Lactalis, one of Europe's biggest dairy companies, raised its stake in Parmalat to 29 percent on Tuesday, buying 15.3 percent in a $1.1 billion deal from funds Zenit Asset Management, Skagen and Mackenzie Financial Corp.
A judicial source said on Friday that Milan prosecutors had opened an investigation into Lactalis's stake-buying. Parmalat Chief Executive Enrico Bondi was heard as a witness in the inquiry and no individuals have been identified, the source said.
Il Sole 24 Ore business daily and Corriere della Sera said the probe centred on potential market manipulation from Jan. 26, when the funds announced an accord to present a joint list of board candidates for Parmalat, Italy's biggest listed food company.
The share price rose as much as 25 percent from the time of the announcement until funds sold their stakes. Trading volume also jumped with the announcement and in the days leading up to the sales.
In a statement late on Friday, Lactalis said it had heard of the Parmalat share investigation from news reports.
Lactalis "confirms it has always acted correctly and waits calmly to know of developments in the case", it said.
Spokesmen for the funds were not immediately available to comment.
Intesa Sanpaolo Chief Executive Corrado Passera said on Thursday the decree that allows the April 14 shareholders meeting to be moved back gave more time to form a rival Italian buyer. Passera is involved in efforts to put together an Italian consortium.
Il Sole 24 Ore said financier Gianni Tamburi, head of Tamburi Investment Partners and a leading shareholder in cable maker Prysmian SpA, had told Intesa Sanpaolo he was available to invest about 350 million euros in an Italian consortium.
A spokesman for the Tamburi firm was not immediately available to comment.
Lactalis's stake in Parmalat helped prompt Italy's centre-right government to approve a decree letting Parmalat delay a shareholder meeting, which could stymie Lactalis's bid to take control of Parmalat.
The government is also poised to bolster Italian food, energy, defence and telecoms companies against foreign takeovers.
Shares in Parmalat ended up 0.59 percent on Friday, in line with the STOXX Europe 600 food and beverage index