Parmalat not concerned by ‘unbelievable’ LAG deal annulment request

01-Mar-2013 - Last updated on 01-Mar-2013 at 13:15 GMT

Parmalat is confident of a positive outcome in the civil hearing into its acquisition of Lactalis American Group (LAG) – despite yesterday’s request by prosecutors to remove the company’s board to enable the annulment of the deal.

The $904m acquisition is currently the subject of civil and criminal probes in Italy - sparked by concerns that the deal was designed to drain cash from Parmalat by its owner, BSA International, which also owns LAG.

The civil investigation, which is being chaired by three judges, is hearing the final closing arguments today.

In an “unorthodox” announcement yesterday, the public prosecutor for Parma, Gerrado Laguardia, revealed that he had issued a new request to the court – calling for the appointment of an administrator to replace Parmalat’s current board.

Laguardia revealed that under the request, Parmalat’s board would be removed for a period of four to five months. This time would be required to “implement necessary actions” to declare the LAG deal “nul and void,” he said.

DairyReporter.com approached Parmalat yesterday following the announcement. Company spokesman, Fabio Caporizzi, declined to comment but admitted that the company was “shocked.”

Speaking with DairyReporter.com today, Caporizzi said the company was still equally as stunned.

“The public prosecutor did something unbelievable yesterday,” he said. “What happened yesterday was really, really unorthodox, but it was very effective from a media point of view.”

Parmalat “not concerned” by request

Despite yesterday’s announcement by Laguardia, Caporizzi claimed that the company is not alarmed.

“Parmalat is not concerned. It is difficult to say what the outcome will be. But they are profiling a crime that is unbelievable from our point of view,” he said.

“They have asked for our co-operation, and that is what we are giving them.”

“We are sure that the judges will understand the decision of the Parmalat board,” said Caporizzi.

“Worst case scenario”

Concerns about the LAG acquisition were first raised in 2012 after two Parmalat shareholders, Italy’s industry minister, and the Italian stock exchange regulator Cosnob all questioned the legality of the deal.

The civil investigation, which began in October 2012, is currently hearing closing arguments. Once all arguments are made, the court will have 30 days to make a decision.

If the court finds in favour of the prosecution, it will consider the new request.

“Following their final decision, the request by the public prosecutor could get very real,” said Caporizzi. “But that is the worst case scenario.”

“If the request is accepted by the judge, a commissioner will be nominated to run the company for four or five months.”

“Some financial analysts in Italy are saying that they have never seen this happen before,” he said. “But it is possible.”