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Mumbai: Europe’s biggest dairy company Groupe Lactalis SA has agreed to acquire a controlling stake in India’s Tirumala Milk Products Pvt. Ltd for between $250 million and $300 million, two people with direct knowledge of the matter said on Tuesday.

Lactalis, based in France’s Loire Valley, will buy shares from Hyderabad-based Tirumala’s founders, who own 80% of the company, and from private equity firm the Carlyle Group, which invested about $22 million in the company in 2011 and holds the remaining 20%, the people said on condition of anonymity.

A Lactalis spokesman confirmed that the company had agreed to buy Tirumala, but did not disclose the value of the transaction. Lactalis will retain the existing management, spokesman Michel Nalet said in a phone interview in Mumbai.

The deal will help Lactalis reduce its reliance on Europe, where it gets 60% of its revenue. Foreign companies announced $15.6 billion of acquisitions in India last year, up from $11 billion in 2012, according to data compiled by Bloomberg.

“India is an important place of opportunity for the development of the group worldwide," Nalet said. “With the size of Tirumala today, we think we have a good opportunity for the development of the Indian dairy market."

India is the world’s biggest milk producer and most of its produce stays at home as a protein staple for its population. The country’s milk product exports are tiny and restricted mainly to south Asian countries.

Tirumala’s sales for the year ended March 2013 rose 21% to 1,424 crore, according to its website. It had net income of 70 crore in the year. The company has seven plants across south India, and Lactalis will help expand the company in both north and South India, said Danda Brahmanandam, Tirumala’s founder and managing director.

Tirumala is the second largest private sector dairy producer in southern India, Brahmanandam said.

The company was founded in 1995 by four rural entrepreneurs—Brahmanandam, B. Brahma Naidu, B. Nageswara Rao and N. Venkata Rao. For sometime, it supplied chilled milk to Heritage Foods India Ltd, managed by the family of former Andhra Pradesh chief minister N. Chandrababu Naidu.

Earlier, stake sale talks with French dairy products maker Danone SA in 2012 broke down after the promoters of Tirumala Milk requested Carlyle to keep the talks on hold for sometime. Carlyle renewed the search for a new investor in June last year.

Family-run Lactalis, owner of the Galbani, Lactel and President brands, is Europe’s No.1 dairy group in terms of revenue.

It has grown through acquisitions to reach annual revenues of €15.7 billion, of which Europe accounts for 60%. One of its recent high-profile acquisitions was Italy’s Parmalat group in 2012.

In India, Lactalis will compete with the likes of Gujarat Cooperative Milk Marketing Federation Ltd, owner of Amul, the nation’s best-known milk and dairy products brand, and the local unit of the world’s biggest food group Nestle.

Rothschild advised Lactalis on the transaction.

Mint’s Yogendra Kalavalapalli contributed to this story.

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