Parmalat has confirmed it is in talks to acquire Brazil’s largest private dairy company dairy Lacteos do Brasil (LBR).

“Parmalat Spa confirms that an exclusive negotiation is underway for a limited period with Lacteos do Brasil (LBR) in order to explore terms and conditions of a potential acquisition agreement,” the Italian dairy giant said in a statement.

LBR manufactures a variety of dairy products, including some Parmalat brand products under license. The firm has the capacity to process more than 2bn litres of milk a year and employs 5,800 people.

However, LBR has struggled in recent years and the group initiated a reorganisation plan in February, including filing for bankruptcy. At the time, LBC cited structural issues in the Brazilian dairy sector.

The Brazilian dairy is majority-owned by private equity firms Laep Investment and GP Investments. Laep previously announced the sale of US$10m in shares to offset losses on its investments. Neither group was available for comment at time of press.