Parmalat set to acquire Brazilian UHT milk and cheese operations

Parmalat looks set to acquire the UHT milk and cheese operations of Brazilian dairy Lácteos do Brasil (LBR), which filed for bankruptcy protection in 2013, for R$250m (US$110m, €83m).

Under the terms of the offer, submitted by the Italian dairy's Brazilian subsidiary Lactalis do Brasil, Parmalat stands to acquire UHT milk and cheese manufacturing operations that in 2013 churned out R$580m (US$255m, €193m) worth of product.

Parmalat will also absorb offices, staff, and some LBR brands through the proposed deal.

The offer, an improvement on an earlier R$100m (US$33m, €44m) bid, was approved by a meeting of LBR creditors on August 21.

LBR was granted bankruptcy protection in February 2013, and according to reports from Brazil owes creditors nearly R$1bn (US$439m, €332m).

In line with the company's bankruptcy recovery plan, creditors approved the sale of 14 LBR manufacturing facilities to Parmalat, ACR Medical Logística, Latícinios Bela Vista, Cooperativa do Vale do Rio Doce, and Agricoop for a total of R$531.5m (US$233m, €177m), according to reports from Brazil.

LBR will continue to operate three sites, the reports added.

In 2013, LBR controlled a 6.6% share of the Brazilian dairy sector - making it the country's fourth largest dairy behind Nestlé, Danone, and Brasil Foods (BRF).

It manufactures and markets a range of products, including milk, milk powder, yogurt, cheese, cream, butter, and dairy drinks.

The company also hold a license, valid until 2017, to market Parmalat brand products.

The transaction, the Italian dairy said, "will permit Parmalat Group to regain full title to the exclusive license to use the Parmalat brand for the production and distribution of UHT milk throughout Brazil."

Final approval of the deals is now in the hands of the Brazilian Bankruptcy Court and the country’s antitrust authority, the Brazilian Administrative Council for Economic Defense (CADE).