Just a few days after a Milan court cleared four international banks of charges relating to the 2003 collapse of Italian milk giant Parmalat, the resurgent company is faced with a takeover bid from its chief investor, France's privately-owned Lactalis.
Italian prosecutors had charged Citigroup, Deutsche Bank, Morgan Stanley and Bank of America with negligence, but the banks were acquitted last week by a Milan court.
Parmalat's founder and chief executive, 72-year-old Calisto Tanzi, had obscured 14 billion euros ($19 billion) in debt. He was given a lengthy prison sentence after the scandal wiped out the savings of some 135,000 people in what was Europe's biggest corporate bankruptcy at the time.
Now Lactalis, which owns 29 percent of Parmalat, is offering 2.60 euros per share of its Italian counterpart. It has plans to grow Parmalat aggressively, keep its headquarters in Italy, and create the world's largest dairy production group, the company announced in a statement Tuesday.
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Italian Prime Minister Silvio Berlusconi says the offer is not 'hostile'According to Lactalis spokesman Michel Nalet, the company is interested in Parmalat's operations in Canada, South Africa, Australia and South America.
"In terms of product, Parmalat... has a good market share position in many of these countries, including Italy in milk, where we are present in cheese, but not in milk," he told Deutsche Welle. "From a strategy point of view it is very interesting for the development of the two groups."
No resistance from Berlusconi
Lactalis' merger plans include expansion in emerging markets like Brazil, India and China. The company announced its public offering Tuesday just before French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi met in Rome.
The proposed 3.4 billion euro ($4.9 billion) deal could create a multinational behemoth with an annual turnover of some 14 billion euros. While Rome previously supported attempts to find an Italian buyer for Parmalat, Berlusconi said during Sarkozy's visit he doesn't see the bid as "hostile."
Instead, there is a "common desire" to "see the creation of large Franco-Italian...international groups that are sufficiently strong to stand up to global competition," Berlusconi said.
The markets also cheered the bid, with Parmalat shares shooting up by as much as 11 percent on the Milan stock exchange.
Cash to expand with
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Parmalat has operations in North and South America, Australia and South AfricaAccording to Guy Montague Jones, who has covered both companies for William Reed Business Media's DairyReporter.com, analysts reckon that Lactalis is partly interested in Parmalat's cash reserves.
"Financially Parmalat is actually in a healthy state," he told Deutsche Welle. "They have quite a lot of money in the bank - not so much through selling products, but through winning legal cases against banks that were involved in their downfall some years ago. So, they're actually quite cash-rich."
Jones added that Parmalat isn't known for efficient operations, but that the company has ample facilities in addition to its cash reserves.
"The very fact that they haven't spent that money to expand could possibly make them vulnerable to attack," he said. "[Parmalat] is quite a quite significant company In a market where being big makes a difference, there could be gains for Lactalis, especially."
Parmalat was not available for comment when contacted on Tuesday by Deutsche Welle.
Author: Gerhard Schneibel
Editor: Nicole Goebel