network of oleochemical production bases. In China where demand is expected to grow strongly in the future, Wilmar is the largest producer of oleochemicals with plants in four locations. In Indonesia, Wilmar operates its recently completed oleochemical facility in Gresik. This network makes Wilmar a dominant oleochemicals producer.

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