By Indulal PM and Sumeet Chatterjee
MUMBAI, Jan 7 (Reuters) - Europe's biggest dairy group Lactalis has agreed to acquire a controlling stake in India's Tirumala Milk Products for between $250 million and $300 million, two sources with direct knowledge of the matter said on Tuesday.
The French firm will buy shares from Tirumala's founders, who own 80 percent 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 percent stake, the sources said.
A Lactalis spokesman said the company had agreed to buy Tirumala for an undisclosed amount. Tirumala officials could not be reached outside business hours.
The sources with direct knowledge of the matter declined to be named before a public announcement about the deal expected this week, or to specify the size of the controlling stake Lactalis would acquire.
However, one of the sources said the French company would buy all of the Carlyle Group's holding.
The deal is subject to regulatory approval and is expected to close in this quarter, the sources said.
Founded in 1998, Tirumala Milk Products, based in Hyderabad, is one of the largest dairy processors in southern India. It sells various milk and other related products.
The company's turnover in the fiscal year that ended March 2013 was 14.24 billion rupees ($228.41 million), according to its website.
"This acquisition is a new step in the international expansion of Lactalis," the French company's spokesman said.
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 euros ($21.42 billion), of which Europe accounts for 60 percent. One of its recent high-profile acquisitions was Italy's Parmalat group in 2012.
With the acquisition of Tirumala, Lactalis will enter one of the fastest-growing markets that has the potential to account for a large part of its sales in the medium to long-term, one of the sources involved in the process told Reuters.
The deal, which took nearly a year to be completed, saw bids from global companies as well as buyout groups, he said.
India is the world's biggest milk producer and most of its produce stays at home as a protein staple for a population of about 1.2 billion. The country's milk product exports are tiny and restricted mainly to south Asian countries.
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.