Vitarich Corp. has reached an agreement to acquire Barbatos Ventures Corp. (BVC) from Luzon Agriventure Inc. as part of what the listed company called its “vertical integration strategy.”
In a stock exchange disclosure on Friday, Vitarich said the acquisition of 100% of the outstanding stock of BVC was for a price of P1.00, with the board of directors of the transacting parties approving the deal.
“The core of our strategy is to create value through further integration,” said Vitarich President and Chief Executive Officer Ricardo Manuel M. Sarmiento, adding that BVC is the company’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,” he said.
Vitarich said by 2025, BVC will bring revenues of around P375 million, with its addition capturing cost synergies of P91 million. In the first two years after the acquisition, it expects a contribution of P46 million to net income or P0.02 to earnings per share.
BVC provides services such as packing, cutting, and the storage of dressed chicken. The company has dressing plant facilities located in Marilao, Bulacan and Tugbok, Davao.
Capital expenditures are expected to be P150 million in total, comprised of P93 million spent in 2021 and P57 million in 2022 for expanding the facilities in Marilao.
Once BVC is acquired, Vitarich will have additional cost savings by the restructuring of their lease and toll arrangement into a contract growing agreement.
The acquisition is expected to be finalized and executed by year-end.
By January 2022, BVC will operate as a wholly owned subsidiary that integrates dressing operations and contract growing.
Vitarich shares were unchanged at 70 centavos each on Friday. — Luisa Maria Jacinta C. Jocson