Lactalis launches €3.4bn takeover bid for Parmalat

By Guy Montague-Jones

- Last updated on GMT

Lactalis launches €3.4bn takeover bid for Parmalat
Lactalis has mounted a €3.4bn takeover bid for Parmalat after government resistance frustrated its initial move to gain control of the company.

The privately-owned French dairy upped its shareholding in Parmalat to 29 per cent some weeks ago – just short of the threshold for a mandatory takeover bid.

Now it has decided to cross the line and has offered €2.60 a share to acquire Parmalat in full.

A deal would create a dairy company with an annual turnover of €14bn. For Lactalis, acquiring Parmalat could offer up big synergies as there is significant cross over in the Italian and European activities of the two companies.

In a statement, the maker of President cheese said: “Lactalis will evaluate the possibility of merging into Parmalat its European milk activities, including those in France and Spain.”

Not the preferred option

But there is a feeling that a full takeover bid was not Lactalis’s preferred course of action but one that it has been pushed to take.

Edoardo Courir, a Milan-based partner in law firm Bird & Bird, told “I would say that the Italian manoeuvres to keep Parmalat in Italian hands have pushed Lactalis to take a stronger and broader stance.”

The Italian government took two steps to frustrate the Lactalis plans.

It passed a decree allowing Parmalat to delay its AGM by 180 days and therefore provide time for an Italian bid to form before Lactalis can take control of the board. And to make an Italian solution more likely the government also made it possible for public funds to be used to protect ‘strategic’ companies.

Improved chances of success

Launching a full takeover bid is a way for Lactalis to increase its chances of overcoming Italian protectionism.

Courir said: “The new move from Lactalis strengthens its position because the full take over bid might raise their stake to 70 per cent, giving them absolute control.”

But this Lactalis may not be the move that the company envisaged making when it increased its shareholding last month.

MF Global analyst Andy Smith said in March: “Lactalis has indicated that it does not intend to launch a bid for Parmalat.”

Smith said that Lactalis is interested in the European business rather than its operations in Latin American or other overseas markets. He added that a European tie-up would deliver considerable synergies and bring in management with strong knowledge and understanding of the dairy sector.

News of the Lactalis bid came just hours before a summit meeting between French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi. After the meeting, Berlusconi indicated that the government would not necessarily be looking to block Lactalis. At a news conference, the political leader said he did not consider the Lactalis bid ‘hostile’ adding that he would welcome an Italian partner joining the French dairy in ownership of Parmalat.

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