French dairy group Lactalis has signed a definitive agreement to buy the milk-processing business of Maharashtra-based Prabhat Dairy for about Rs 1,700 crore through a slump sale.
Lactalis’ local arm, Tirumala Milk Products, will acquire Prabhat’s dairy business as well as its step-down subsidiary Sunfresh Agro Industries through a share purchase agreement, it said in a statement.
“The association with Lactalis – one of world’s largest dairy players – will offer this business a strong platform for accelerated growth momentum in becoming one of the largest private dairy businesses in India,” said Vivek Nirmal, joint managing director of Prabhat Dairy.
The acquisition will help Lactalis reduce its dependence on home markets within Europe, where it gets the bulk of its revenue. Family-run Lactalis, owner of the Galbani, Lactel and President brands, is the second-largest food company in France, behind Danone.
It has grown through acquisitions to reach annual revenue of ¤17 billion, of which Europe accounts for 58%, followed by America at 21%. In 2014, the French giant had purchased Hyderabad-based Tirumala, the second-largest dairy company in south India, for Rs 1,750 crore.
Prabhat, incorporated in 1998, has an aggregate milk processing capacity of 1.5 million litres per day and annual revenue of Rs 1,554 crore.
The BSE-listed company’s stock closed at Rs 93.05, up 1.64%, on Monday to reach a market capitalisation of Rs 908.8 crore.
After the deal, Prabhat will focus on its cattle feed business and expand into allied businesses such as animal nutrition and animal genetics.
Earlier this month, it partnered with Denmark-based animal nutrition major DLG.
Source: Economic Times