KUALA LUMPUR, Dec 7: Malaysian palm oil company IOI Corporation said on Thursday it would acquire two oleochemical firms from Indian conglomerate Aditya Birla Group in a deal worth 423 million ringgit ($119.41 million).

IOI said the purchase of Aditya Birla's Malaysian refinery and oleochemical businesses -- Pan-Century Edible Oils (PCEO) and Pan-Century Oleochemicals (PCOC) -- would be funded by existing cash reserves and borrowings.

IOI, one of Malaysia's leading palm oil companies, said in a statement the purchase would enable it to expand its oleochemical production, which had been running at full capacity for the past two years.

Aditya Birla, in a separate statement released in Malaysia, said the share sale agreement had “an enterprise value in excess of $160 million”.

Chairman of the Aditya Birla Group, Kumar Mangalam Birla, said the group's decision to move out of the business was “driven by its limited presence in the palm value chain, which constrains both growth and competitiveness”.

“Additionally, the palm oil business offers no scope for horizontally leveraging our group's business synergies,” he said in the statement.

“The divestment is in the best interest of all of the company's stakeholders, and for its sustainable growth”.

PCEO is involved in the refining and processing of crude palm oil, as well as the manufacturing of soap noodle and glycerine, while PCOC is principally engaged in the manufacture of oleochemical products.

IOI employs more than 27,000 people, with manufacturing facilities in Malaysia, Europe, and the United States.—AFP