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Prabhat Dairy shares gained as much as 20 per cent to Rs 111.3, their highest intra-day gain since August 23, 2016.
The dairy company will sell its dairy business to French dairy company, Groupe Lactalis, for Rs 1,700 crore ($238.31 million).
The company will sell its unit, Sunfresh Agro Industries, to Tirumala Milk Products, the Indian arm of Lactalis, and later transfer the dairy products business to Sunfresh via a slump sale on a going concern basis.
The company said it intends to share a substantial portion of the sale proceeds with shareholders after meeting its tax and transaction cost obligations.
Post-deal, the company also intends to further develop its cattle feed business, and expand into businesses such as animal nutrition and animal genetics.
Prabhat's shares have touched their highest level since November 14, 2018. More than 3.3 million shares changed hands versus a 30-day average of over 83,326.
The stock was up 2.5 per cent this year as of the last close.
The stock closed at Rs 79.75 , down Rs 13.30 (-14.29%) on the BSE on Tuesday.
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