KUALA LUMPUR (May 3): CB Industrial Product Holding Bhd (CBIP) has acquired a local biofuels producer in a move to strengthen the group's position within the biofuels industry.

In an exchange filing today, CBIP said the group and its 80%-owned unit, TPG Oil & Gas Sdn Bhd, are taking up a 70% stake in Gulf Lubes Malaysia Sdn Bhd for RM2.11 million.

Gulf Lubes, which will become a 68.73%-owned subsidiary of CBIP based on the effective equity interest, is a loss-making company principally engaged in the production of palm-based biofuels for the energy sector.

Gulf Lubes owns a biofuels processing facility on an eight-acre land at the Port Klang Free Zone, which includes two biodiesel processing plants with total annual production capacity of 350,000 tonnes and a refined, bleached and deodorised palm oil processing plant with annual production capacity of 250,000 tonnes.

The facility has been left idle since its construction in 2009 and will require refurbishment before commencing its maiden production, said CBIP, which expanded its business activities into palm-based biofuels in 2018.

This acquisition, the group said, complements its business activities and will enable the group to "synergystically broaden its business activities and earnings base".

CBIP said the cash consideration, as well as outstanding debt of Gulf Lubes amounting to RM43.16 million to be assumed by CBIP, will be satisfied by internally generated funds.

The acquisition will contribute positively to the group's future earnings and growth, it added.

Shares in CBIP closed one sen or 0.86% lower today at RM1.15, for a market capitalisation of RM586.21 million.