Italian pasta and baked goods producer Newlat has reportedly entered talks to acquire a significant stake in a dairy group Centrale del Latte d’Italia (CLI).

According to Reuters, the company’s move to acquire the Italian dairy producer came in response to the outbreak of coronavirus (Covid-19), which has increased the sales of food commodities in Italy considerably.

As part of this initiative, Newlat has signed a letter of intent (LoI) with CLI’s top investor Finanziaria Centrale del Latte di Torino to negotiate the acquisition.

Newlat chief executive Giuseppe Mastrolia said: “The strategic rationale is combining the two companies’ production capacity to become one of the leaders for dairy production in Italy.

“The high demand is for our products with a long-shelf-life, including pasta, baby food and bakery products … we are doing all our efforts to satisfy our customers and we can win new ones.”

Established in 2004, Newlat produces various food commodities.

In addition to selling in the Italian markets, the company also exports food products to other parts of the globe through significant partnerships with international distribution chains and operators.

If successful, Newlat expects the deal to increase its revenue to €500m ($533m). Last year, CLI registered revenue of €180m and had earnings of around €6m.