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Lactalis launches full takeover bid for Parmalat

Lactalis has upped the ante in the battle for Italian rival Paramlat with the announcement this morning on Tuesday April, 26, of a takeover bid for the entire business.

The French dairy giant, which has faced political and business opposition in Italy to its building of a near 29% stake in Parmalat, has tabled an offer for the rest of the company worth EUR2.60 a share. The bid values Parmalat at EUR3.38bn ($4.95bn).

Lactalis said the offer represented a premium of 21.3% on the average price of Parmalat’s shares over the last 12 months.

“We have an ambitious growth project for Parmalat, to build a flagship Italian group in the global milk market – with its headquarters, its organisation and its management in Italy,” said Lactalis president Emmanuel Besnier.

Last month, Lactalis started to buy shares in Parmalat, ultimately taking its stake to just under 29%. The French company also put forward a slate of candidates for nomination to Parmalat’s board at its AGM.

The moves prompted concern in political concerns in Italy that one of the country’s “strategic” businesses could fall into foreign ownership. Rome passed an emergency decree allowing companies based in Italy to delay shareholder meetings – a move said to be a way of giving Parmalat time to consider its options – and the Italian firm pushed back its meeting until June.

Rome also indicated that it wanted a “consortium” of domestic companies and banks to keep Parmalat in Italian hands.

Since Lactalis’s investment, reports in Italy have speculated that domestic banks could buy into Parmalat to prevent the French firm from taking control.

The industrial logic of Lactalis’s move for Parmalat is clear, writes Dean Best, managing editor of “A stronger Italian business would be created and each company could benefit from the overseas presence of the other. Parmalat’s presence in markets like Canada, Australia and South Africa, for instance, was no doubt a key reason behind Lactalis’s initial investment.

“However, the flurry of reports and level of speculation surrounding a desire to keep Parmalat Italian-owned means a counter offer should not be ruled out. Nationalism is one reason but let’s not forget that Italian financial institutions are likely to be eyeing the level of cash remaining on Parmalat’s balance sheet with interest.”


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