Speculation of a Parmalat takeover by Danone queried by analysts

Posted by Daniel Palmer on 28th May 2009

Reports are circulating in the European press that the world’s largest yoghurt maker Danone could make a play for Italian dairy firm Parmalat.

Parmalat’s share price soared overnight as rumours swirled in the wake of a 3 billion euro (A$5.4b) capital raising by Danone earlier this week. The French company indicated the money would be used to pay down debt and/or make acquisitions and, given Parmalat’s market capitalisation is around the exact amount they raised, it has ensured speculation of a major dairy deal.

Danone did try to distance themselves from immediate takeovers upon announcement of the raising, with CFO Pierre-Andre Terisse indicating they had no plans to make any significant purchases in the “coming weeks to months”. However, that hasn’t quelled speculation of a major deal in the French financial newspapers.

Danone had been reported as a suitor for Parmalat when the company filed for bankruptcy in 2003, but refuted the suggestions of any interest. However, the Parmalat situation has changed markedly since then, with the Italian firm potentially ripe for a takeover given their lack of major shareholders. Incidently, the Italian firm made their first acquisition since bankruptcy in Australia last week, with the $70 million purchase of a number of dairy assets from National Foods.

The speculation is considered over-the-top by some analysts who believe that Danone would struggle to get approval from Italian authorities due to the potential to restrict competition.

“This is total nonsense and the most naive and desperate form of stockmarket trader speculation,” James Amoroso, Director of Amoroso Strategic Insights, told just-food.