The installation of production lines – for soy-based milk brand Sollys, Nestlé Fast, and RTD beverages under the brands Alpino, Nescau and Neston – aims to produce around 124,000 tons of milk products a year, said Nestle. The investment was announced by Ivan Zurita, Chief Executive Officer of Nestlé Brazil, and Sergio Cabral, Rio de Janeiro State Governor.

It will create over 1,000 direct and indirect new jobs. Commenting on the move, Mr Zurita reiterated that Nestle chose the State of Rio de Janeiro for its 31st industrial factory in Brazil due to its growing importance for the Nestlé business in the country. The investment reinforces Nestlé’s commitment to Brazil, he said.

Sérgio Cabral, Governor of the State of Rio de Janeiro, said the investment will bring about economic revitalization in the state. Sergio expects Nestlé’s investment to substantially contribute to the development of Rio de Janeiro’s economy.

Adopting state-of-the-art production technologies and equipment for product packaging and innovative raw material collection, the facility will promote the efficient use of energy and water, illustrating Nestlé’s commitment to environmental sustainability, said Nestle.

The factory – which will supply products to the Brazilian states of Rio de Janeiro, Minas Gerais, Espírito Santo and São Paulo – will furthermore provide an opportunity to improve the milk production in the region, where initial milk supply is around 200,000 litres a day.

The factory will be the third production site in the State of Rio de Janeiro under the Nestlé umbrella. The Jacarepaguá factory produces Nestlé ice cream products, while the Petrópolis plant supplies Nestlé bottled mineral water.

The new Brazilian investment follows the 120 million reals (over CHF 61 million) expansion of Nestlé’s 63-year-old plant in Araraquara, Brazil, in summer 2009, increasing the production of aseptic brands Ninho and Molico. It also follows the inauguration of Nestlé’s largest ready-to-drink aseptic products factory in Anderson, Indiana, in the United States, in March 2009.

However, private equity firm Laep Investments, a joint venture owner of Lacteos Brasil, declined to comment on the Newspaper reports when contacted by Reuters. But even so, there was an increase in Laep Investments share trading with the speculations. The shares closed 1.9 per cent higher Friday on the news, signaling investors had responded well to the speculation.

According to the Valor Economico report, Parmalat, which is already one of the leading UHT milk companies in Brazil, could pay up to €2.50 billion for the Sao Paulo-based dairy business in an all-stock deal. The investment could make Lacteos Brasil the largest shareholder in the Parma-based firm, giving it a stake of around 30 per cent, the newspaper added, but did not disclose the source of its information.

Lacteos Brasil group is majority owned by Laep and emerging markets private equity group GP Investments, but there are minority shareholders who would need to approve a deal. Parmalat has long been a potential takeover target. This time last year minority institutional investors – including BlackRock and Goldman Sachs – were trying to weaken the position of chief executive Enrico Bondi.

Reports at the time suggested these 17.6 per cent equity holders wanted to take over Italy’s main dairy company in a consortium with a trade buyer. O Estado de S Paulo supported Valor’s claims and said Parmalat is concerned that the likes of Nestle could launch a hostile takeover.

Lacteos Brasil runs the Italian brand in Brazil and is one of the largest private sector dairy companies in its domestic market. It was formed at the end of last year when GP and Laep-backed LeitBom agreed to acquire Bom Gosto, the company behind the Corlac, Sarita and Lider brands. The terms of this transaction, which completed in January, were not disclosed.

The Parmalat Group is one of the few major Italian multinationals in the food industry and a global player in the production and distribution of foods such as milk, dairy products (yogurt, cream based sauces, desserts and cheese) and fruit beverages, which generated revenues of about 4.3 billion Euros in 2010.

GEM will give the capital injection via a subscription of Laep’s shares but even so, Laep would not reveal just how many shares are to be subscribed in the offing. However, Laep did say that it plans to utilize the accrued funding from GEM subscription to aid its development through funding investments and acquisitions.

Should the deal go through, this will be the second time GEM is being approached to for a capital injection by Laep after having been called upon for a similar offer back in June when it gave 126 million Brazilian reals to the company via a subscription of 109.7 million Laep shares. GEM was begun in 1991 and has since grown to a $3.4 billion alternative investment group and is involved in the management of a varying amount of investment vehicles that are targeted on emerging markets all over the globe.

In May 2006, Laep successfully purchased Parmalat Brasil after the collapse of its Italian parent company, Parmalat SpA. At the time of the acquisition, Parmalat was still under restructuring in the domestic Brazilian courts after the failure of its parent in the 2003 crisis.

Laep Ltd’s principal activity is to invest in companies engaged in the production and distribution of dairy products. It deals with production, processing, marketing and distribution of dairy products and other food products like: cakes, cookies, tea and juices. The Group also operates with private equity investment, leasing, cattle raising and agricultural and real estate sector. It owns brands like: Parmalat, Gloria, Alimba, Lacesa, Kidlat, Lady, Ibituruna, Pocos de Caldas and Paulista.

Laep Investments Ltd., a private equity fund that controls Parmalat, rose 14 percent on Wednesday, and Parmalat spiked as much as 26 percent. In January, JBS, Brazil’s giant food company had been speculated for a potential Pramalat Brasil acquisition, the company Laep Ltd controls. Laep reiterated that it would be going on an investment spree, mainly expected to target acquisitions in the country and investment opportunities that would help expand the company.