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Lactalis to raise Parmalat stake in $1B deal

Lactalis to raise Parmalat stake in $1B deal

The French dairy company Groupe Lactalis said Tuesday that it has reached a (EURO)744 million ($1 billion) deal to raise its stake in Italy's Parmalat to 29 percent _ a move that is likely to raise Italian government objections.
Italian officials have indicated that they would move to protect Parmalat's Italian identity, going so far as to call the dairy company a strategic business _ a term usually reserved for industries with vital assets such as defense or high technology.
Lactalis said it reached a deal with three major shareholders to take a 15.3 percent stake for (EURO)2.80 a share in both cash and stock. The price is a 14 percent premium on Monday's (EURO)2.40 closing.
Lactalis' purchase of shares owned by Mackenzie Financial, Skagen AS and Zenit Asset Management AB would make it by far the largest shareholder in the group. The next largest would be Blackrock Inc., with 4.94 percent, according to the Italian Stock Exchange.
Lactalis said it would buy the shares on Tuesday either through a direct purchase or equity swap. It will inform the markets of the breakdown "as soon as possible."
Parmalat shares were suspended briefly due to the announcement and were trading down 3.49 percent at (EURO)2.38 at midday.
The head of Italy's anti-trust authority said he was paying close attention to the moves.
"We take interest in the situation when there is a de facto change of control, not when it is a legal change of control," Antonio Catricala was quoted by ANSA as saying. "Probably in this case, it is a de facto change of control."
Parmalat became a symbol of corporate greed when it collapsed under (EURO)14 billion in debt in 2003. It has successfully turned around by focusing on its core dairy business.
The company remains a household staple across Italy as a producer of milk, yogurt and juices under the Parmalat brand.
Lactalis, meanwhile, is present in Italy with the dairy brands Galbani, Invernizzi and Cadermartori.
Italian pride was wounded when French colossus LVMH Moet Hennessy earlier this month agreed to buy Rome-based luxury jeweler Bulgari SpA, with commentators asking why Italian companies have not formed a large luxury group to defend Italian brands. Like Bulgari, most Italian luxury houses are family companies.
Finance Minister Giulio Tremonti has indicated that the government is likely to try and protect what it considers country's strategic businesses, noting that "French law protects its strategic businesses."
Premier Silvio Berlusconi successfully engineered the sale of the government's stake in carrier Alitalia to Italian bidders, derailing an attempt by Air France-KLM to take over Italy's flagship airline.


Updated : 2021-03-03 14:20 GMT+08:00