Lactalis-Parmalat Takeover Saga Drags On as Minority Shareholders Resist
April 05 2017 - 7:24AM
Dow Jones News
By Ben Dummett
French dairy giant Lactalis Group failed in its effort to buy
out the remaining minority shareholders of Parmalat SpA prolonging
its attempt to privatize the Italian company six years after it
initially launched its contentious takeover.
The setback is the latest twist in a long-running battle that
initially pitted big business against political interests but has
more recently become a tussle with some big name shareholders over
price.
Last month U.S. money manager Gamco Investors Inc. became the
latest investor to balk at Lactalis's bid to buy out the remaining
minority shareholders. Amid that opposition the French firm raised
its latest bid by about 7% to EUR682.2 million ($727 million) for
the stake it already doesn't own.
This latest rebuff represents a victory for some of Parmalat's
minority shareholders who have argued for a higher tender offer in
part to recognize the full potential benefits of acquisitions made
by Parmalat since 2014. That includes Lactalis' $578.8 million
purchase through Parmalat of the dairy operations of Brazilian food
company BRF SA .
Lactalis says it won't raise its latest offer of EUR3 a share
for Parmalat, which is listed on the Milan stock exchange. Still,
Parmalat was recently trading up 2.8% at EUR3.14 Wednesday, a bet
by some investors that the French company will ultimately offer a
higher bid.
As the main shareholder of Parmalat, "we will continue to manage
Parmalat...according to a long-term industrial strategy," while
ensuring to keep its industrial roots in Italy, Lactalis said in a
statement.
Lactalis, a family-owned company whose cheese, milk and other
dairy products are sold under such well-known brands, as President
and Bridel, currently owns 89.6% of Parmalat. That is up from 87.7%
in December when Lactalis launched a voluntary tender offer of
EUR2.80 a share to buy out the Italian subsidiary's remaining
public shareholders. Then in March it raised the offer to EUR3 a
share to help ensure it could at least boost its stake to 90%. At
that level, Lactalis could appeal to the Italian stock market
regulator to acquire the remaining shares, based on a price set by
the watchdog.
But the tender offer expired Tuesday without Lactalis reaching
that threshold. That means Parmalat will remain listed on the Milan
exchange. Lactalis has warned Parmalat's shareholders that by not
tendering, they could struggle in future to trade the stock because
of the difficulty potential investors would face acquiring a
meaningful holding.
Lactalis' effort to acquire Parmalat dates back to its original
bid to take over the whole company in April 2011. At that time,
Lactalis acquired 83.3% of Parmalat amid concerns among Italian
government officials and leading business figures that the country
could lose a national champion to foreign buyers. Parmalat oversees
operations in Europe, the Americas, Africa and Australia.
Lactalis had subsequently increased its Parmalat stake to 87.7%
in December 2016 when it initiated its latest tender offer. More
recently, some investors have raised concerns that Lactalis has
tried to privatize Parmalat while minimizing the premium it
pays.
Another reason for investor opposition to Lactalis' latest
tender offer is a continuing legal fight between Parmalat and
Citigroup Inc. that stems from the Italian company's bankruptcy in
2003 when it collapsed under EUR14 billion of debt. Parmalat
subsequently relisted on the Italian exchange in 2005.
Some investors had said that they wanted the Lactalis' tender
offer to include a so-called contingent value right to ensure
minority shareholders benefit from any proceeds generated by the
legal process. That said, Parmalat is fighting another legal battle
against Citigroup that could prove costly to the Italian company if
it loses.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
April 05, 2017 07:09 ET (11:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Gamco Investors (NYSE:GBL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Gamco Investors (NYSE:GBL)
Historical Stock Chart
From Sep 2023 to Sep 2024