Three foreign funds trying to replace management at Italy's Parmalat said they would not team up with France's Lactalis, which revealed late on Thursday it had become the dairy company's biggest shareholder. "We do not see any industrial convergence with Lactalis. Such an alliance would make no sense. Either we run it or they run it," said Massimo Rossi, who will become the new boss of Parmalat if the funds win shareholder support at a general meeting on April 12-14.
The battle for control of Parmalat is reigniting investor appetite and sparking fears in Rome over the loss of Italy's key companies to foreign groups. The government of centre-right Prime Minister Silvio Berlusconi said on Friday it was readying a new law to protect strategic companies on the basis of similar regulation existing in France.
The move follows the this month's take-over of jeweller Bulgari by France's luxury giant LVMH, while French electricity monopoly EDF is trying to gain more direct control of energy group Edison. Shares in Parmalat were up 3.52 percent at 2.58 euros at 1600 GMT, having risen to their highest in three years on Thursday, before Lactalis, one of Europe's biggest dairy groups, said it had built up a stake of 11.42 percent.
Rossi told Reuters on Friday his industrial plan would make Italy's biggest listed food company, which has a market value of 4.3 billion euros ($6.07 billion), a world top-five dairy company within six years. The three funds - Mackenzie Financial Corp, Skagen AS and Zenit Asset Management AB - control a combined 15 percent and have proposed a new list of board members including Rossi.
Rossi believes his list could win the support of 20-23 percent of Parmalat's capital. He said he envisaged organic growth in Italy and selective acquisitions in emerging markets. If backed by shareholders, his first priority would be to speak to Lacteos, which operates a Parmalat licence in Brazil, and also explore a possible combination with domestic dairy champion Granarolo.
Lactalis did not comment on shareholding issues but said a tie-up between itself and Parmalat would enhance Parmalat's business globally. "There is complementarity in terms of geography and products which would allow the development of the business as a whole," a spokesman for Lactalis told Reuters. The funds and Lactalis face competition from Intesa Sanpaolo SpA, Italy's top retail bank and a Parmalat shareholder, with around 2 percent. The bank has said it is open to taking part in an Italian consortium on Parmalat.
Italy's Industry Minister Paolo Romani has said he "strongly favoured" an Italian consortium for Parmalat. Intesa Sanpaolo is backing Chief Executive Enrico Bondi, the architect of Parmalat's turnaround after its massive failure in 2003, in a list it presented on Friday.
Bondi is under fire from the foreign funds who want more acquisitions and better returns from the company's 1.4 billion euro cash pile. "The stake-building process could continue up to the first days of April, when it will be necessary to ask for voting capability at the next-to-come AGM," analysts at Mediobanca said in a research note. Granarolo Chairman Giampiero Calzolari, who has expressed interest in joining an Italian consortium for Parmalat, dismissed the possibility of linking up with Lactalis. "A consortium with Lactalis for Parmalat? I don't believe this is a path we can go down. The interests (of the groups) are too distant," Calzolari told Italian daily Il Sole 24 Ore.
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