Tanduay acquires two liquor firms for P1.25B

Tanduay Distillers Inc. (TDI), the liquor unit of tobacco and beer magnate Lucio Tan’s Tanduay Holdings Inc., has paid P1.25 billion for the acquisition of a 90-percent stake in Asian Alcohol Corp. and Absolute Chemicals Inc.

In a disclosure to the Philippine Stock Exchange, TDI said funding for the aquisitions came from its existing credit lines with local banks amounting to P3 billion.

TDI said Asian Alcohol and Absolute Chemicals will increase their capital stocks to facilitate the entry of TDI.

Apart from these companies, the group also invested P185 million in Cabuyao Packaging Corp. but didn’t give details on whether it acquired a stake in the packaging firm.

TDI has set aside P2 billion over the next three years for the establishment of a new plant and planned acquisitions.

It has already began construction of a new liquor plant in Cagayan de Oro which is estimated to cost between P500 million to P1 billion.

TDI intends to continue on increasing the share of higher margins in its product mix and sustain the development efforts on new products that will address emerging consumer preferences.

It is looking at new markets that will expand its customer base and aggressively shop around for acquisitions that will grow its business and improve shareholder value.

TDI vice-president and chief finance officer Nestor Mendones said the plant, which will be the company’s fourth, is expected to produce about 40,000 cases of liquor per day. The company currently has three plants, one in Negros, another in Cabuyao, Laguna and another in Quiapo.

He said TDI is also set to acquire two more liquor companies this year in line with efforts to further strengthen its foothold in the liquor market.

Last March, the TDI board approved the acquisition of majority control of six liquor companies: Asian Alcohol Corp., Absolute Chemicals Inc., DyZum Distillery Inc., Cabuyao Packaging Corp., Flor De Cana Shipping Inc., and Negros General Services.

TDI reported an 88 percent increase in its net income last year to P660 million, driven by higher sales. Net sales rose 22 percent to P6.76 billion, largely a result of higher sales volume and the increase in selling prices by 13 percent. Sales volume increased by nine percent.

A sustained advertising campaign resulted in the strong performance of TDI’s main product lines such as Tanduay Five Years and ESQ.