The Lucio Tan Group is consolidating its alcohol businesses with the sale of 100 percent of Asian Alcohol Corporation (AAC) to affiliate Victorias Milling Company (VMC) for P2.21 billion.

In a disclosure to the Philippine Stock Exchange, LT Group Inc. said AAC, a manufacturer of rectified and denatured alcohol, was sold by wholly-owned subsidiary Tanduay Distillers, Inc. together with Prior Holdings Inc. and Castelbridge Investment Corporation.

Under the Sale and Purchase Agreement signed by the parties, a total of 738.33 million common shares of AAC was sold to Victorias Milling. The negotiated purchase price of P2.21 billion will be paid in tranches subject to closing conditions.

In a separate disclosure, VMC said that, in the last few years, it has been focused on becoming a fully integrated sugar business by diversifying into ethanol and power.

Since 2018, VMC upgraded and expanded its existing distillery facility in Manapla, Negros Occidental, to produce ethanol, which now has a production capacity of 36 million liters.

Acquiring a similar business will provide cost synergy in terms of shared manpower, information technology and supply chain.

VMC said it also has access to expertise that can streamline the processes to optimize production, increase recovery and efficiency of the plants.

Being under corporate rehabilitation, VMC said it is mandated to continuously create measures to attain sustainable financial stability.

“The horizontal integration will not only improve the profitability and cash flows of the group, it will also increase the group’s market share in the ethanol industry, and in extension its contribution to the energy security of the country with the least negative impact to the environment,” said VMC.