Lactalis eyes top spot with 3.4 bn euro Parmalat bid

26th April 2011, Comments 0 comments

French giant Lactalis on Tuesday launched a takeover bid worth 3.4 billion euros ($4.9 billion) for Italy's Parmalat to create the world's top dairy company ahead of a critical Italy-France summit.

With Rome and Paris already at loggerheads over immigration, the takeover of a major Italian brand was set to further complicate diplomatic ties as French President Nicolas Sarkozy flew into Rome in an attempt to patch up relations.

Lactalis already owns 29 percent of Parmalat and a group of Italian companies has been scrambling to block the takeover amid nationalist sentiment and fears over the French company's dominant role on the Italian market.

Investors however cheered the takeover bid, with Parmalat shares rocketing up 11.76 percent to 2.584 euros in the first deals on the Milan stock exchange.

But Susanna Camusso, head of Italy's biggest trade union, Cgil, said the bid showed that "Italy's big farming businesses are less and less Italian."

The powerful union boss criticised the "weakness and inexistence of an Italian consortium" that could step in to block the Lactalis takeover.

Lactalis, already the world's top cheese producer, said it was offering 2.60 euros per share -- 21.3 percent more than the average over the past 12 months.

"The Lactalis Group combined with Parmalat will have an annual turnover of around 14 billion euros, which would make it the biggest group in the world for dairy products," Lactalis said in its statement.

Lactalis chief Emmanuel Besnier said the French giant had "an ambitious growth project" for Parmalat that would increase the firm's visibility on the world stage while keeping its headquarters in Italy.

Italy and France have fallen out over Lactalis moves to control Parmalat.

"We're living in a single market reality," a source from Sarkozy's entourage told AFP ahead of the talks. "There is a common law that we respect that is applied in France as it is in Italy," the source said.

Interviewed in French business daily Les Echos, Franco Bassanini, the head of Italy's state-controlled Cassa Depositi e Prestiti bank, accused France of double standards in defending the Lactalis bid for Parmalat.

He said France had itself blocked a bid by Italian energy giant Enel for French electricity and natural gas firm Suez in the past.

"Parmalat has a leading role in the food and beverage sector and some people suspect Lactalis of only wanting to access its funds," he said.

"It's normal for the government to look for an Italian solution," he said.

Italian Economy Minister Giulio Tremonti said earlier that Rome would protect "strategic companies" and four Italian banks -- Intesa Sanpaolo, Mediobanca, BNL and UniCredit -- have offered to help any Italian investors.

Parmalat collapsed in spectacular fashion in 2003 in what was then Europe's biggest corporate failure. The bankruptcy destroyed the savings of some 135,000 people and left a gaping 14-billion-euro hole in the company's finances.

Following years of legal wrangling, the company has now recovered and had total revenue of 4.3 billion euros last year. Parmalat said on its website that it has 69 factories in 16 countries and employs around 14,000 people.

© 2011 AFP

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