Tanduay eyes Central Azucarera Don Pedro

MANILA, Philippines — Taipan Lucio Tan’s Tanduay Distillers Inc. (TDI) is interested in acquiring Central Azucarera Don Pedro Inc. (CADPI), its top official said.

“We are looking at it because it will complement our business,” TDI president and CEO Lucio “Bong” Tan Jr., the son and namesake of the taipan, told The STAR in an interview on Friday. 

The Gokongwei group’s Universal Robina Corp. (URC) offered earlier to merge with CADPI but failed to get the nod of the Philippine Competition Commission (PCC), the government’s anti-trust agency. 

Tan said they are conducting their due diligence.

“If the price is okay, yes we are interested. We are doing our due diligence,” Tan said. 

He said acquiring CADPI would provide Tanduay another source of molasses -- which are necessary raw materials in manufacturing alcohol. He said this can reduce the company’s business cost.

“We have our distiller so it will be complementary.  We can use the molasses for our distiller,” Tan said. 

TDI produces spirits, wines, brandies, gins and vodka. The Lucio Tan group acquired the brand from the Elizalde family in 1988. 

It has two distilleries, AbsolutDistillers Inc. and Asian Alcohol Corp. These distilleries supply some of the alcohol requirements of TDI.

Under the leadership of Bong Tan, TDI’s flagship brand Tanduay rum became the world’s number one rum last year, beating for the first time Puerto Rican brand Bacardi, perennially the top-selling rum in the world. 

Quoting data from Drinks International, TDI said it sold 19.5 million nine-liter cases worldwide last year compared to Bacardi’s 16.3 million nine-liter cases.
CADPI, meanwhile, operates a sugar mill and a refinery in Nasugbu. 

According to its profile, it offers refined sugar requirements for traders and industrial customers, such as multinational food and beverage, and pharmaceutical companies in Luzon. 

The company is based in Nasugbu, Batangas and operates as a subsidiary of Roxas Holdings Inc.

Last month, PCC blocked a planned merger between URC and CADPI, saying it would create a monopoly. 

URC’s sugar mill is in Balayan while CADPI-RHI’s milling facilities are in Nasugbu. 

Both mill operators are in Batangas but the monopoly to be created by the merger will substantially lessen competition in the sugar milling services market not only in Batangas, but also in Cavite, Laguna, and Quezon, the PCC said.

It also noted that while the transaction mainly affects sugarcane farmers in Southern Luzon, the sugar processed from these facilities serve nationwide demand, including that of Metro Manila.

“The transaction will create market power for URC and allow it to unilaterally reduce the planters’ share in the planter-miller sharing agreement, the theoretical recovery rates quoted to planters, and the incentives provided to planters,” the PCC said.