FRENCH DAIRY group Lactalis yesterday launched a €3.4 billion takeover bid for rival Parmalat, prompting intervention by Italy and France to defuse a row over control of the Italian company.

Lactalis will pay €2.60 per Parmalat share to create the world’s biggest dairy group, with estimated combined annual revenues of €14 billion.

The French company’s purchase of 29 per cent of Parmalat in March had spurred Italy to look at ways to stop one of the country’s best-known companies from falling into foreign hands.

Lactalis, Europe’s largest dairy company, said it had decided to make the takeover offer because of an Italian government decree that would thwart its bid to acquire Parmalat.

Lactalis made its bid just hours ahead of a meeting between Italian prime minister Silvio Berlusconi and French president Nicolas Sarkozy in Rome.

Speaking at a joint press conference, Mr Berlusconi said he hoped Italian groups would reach an accord with Lactalis after the French group’s bid.

“I do not consider the takeover bid a hostile takeover bid,” Mr Berlusconi said. He added that it was strange that the bid was launched on the day he was meeting Mr Sarkozy. Mr Sarkozy said the French and Italian governments would name advisers to “help bring the two sides together”.

Mr Berlusconi’s centre-right government has become concerned about French moves on Italian companies. Italian and French shareholders are battling for control of Italian power generator Edison, in which French utility EDF is poised to own a majority stake.

French luxury goods group LVMH Moet Hennessy Louis Vuitton is buying Italian jeweller Bulgari.

“Lactalis did the best thing they could do,” Centrobanca analyst Simone Ragazzi said.

Parmalat shares were up 11.1 per cent at €2.57 after the announcement.

Lactalis, which owns Italian cheese brands Galbani and Locatelli, said it planned to keep Parmalat listed on the Milan bourse and maintain the headquarters in Italy.

Its offer represents a premium of 21.3 per cent to Parmalat’s share price over the past 12 months, Lactalis said.

Parmalat has been seen as an attractive target in part because of €1.4 billion cash accumulated mostly through litigation settlements following the group’s rebirth from its spectacular collapse in 2003.

European Union regulators have been following Italy’s efforts to fend off Lactalis to ensure any steps taken comply with the bloc’s merger rules, the EU’s antitrust chief said this month. – (Reuters)