French dairy multinational Groupe Lactalis has agreed to acquire the milk products business of Prabhat Dairy Ltd for Rs 1,700 crore ($239 million) in its third takeover deal in the country.
Mumbai-listed Prabhat Dairy said in a stock-exchange filing that it now intends to develop its cattle feed business in various parts of the country and expand into allied businesses such as animal nutrition and animal genetics.
The acquisition is subject to customary conditions precedent, including approval from the Competition Commission of India, and other conditions precedent.
Lactalis had struck its first India deal in early 2014 when it bought Tirumala. In 2016, it acquired the dairy business of Indore-based Anik Industries for Rs 470 crore ($70 million).
Rahul Kumar, managing director at Lactalis India, had told VCCircle in 2017 that the French giant was actively scouting for more acquisition opportunities in India amid efforts to become the top private dairy player in the world’s largest milk-producing nation.
Kumar had said that Lactalis was eyeing the western and northern regions in particular. Prabhat has a strong presence in western India.
Lactalis, which offers products such as cheese and butter, has a presence in more than 120 countries.
VCCircle had reported last March that Rabo Equity Advisors (Rabo PE) was in talks to exit its seven-year-old investment in Prabhat Dairy in a transaction that could see the promoters also relinquish control.
Other key shareholders include French development finance institution Proparco and mid-market PE firm TVS Capital.
Prabhat Dairy was started in 1988 and initially catered to institutional customers. It started selling to retail customers over the past four to five years. Its products include milk, milk, milk powder, butter and ghee, according to its website. It markets a wide range of value-added dairy products under Prabhat, Flava and Milk Magic brands.
Dairy segment, related deals
India’s dairy market is highly fragmented and is dominated by local milkmen and regional brands.
Kwality Ltd and Mother Dairy Fruit & Vegetable Pvt Ltd dominate the north while Hatsun Agro and Tirumala are leaders in the south. Then there are larger co-operative players such as Gujarat Cooperative Milk Marketing Federation (GCMMF), which sells its products under the Amul brand.
Britannia Industries Ltd and Nestle India are among the other players in the dairy market.
Several deals have been executed in the category in the recent past.
Danone earlier announced that it would exit its dairy business in India and focus instead on its nascent nutrition business in the country.
There have also been developments on the fundraising front.