Blog: Dean BestAll eyes on Parmalat's board

Dean Best | 13 May 2011

The Italian shares regulator today (13 May) gave Lactalis's takeover bid for Parmalat the green light. How will Parmalat's board react?

CONSOB, the Italian stock market watchdog, has approved Lactalis's EUR3.4bn (US$4.8bn) offer for the 71% of Parmalat that it does not already own.

Lactalis's interest in Parmalat has had its detractors ever since the French dairy group bought its first shares in the company in March.

Yesterday, Parmalat issued its financial results for the first quarter of 2011 and analysts and shareholders took the opportunity to ask CEO Enrico Bondi about Lactalis's offer and his company's likely response.

One shareholder, however, took the opportunity to remind Bondi of what he saw as the relative paucity of Lactalis's offer.

The bid is worth EUR2.60 a share; in March, when Lactalis built its 29% stake in Parmalat, it paid three funds EUR2.80 a share for 15.3% of the company.

The shareholder said it would be "unacceptable" for Bondi to "surrender control of the company" for Lactalis's current EUR2.60-a-share bid.

"We urge you to consider the inconsistency between accepting a bid of EUR2.60 when the move that enabled Lactalis to get to this position was EUR2.80," the shareholder said. "We would find that quite difficult to understand, frankly, having been investors in the company for a long time."

He added: "We look forward to you protecting our interests and ensuring that minority shareholders are respected and that you will update us on this."

The shareholder was also among those who asked Bondi if the Parmalat board had been looking - and would look - at other alternatives to the Lactalis bid.

"It surely would be worthwhile entertaining other alternative bidders who may have more industrial logic than Lactalis," the shareholder said. "Lactalis is not the only dairy company in the world."

Bondi met the questions on Lactalis politely but said Parmalat had (at that point) yet to receive the verdict from CONSOB. When it did, Bondi said, Parmalat would evaluate Lactalis's offer with its advisors and consider all options.

Now, Parmalat has heard CONSOB's verdict and will receive Lactalis's offer prospectus.

Reports in Italy claim that Parmalat's board, which is being advised by Goldman Sachs, will meet next week. There have been rumours in Italy that Goldman Sachs will argue that Lactalis's board is too low.

However, Lactalis's pursuit of Parmalat has provided one of 2011's more unpredictable storylines. (There have also been allegations of market rigging and insider trading. Reports in Italy have claimed that police have raided banks and PR firms over the allegations, which are linked to Lactalis's acquisition of shares in Parmalat).

Who knows which way it will turn next?


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