Italian dairy producer Parmalat (PLT.MI), seeking to fend off a takeover by a bigger rival, is holding merger talks with Brazilian peer Lacteos Brasil in a deal valued at up to 2.5 billion euros ($3.4 billion), two Brazilian newspapers reported on Thursday. Under terms of the accord, Lacteos Brasil could sell itself to Parmalat in an all-stock deal that would make the Brazilian company the largest shareholder in Parmalat, with a stake of up to 30 percent, Valor Economico said, without divulging how it got the information. O Estado de S. Paulo, citing sources with knowledge of the situation, said the talks began in January at the initiative of Parmalat, which fears that big food companies including Nestle (NESN.VX) could try to win control of its operations.
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