Italian prosecutors have asked for Parmalat’s $904m acquisition of Lactalis American Group (LAG) to be cancelled and the Parma-based dairy giant’s board to be removed, according to reports.
Reuters reported earlier today that Parma’s public prosecutor, Gerrado Laguardia, told journalists that his colleagues had been asked to appoint a judicial administrator to run Parmalat for several months – in place of the current board.
Laguardia added that this four to five month period would be required to “implement necessary actions” to declare the LAG deal “nul and void.”
Parmalat completed the intra-group acquisition of sister unit LAG in May 2012. Both companies are owned by the parent company of French dairy giant Lactalis, BSA International. Civil and criminal inquiries into the deal are on-going – sparked by concerns that BSA International drained Parmalat’s cash pile through the deal.
DairyReporter.com approached Parmalat in regards to the reports. The firm’s spokesman Fabio Caporizzi declined to answer any questions until later today, but voiced the company’s astonishment at the announcement.
“The public prosecutor of Parma has informed journalists of his request. We are very shocked.”
“But we have no comment to make for now,” Caporizzi added.
Civil and criminal investigations….
Concerns about the LAG acquisition were first raised in 2012. Two Parmalat shareholders, Italy’s industry minister, Corrado Passera, and the Italian stock exchange regulator COSNOB all queried the legality of the deal.
Since then scores have questioned the use of Parmalat’s €1.5bn cash pile to finance the acquisition.
As a result of the concerns, three judges launched a civil investigation into the deal in October 2012.
The civil hearing is on-going, but DairyReporter.com understands that a decision on the civil investigation could be announced as early as tomorrow (Friday 1 March 2013).
The Italian headquarters of Parmalat and its owner, Lactalis, have since been searched by police as part of a criminal investigation into the LAG acquisition.
The Guardia della Finanza - the Italian Finance Police – executed searches warrants at Parmalat HQ and at the offices of Gruppo Lactalis Italia, the operating company that manages Parmalat. The warrants, which were issued by Parma’s public prosecutor, sought “document concerning the acquisition of Lactalis American Group.”
Notices were also served to a number of Parmalat board members and executives informing them that they had been made the target of an investigation into “aggravated embezzlement.”
Despite the overwhelming interest in the legality of the deal, Parmalat has maintained it innocence.
In December 2012 - just days after the search - Parmalat spokesman Caporizzi told DairyReporter.com that the company was “not worried.”