Swiss dairy company Emmi has increased its stake in Brazilian peer Laticínios Porto Alegre Indústria e Comércio.
Emmi first took a stake in the business in 2017 but has now increased its holding from 40% to 70%.
Laticínios Porto Alegre Indústria e Comércio, based in Ponte Nova in the state of Minas Gerais, is now among the top three largest dairies in the state.
In a statement, Emmi said “the company has continued its positive development in an extremely challenging market environment”.
It added: “At the time of the initial investment, Laticínios Porto Alegre was one of the five largest milk processors in Minas Gerais. It has since grown into one of the top three. One of the reasons for this positive development in a very challenging environment is the excellent work of the local management, which maintains very good relations with milk suppliers and customers.”
On upping its stake, it said: “With a view to strategically strengthening its international business, Emmi decided to increase its stake to 70 %, subject to the approval of the local competition authority. It has been agreed not to disclose the price of the stake.”
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Laticínios Porto Alegre produces natural cheese, mozzarella and requeijão (cream cheese), as well as UHT milk, cream and butter.
It is also a producer of whey powder, which is mainly supplied to the Brazilian food industry.
In 2018, Laticínios Porto Alegre achieved net sales of around BRL630m (US$162m). It employs around 1,250 people.
The remaining 30% of the company, founded in 1991, remains in the hands of brothers José Afonso and João Lúcio Barreto Carneiro.
Commenting on the investment, analyst Alain Oberhuber of MainFirst Bank, said: “No details about the transaction price were disclosed. However, we expect the company to reach an EBITDA margin of 18%.
He added: “The consolidated total sales will have an annual impact of +5% on Emmi’s sales (vs. FY18).”
Oberhuber concluded: “It is another meaningful step for Emmi to strengthen its International business.”
In April Emmi took a majority stake in Austrian goat milk firm Leeb Biomilch.