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Parmalat confident as LAG acquisition hearing begins

By Mark Astley , 26-Oct-2012

Parmalat has voiced confidence that “nothing wrong was done” in relation to its May 2012 intra-group acquisition of Lactalis American Group (LAG) – just hours after court proceedings surrounding the deal began in Italy.

The Parma-based investigation, which is being chaired by three judges, was opened earlier this month after it emerged that two Parmalat minority shareholders had raised concerns that the deal was completed in the interests of Parmalat’s parent company, BSA International.

LAG is also controlled by BSA – a fact that has previously led to suggestions that the deal was merely a way for BSA to move money between its subsidiaries.

Italy’s industry minister Corrado Passera and the Italian stock exchange regulator COSNOB also made calls for an investigation into the deal, with the latter questioning the use of Parmalat’s €1.5bn cash pile to finance the acquisition.

Parmalat spokesperson Fabio Caporizzi told DairyReporter.com that the firm is confident that the investigation will find no fault with the €904m deal.

Criminal investigation

“The court is investigating if members of the Parmalat board did their duty and approved the LAG acquisition in the best interests of the company,” said Caporizzi.

He added that a second, criminal investigation into the acquisition is likely to be opened if the current hearing decides that the deal was completed “for the wrong reasons.”

“The second possible investigation, which would be a criminal investigation, would investigate whether members of the board have done wrong in their own interests,” Caporizzi added. “But we are confident that nothing wrong was done.”

No discussions took place at the first hearing, Caporizzi revealed, but the court did appoint an “external expert” called Alberto Guiotto to represent Parmalat during the hearings.

Guiotto was granted a delay in proceedings to prepare his defence of the acquisition and is due to appear before the committee on 15 November 2012 to present relevant documents.

Guiotto will then face the court on 27 November 2012, following which a criminal investigation could be opened.

Financial scandal

The Parmalat brand is no stranger to financial scandal.

A number of former Parmalat executives have been jailed in recent years for their part in the firm’s financial collapse in 2004. The firm’s founder, Calisto Tanzi, was sentenced to 10 years in prison for market rigging after bankruptcy revealed a €14bn hole in the company’s accounts.

Caporizzi added that he can understand any links that are made between that case and the current proceedings.

“It is easy to understand that the Italian authorities want to have strong control over Parmalat is involved in, considering the trouble that has been caused before.”

“Parmalat’s history in my opinion could be one reason for all this attention,” he concluded.