Mumbai-based Prabhat Dairy, which sold its milk processing business to French dairy products corporation Lactalis, is planning to merge its wholly-owned subsidiary Cheese Land Agro (India) Private Ltd. with itself.
Cheese Land Agro holds a 71 per cent stake in Sunfresh Agro Industries, a step-down subsidiary of Prabhat Dairy, which holds the remaining stake.
“The proceeds from the sale of the dairy business will not be used for animal nutrition business, as we intend to provide it to the shareholders. The promoters will be investing their own money into animal nutrition business,” Vivek Nirmal, Joint Managing Director & CEO, Prabhat Dairy, told BusinessLine.
However, the company is yet to finalise the amount it intends to return to shareholders.
Prabhat Dairy has convened a board meeting recently to seek shareholders’ approval for the merger of Cheese Land Agro. In January, Lactalis entered into a definitive agreement to acquire Prabhat Dairy’s milk processing business for about Rs. 1,700 crore ($238.31 million).
The French group will be making the acquisition through its wholly-owned Indian subsidiary, Tirumala Milk Products, by way of a slump sale.
Prabhat Dairy will also sell its entire stake in Sunfresh Agro Industries, the step-down subsidiary, through a share purchase agreement.
“Now, animal nutrition business is pretty small; in the next 2-3 years, we intend to make it big,” Nirmal said.
In January, Prabhat Dairy had also entered into a strategic alliance with Denmark-based DLG Group, as part of its plans to foray into animal nutrition business.
Copenhagen-headquartered co-operative Dansk Landbrugs Grovvareselskab (officially DLG Group) is into production of high-quality vitamin-mineral feeds and farm supplies.
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