Friesland-Campina in talks to acquire stake in Parag Milk Foods

Dutch dairy cooperative Friesland-Campina is reportedly in discussions with promoters and investors of Parag Milk Foods to acquire a 60% to 75% stake in the India-based company.

IFC, Motilal Oswal and IDFC together hold a 45%-50% stake in Parag Milk Foods, while the rest is held by promoter Devendra Shah.

In 2008, Motilal Oswal acquired a minority stake in the dairy firm for INR600m ($10.05m), and in 2012, IDFC Alternatives acquired a 15%-20% stake by investing INR1.55bn ($25.97m), valuing the company at around INR7.5bn ($125.67m).

In early 2013, the promoters further divested their stake in Parag Milk to International Finance Corp (IFC) for INR1.02bn ($17.09m).

A person close to the discussions was quoted by the Economic Times as saying that the talks are currently dealing with the valuations and the structure of the deal.

The deal could value the company at around INR21bn ($351.88m), the source added.

Parag Milk Foods, which owns the Gowardhan and Go brands, is a leading milk producer in India, with a capacity to produce one million litres daily.

The company, which has about 2% share in India’s organised dairy market, produces milk and milk products as well as byproducts such as whey protein and cheese to processed food companies in India.

Based in Pune, the company has more than 300,000 retail outlets and has more than 2,000 distributors, and exports its products to about 27 countires in West Asia, South-East Asia and Africa.