SINGAPORE - Palm oil giant Wilmar International has entered into a conditional joint venture agreement with Japan-based Lion Corporation to set up a plant-based surfactant business.

The group announced on Friday that its unit, KOG Investments, will manufacture and sell methyl ester sulfonate along with Lion, a Tokyo-listed firm that makes and sells toothpaste, toothbrushes, soaps, detergent, hair- and skin-care products, cooking-related products, and pharmaceuticals.

Methyl ester sulfonate is an ingredient used to make detergents.

The joint venture company will be incorporated in Singapore, which, in turn, will incorporate an operating company in Indonesia. It will be funded in equal parts by Lion and the Wilmar group.

The incorporation of the joint venture company and the operating company is subject to the completion of certain conditions in the joint venture agreement, including approvals by competition authorities.

Wilmar said the transaction is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the group and its subsidiaries for the current financial year ending December 31.

Shares of Wilmar closed 3.7 per cent or 13 cents down at S$3.35 on Friday (June 30), before the announcement was made.