Vitarich Corporation is allotting capital expenditures of P150 million for the expansion of a chicken dressing plant in Marilao, Bulacan after its planned acquisition of Barbatos Ventures Corporation.

In a disclosure to the Philippine Stock Exchange, Vitarich said it has reached an agreement with Luzon Agriventure Inc. to acquire Barbatos Ventures Corporation (BVC) for a price of P1.00 as part of its vertical integration strategy.

The valuation is based on net asset value as audited by MG Madrid & Company. The boards of directors of both companies have approved the transaction.

“The core of our strategy is to create value through further integration,” said Vitarich President and CEO Rocco Sarmiento.

He explained that, “BVC has been VITA’s dressing plant partner since 2019. This acquisition allows us to provide our customers with end-to-end processes, ensuring tighter control and traceability of operations which most hotel, restaurants, and institutional (HRI) customers value highly. It also delivers operational and financial synergies, including cost efficiencies.”

With 373 employees and contractors, BVC provides a range of services such as packing, cutting, and storage of dressed chicken, which will expand to chicken products specifically for HRIs following the acquisition.

The company holds national and local permits for dressing plant facilities located in Marilao, Bulacan and Tugbok, Davao as well as relevant licenses and industry accreditations from the Department of Agriculture (DA), Department of Health (DOH), and the Department of Environment and Natural Resources (DENR).

In addition, BVC Marilao has certifications for food safety management systems including Hazard Analysis and Critical Control Points (HACCP) and all its products are Halal accredited by the Islamic Da’wah Council of the Philippines (IDCP).

Capital expenditures related to improvements are expected to be P150 million in total, comprised of P93 million spent in 2021 and P57 million in 2022 for expanding and upgrading the Marilao facilities.

The addition of BVC will bring revenues of approximately P375 million to VITA by 2025, while also capturing cost synergies of P91 million. In the first two years following the completion of the acquisition, it is expected to contribute P46 million to net income or P0.02 to earnings per share.

Beginning January 2022, BVC will operate as a wholly-owned subsidiary that integrates dressing operations and contract growing.