INDIA – The Competition Commission of India (CCI) has approved Tirumala Milk Products’ bid to acquire Prabhat Dairy’s subsidiary Sunfresh Agro Industries as well as the company’s dairy business.
Tirumala Milk Products is a subsidiary of the French dairy corporation, Lactalis, providing and supplying dairy products including cream milk; curd cup and pouch; flavored milk; buttermilk.
According to ET Retail, the transaction involves sale of 100% shareholding in Sunfresh Agro Industries, a step-down subsidiary of Prabhat, via a share purchase agreement.
Lactalis unveiled the intention to buy Prabhat dairy business through its local arm Tirumala Milk Products in January this year.
The transaction estimated at US$238 million (RS 1,700 crore) provides Lactalis a strong growth momentum in India’s rapidly growing market.
Commenting on the deal in January, Vivek Nirmal, joint managing director of Prabhat Dairy said: “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.”
Prabhat had indicated that after the sale, it will focus on its cattle feed business and expand into allied businesses such as animal nutrition and animal genetics.
Lactalis acquired Hyderabad-based Tirumala Milk, which is the second largest private dairy company in South India for US$275 million.
The acquisition will help Lactalis reduce its dependence on home markets within Europe, where it gets the bulk of its revenue.
In 2016, it acquired the dairy business of Indore-based Anik Industries for US$70 million (Rs 470 crore).
Anik Industries sells its dairy products under two brand names, Anik for butter, skimmed milk powder, dairy mix and Saurabh for whole milk, ghee and spray dried.
Anik attributed the divestment to high competition in the dairy business.
Lactalis is eying more buyouts in the Indian dairy sector to consolidate its presence in a market where domestic players are limited in expansion partly due to inadequate capital to scale up operations.