A Brown Co. Inc. is acquiring a palm oil farm estate in Surigao del Sur for P100 million, enabling the holding firm to process palm oil and source raw materials from its own plantation as well as adjacent farms.
In a disclosure on Wednesday, A Brown said its subsidiary Surigao Greens Agri Corp. (SGAC) had executed an asset purchase agreement covering several parcels of land with total land area of 70,000 square meters and a palm oil milling plant in the town of Barobo.
The facility, according to the listed firm, consists of a factory building and machinery with a rated capacity of 10 metric tons per hour.
A Brown said it had made a good-faith payment of P2 million on Nov. 9, 2022, to conduct a due diligence on the assets. This formed part of the purchase price.
It committed to pay P10 million at the end of every month for 10 months. The last installment payment totaling P8 million will be given after crediting the good faith payment already made last year.
“SGAC may withhold the last two payments until the seller is able to obtain a title covering two of the real properties subject of the asset sale,” it said.The acquisition would provide A Brown access “to an existing and operational and cost-efficient crude palm oil milling plant that is able to source palm oil fresh fruit bunches from nearby plantation farms in the region (Surigao and Agusan),” the disclosure said.
“The acquisition will also provide operational and supply chain synergies with existing palm oil milling and refinery facilities in Impasug-ong, Bukidnon that are currently operated by A Brown Energy and Resources Development Inc. , another A Brown subsidiary,” it added.
A Brown explained that by gaining access to more palm oil fresh fruit bunches from nearby plantations, it could realize operational and cost-cutting synergies within the group, reduce logistics and transport costs, and become better positioned to pursue further growth opportunities in its palm oil business.
SGAC is engaged in the business of processing, milling and refining palm oil to manufacture crude palm oil, refined beached deodorized palm oil, palm olein and other products, and distributing such products on a wholesale or retail basis. INQ