Prabhat, in an official statement released in Mumbai, said it will share a "substantial proportion" of the sale proceeds with its shareholders and will focus on cattle feed business after the close of the transaction.
The company has entered into definitive agreements with Tirumala Milk Products, a wholly-owned subsidiary of Lactalis, for the Rs 1,700-crore sale, said the statement.
The transaction involves sale of the dairy business undertaking of Prabhat Dairy by way of slump sale on a going concern basis, as well as the sale of 100 per cent shareholding in Sunfresh Agro Industries, a subsidiary of Prabhat Dairy, via a share purchase agreement, it said.
"The association with Lactalis--one of world's largest dairy players--will offer this business a strong platform for accelerated growth momentum in becoming one of the largest private dairy businesses in India," said Vivek Nirmal, joint managing director of Prabhat Dairy, in the statement.
Promoters Sarangdhar Ramchandra Nirmal, Vivek Nirmal and Nidhi Nirmal will continue to be associated with the business for the next two years. The acquisition is subject to regulatory approvals from the Competition Commission of India, the statement said.