Bom Gosto and PE-backed LeitBom Will Merge

Brazilian dairy producers Bom Gosto and LeitBom plan to merger operations, Reuters reported. LeitBom is owned by Monticiano Participacoes, a joint venture between private equity firms Laep Investments and GP Investments. The newly combined company, called Lacteos Brasil will have annual sales of roughly 3 billion reais ($1.8 billion), Reuters said.

(Reuters) – Brazilian dairy producers Bom Gosto and LeitBom agreed late on Wednesday to merge their businesses, in a bid to compete in global markets.

The combined company, called Lacteos Brasil, or LBR, will have annual sales of 3 billion reais ($1.8 billion) and an agreement with suppliers to buy more than 2 billion liters of milk a year, Bom Gosto and LeitBom said in a statement.

The two companies should “complement each other well” as they have 30 plants around the country that overlap very little, the statement said.

As part of the merger agreement, Brazil’s state development bank BNDES [BNDES.UL] will inject 700 million reais into LBR, 450 million reais through the private purchase of stock in LBR and 250 million reais of bonds convertible into shares.

LeitBom is controlled by Monticiano Participacoes, a joint venture between private equity firms Laep Investments and GP Investments . Bom Gosto is jointly controlled by businessman Wilson Zanatta and the BNDES through its BNDESpar holding company.

LBR will be controlled by Monticiano, with a 40.6 percent stake, followed by a 30.3 percent from BNDESpar and a 26.3 percent holding by Bom Gosto Participacoes. Two funds held by private equity company CRP will hold the remaining 2.8 percent of LBR, according to a securities filing.

Fernando Falco, chief executive of LeitBom, will be the CEO of LBR. Zanatta will be co-chairman of the company with Fersen Lambranho, the co-head of GP Investments. ($1=1.694 reais) (Reporting by Aluisio Alves, Writing by Elzio Barreto; Editing by Derek Caney)