Parmalat will not pursue an acquisition of Brazil’s largest private dairy company, Lacteos do Brasil (LBR), due to the “high level of risk” a deal for the business would carry, sources have said.

The Italian dairy giant, majority owned by French dairy processor Lactalis, confirmed last month it was in “exclusive negotiations” with LBR in order to explore a possible acquisition.

A source close to the company told just-food today (18 September) that given LBR is undergoing Chapter 11 bankruptcy proceedings, there are “a lot of risks that a buyer would need to take into account” when considering an acqusition of the group.

“Having taken into consideration the quite high level of risk and also the valuation in terms of the money [LBR] were expecting, Parmalat management decided not to go ahead with any offer for Lacteos,” the source said.

LBR manufactures a variety of dairy products, including some Parmalat brand products under licence. However, the company has struggled in recent years and the group initiated a reorganisation plan in February, including filing for bankruptcy.

The Brazilian dairy is majority-owned by private-equity firms Laep Investment and GP Investments.