ITALY – Parmalat activist investor Amber Capital believes the price of a buyout offer by France’s Lactalis undervalues the Italian dairy group and won’t be tendering its three per cent stake.
Lactalis, which won control of Parmalat in 2011 amid failed efforts in Italy to mount a domestic counter bid, has launched an offer on the 12.26 per cent of Parmalat it doesn’t already own with the aim of delisting the group.
Lactalis, itself a private company controlled by the Besnier family, is offering to buy Parmalat shares at 2.8 euros (C$3.99) each.
the stock, which has risen nearly 17 per cent since Lactalis announced its offer in late December, was flat on the day at three euros.
“We believe the price of Lactalis’ offer is too low and does not reflect the real value of Parmalat,” Amber Capital portfolio manager Arturo Albano told Reuters in an interview.
A group of retail shareholders in the Azione Parmalat association has also raised doubts about the price of the bid.
Parmalat buckled in 2003 with a 14 billion-euro hole in its accounts in Italy’s biggest corporate scandal.
It restructured under turnaround expert Enrico Bondi and funds clawed back through a number of lawsuits helped it build a large cash reserve.
Albano said that by taking full control of Parmalat, Lactalis would deprive minority shareholders of potential benefits of a dispute still pending with Citigroup.
“On Dec. 29 we asked (market watchdog) Consob to request Parmalat to provide additional information on the outlook for the next two-three years and on developments related to its dispute with Citi which includes a significant damage request,” he said.
Albano said Amber would start a campaign with proxy adviser Georgeson to explain to other investors why the offer undervalued Parmalat.
“The offer comes after a terrible year in which Parmalat was hit by the crisis in Venezuela … and exchange rates, with the exception of the U.S. dollar,” he said.
Albano noted Parmalat had invested one billion euros in the past three years in countries such as Brazil, Mexico and Australia.
“It is yet to reap the fruits of such investments, as the company’s chairman in person pointed out when we complained at April’s shareholder meeting,” he said.
Related Article: Lactalis launches buyout bid to delist Parmalat