By Christopher Emsden.Parmalat SpA (PLT.MI), the Italian dairy group taken over by France’s Lactalis Group last year, has bought a U.S. business from its parent that will add almost a billion dollars to its topline.Parmalat said late Tuesday, May 22nd its board had agreed to pay $904 million for Lactalis American Group, which sells French «President» Brie cheese as well as U.S.-made mozzarella cheese.
The enterprise value of the deal values the acquired company at 9.5 times projected 2012 earnings before interest, taxes, depreciation and amortization, or 10.6 times 2011 Ebitda.
Analysts noted the price was hefty but broadly praised the potential synergies of the deal, with the Kepler brokerage raising Parmalat to «buy» from «hold» and increasing its share target price to EUR2.1 from EUR1.9.
Parmalat shares at midday trading Wednesday were down 3.5% at EUR1.64, a fall broadly in line with Milan’s FTSE-Mib index.
For Lactalis, which bought 83% of Parmalat last year, the quasi-internal deal brings cash from its Italian prey to its French headquarters, which took on debt to make the acquisition.
Parmalat’s EUR1.4 billion cash pile was acquired due to successful lawsuits linked to the dairy group’s financial collapse almost a decade ago.
Parmalat, which was advised by Mediobanca SpA (MB.MI) in the acquisition, said the deal was «motivated exclusively by relevant industrial synergies, territorial coverage extension, product portfolio improvement and Ebitda improvement.»
The company, whose Canadian operations are almost twice the size of its domestic Italian business, noted that it is obtaining entry to the U.S. market, and that it will be able to import Canadian cheddar cheese as well as sell Lactalis’ «soft and fresh» cheese products.
Source: Wall Street Journal