French dairy company Lactalis announced Tuesday a 3.38 billion euro ($4.92 billion) offer to buy full control of Italy's Parmalat, a move the Italian government had sought to avoid to protect one of the country's corporate titans.
The unsolicited offer, at 2.6 euros per share, sent shares of the Italian company soaring 11 percent — to 2.58 euros — in midmorning trading on the Milan Stock Exchange.
In a statement, Lactalis sought to assuage concerns in Italy about the takeover, saying the merged company would be built around Parmalat and its brand name.
"We have an ambitious project for growth at Parmalat, to make a standard-bearing Italian group in consumption milk around the world, with headquarters, organization and management in Italy," said Lactalis president Emmanuel Besnier in a statement.
Lactalis will examine transferring its activities in the milk sector in France and Spain into Parmalat, the statement said, adding that the size of the merged company could provide enhanced growth prospects in emerging markets like Brazil, China, and India.
After Lactalis moved to increase its stake in Parmalat to 29 percent in recent weeks, the Italian government passed new rules to protect companies in strategic sectors from foreign takeovers. It claimed Parmalat was in the strategic sector of food production.
European Union officials said they were watching the case to see whether EU merger rules applied.
On the day the bid was announced, French President Nicolas Sarkozy was planning to meet with Italian Prime Minister Silvio Berlusconi for a bilateral summit.
Lactalis said its offer is targeting 1.30 billion shares — including the 1.23 billion shares that make up 71 percent of Parmalat's float — plus a possible further 63.7 million shares. At 2.6 euros per share, that would put Parmalat's total value at more than 4.7 billion euros.
Lactalis said the combined company would have revenues of 14 billion euros, making it the world leader in dairy products.
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