French group Lactalis to acquire Prabhat Dairy for Rs1,700 cr

The French group has signed a definitive agreement to buy the milk-processing business of Maharashtra-based Prabhat Dairy. 

Prabhat Dairy will also sell its entire stake in Sunfresh Agro Industries, a step-down subsidiary, through a share purchase agreement, the company said in a statement.

Following the completion of the deal, Prabhat Dairy intends to further develop its cattle feed business and expand into allied businesses such as animal nutrition and animal genetics, Vivek Nirmal, joint managing director at Prabhat Dairy Ltd, stated in a press release . 

“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,” Nirmal said.

The deal is subject to customary conditions and regulatory approvals. “The acquisition of the dairy business undertaking of Prabhat by Lactalis represents a meaningful opportunity for the employees of Prabhat to be associated with one of the global leaders in the dairy products business,” Raviraj Vahadane, chief financial officer at Prabhat Dairy said.

Prabhat Dairy intends to share a substantial portion of the proceeds from the sale with shareholders after meeting its tax and transaction cost obligations. 

Promoters of the company Sarangdhar Ramchandra Nirmal, Vivek Nirmal and Nidhi Nirmal will continue to be associated with the business for the next two years.

Kotak Mahindra Capital acted as the financial advisor to Prabhat Dairy, while Veritas Legal was the legal advisor.

Earlier this month, Prabhat Dairy signed a joint development agreement with Denmark-based Dansk Landbrugs Grovvareselskab (DLG Group) as part of its plans to foray into animal nutrition business. This includes cattle feed, nutrition supplements and animal genetics.

Prabhat Dairy is already a supplier of cattle feed under the brand name ‘Annapurna’.