Lactalis has secured control of the board of takeover target Parmalat, which leaves the French dairy giant in a strong position to buy its Italian rival.
At a meeting of Parmalat shareholders yesterday (28 June), candidates put forward by Lactalis won nine out of 11 seats on the board of directors.
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The result means that Lactalis will effectively vote on its EUR3.4bn takeover bid for Parmalat.
Lactalis, which already owns 29% of Parmalat, has offered EUR2.60 a share for the rest of the business. The offer has attracted criticism from some Parmalat shareholders and last month Goldman Sachs – appointed by the company’s then board to evaluate the bid – said the offer was too low. Lactalis needs investors representing 55% of Parmalat’s shares to approve the offer for its deal to go through.
Parmalat shareholders have until 8 July to accept the bid and some industry watchers believe Lactalis, with control of the board, is unlikely to raise its offer.
“In our view Lactalis has seized the initiative with an opportunistic bid to acquire majority control to entrench its position at a lowball price,” MF Global analyst Andy Smith wrote today.
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By GlobalData“Having gained control of the Parmalat board, in our view, Lactalis will play out its offer timetable offer of EUR2.60 per Parmalat share. The probability of a bump in the offer has probably receded if the shareholders voting in favour of a change to the old board represents a read-through as to the proportion of shareholders wishing to tender at the current offer.”
However, Smith added: “That said, and following the Parmalat AGM, if necessary, Lactalis may revise its offer before expiry of the acceptance period to secure the receipt of acceptances sufficient to satisfy its acceptances condition.”
The directors that have stepped down include Parmalat CEO Enrico Bondi, who oversaw the company’s revival after it fell into bankruptcy in 2003.
The new board will sit for a year. Francesco Tatò will become Parmalat’s chairman, although a new CEO has yet to be elected.
Reports have speculated that Antonio Sala, the head of Lactalis’s business in Italy, could become CEO, although a Parmalat spokesperson said no decision had been made. The new board will meet in the coming days to decide upon the company’s new chief executive, the spokesperson said.
