French dairy giant Lactalis is trying to acquire Italy's Parmalat. Roberto Priolo on why Italy should at least consider the offer.
Relations between Italy and France are a complicated matter, to say the least. On one hand, the two nations recognise their similarities and appreciate their common heritage; on the other hand, there are times when rivalry becomes so intense that one would think the countries are simply sworn enemies.
The battlegrounds on which Rome and Paris are facing each other these days are numerous. Take the situation in Libya, for example: as thousands of people flee North Africa and arrive on Italian coasts in a bid to reach other European countries, Italy claims that it was abandoned by the EU to deal with a “tsunami of immigrants” (as the Italian government, somewhat exuberantly, puts it). It asked France to open its frontier – France refuses, very realpolitikly, and the Italian border town of Ventimiglia is turned into a refugee camp.
However, the real war rages about economic matters. EDF, the French energy colossus, is closing in on Italy’s second biggest producer of electricity Edison, whose board is led by a Frenchman as of yesterday, the same day dairy producer Lactalis announced its bid to acquire Parmalat.
Yesterday was not a good day for Italy, with France threatening to get its hands on two of the country’s most important companies. Parmalat, in particular, is considered a quintessentially iconic Italian company: Lactalis, which already owns 29% of Parmalat’s shares, launched an OPA (offerta pubblica di acquisizione, a takeover bid) yesterday, a few hours before a meeting between Italian Premier Silvio Berlusconi and the French President Nicolas Sarkozy was due to begin in Rome.
While speaking during a press conference, the two didn’t miss an occasion to compliment each other and remind everybody of the good relationships between Italy and France. Both Berlusconi and Sarkozy made sure they referred to both “French-Italian” and “Italian-French” groups, when discussing the future of companies like Parmalat or Edison.
Berlusconi said the time chosen by Lactalis to announce its bid was “peculiar”, but he also stressed he does not see the bid as “hostile”.
The Italian government has tried to stop Lactalis over the past few weeks. The Minister of Economy and Finance, Giulio Tremonti, pushed for the introduction of a decree to prevent “raids on companies” and encourage a group of Italian entrepreneurs to step in and take control of Parmalat. This is a highly protectionist effort, the details of which are not clear yet. Time is running out, too. By the beginning of May, an anti-OPA needs to be launched if Italy wants to keep Parmalat Italian.
This may remind many British people of the Cadbury case; Italy is not new to this kind of situation. To name one episode, Airfrance was the first to express an interest in saving Italian airline Alitalia from bankruptcy a few years ago, but the group of entrepreneurs was the chosen action then as well. Looking back, Airfrance might have been a better option.
Italy should stop and think for a second. Parmalat is not in the difficult situation Alitalia was when France took a step forward, and an acquisition by Lactalis would probably bring many benefits to the company, and the country as a whole.
Lactalis said it wants to keep the “Italianity” of Parmalat untouched, and offered to keep the production plants in Italy open and the Italian workforce in place. In addition, it said it is considering moving to Italy its French and Spanish operations, and to expand in new, emerging markets like Brazil and China.
In the integrated European economy, an impulse towards protectionism and nationalistic positions can easily damage a company and an entire country, especially a country as economically weak and as frozen as Italy.