NatFoods eyes Parmalat's Australia firm
MELBOURNE, Australia (Reuters) -- Australia's National Foods Ltd said on Thursday it might bid for struggling Italian group Parmalat Finanziaria's Australian dairy business if it is put up for sale.
Parmalat Finanziaria SpA faces the biggest crisis of its 40 years in business as concerns mount that questionable investments have left the group with insufficient cash to repay debts.
The Milan-based company has named a turnaround specialist, Enrico Bondi, to draft a restructuring plan.
"It makes sense that (Parmalat) Australia could come into play at some point in time, but they've got bigger problems at the moment," an industry source said. Parmalat bought the Queensland-based Pauls business for a hefty A$436 million ($323 million) in 1998 and then paid tens of millions of dollars to buy the state of Victoria's licenses for three key milk brands.
But the business, which sells fresh milk domestically through its Pauls brand as well as yoghurt and ice cream, has struggled since the deregulation of Australian milk prices three years ago.
"They'd be lucky to get half that now," the source said.
Pauls General Manager David Lord was not immediately available for comment.
"We have expressed an interest in acquiring the Australian operations should they be available," National Foods spokesman Ian Greenshields told Reuters.
Other potentially interested companies -- soft drink maker Coca-Cola Amatil Ltd and New South Wales-based co-operative Dairy Farmers -- were coy on whether they might bid.
"We're interested bystanders, but it's a bit early yet to be getting too excited about what may or may not happen to Parmalat in Australia," said Dairy Farmers spokesman Stuart Silver.
At the end of June, Parmalat had the smallest share of Australia's fresh milk market, at 18 percent, compared with 43 percent for National Foods and 22 percent for Dairy Farmers.
Coca-Cola wants to follow its parent, U.S. soft drinks giant The Coca-Cola Co, into chocolate and other flavored milk to counter slowing demand for its carbonated drinks.
"We have stated our intention to expand the range of the beverages we offer either through acquisition or greenfields, but we are not going to comment on specific opportunities," C-C Amatil spokesman Alec Wagstaff said.
Australian dairy industry players have long agreed that the three main milk processors -- National Foods, Parmalat and Dairy Farmers -- need to become two to get rid of overcapacity and stop a price war that has followed price deregulation.
But National Foods and Parmalat have been spurned in a range of attempts to consolidate the industry.
The industry source said while Parmalat did not have much flavored milk capability in Australia, C-C Amatil could see it as a platform for swapping fresh milk capacity for some flavored-milk business in a broader industry restructuring.
National Foods has been seen as a potential takeover target itself. French food company Groupe Danone, New Zealand farmer-owned dairy firm Fonterra Co-Operative Group Ltd and Dairy Farmers hold major stakes in the company.
National Foods shares closed one percent down at A$4.03 in a softer overall market. Parmalat's shares closed on December 5 at 2.24 euros before being suspended from trading on the Milan bourse. Ratings agency Standard & Poor's has slashed the firm's rating to just two levels above default grade.
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