Malaysian plantation group IOI Corp is buying the Unilever group's speciality oils and fats division for RM814 million (€218.5m), a move that will give it an instant market presence and manufacturing facilities in Europe, North America and Latin America.
Analysts believe the investment in Loders Croklan, Unilever's oils and fats division, will become a growth generator for the group.
"And it is not an 'ambitious' move as it will not be a strain on their balance sheet," an analyst from a foreign research house said, adding that long-term returns are assured as well.
"Give them two years to overcome teething problems and Loders Croklaan will certainly enhance IOI's business."
A local analyst, however, cautioned that while "everything seems to look good in the immediate term", IOI would need to address issues related to operating a business far from home.
"There are risks operating in an overseas environment... even if you engage locals there to help you run or manage the company," she said.
The acquisition will also enable Loders to fulfil plans to set up a manufacturing base in Malaysia that would cater for the Asian market.
Loders Croklaan is one of the world's leading suppliers of specialty oils and fats to the food sector. It also operates a special products unit that markets both food and animal feed ingredients produced by other manufacturers.
The acquisition will create synergies for IOI's palm oil business and provide it with an opportunity to emerge as a global integrated speciality fats and oils industry player.
Loders Croklaan has an extensive oils and fats derived products portfolio and a global customer base that includes Nestle, Cadbury and Kraft.
The business to be acquired by IOI Corp comprises the manufacturing facilities and other operations of Loders Croklaan BV in the Netherlands; Loders Croklaan for Oils Co SAE in Egypt; Channahon in Chicago; and Rexdale and Betrflake in Canada.