Groupe Lactalis launches takeover bid for Parmalat

Shelves being stacked with Parmalat milk at a supermarket in Rome The battle for control of Parmalat has become a hot political issue

French dairy firm Groupe Lactalis has launched a 3.4bn euro ($4.9bn; £3bn) takeover bid for Italian rival Parmalat.

Lactalis says it plans to keep Parmalat, Italy's biggest listed food group, trading on the Milan stock exchange.

The company says it will pay 2.6 euros per remaining Parmalat share. Lactalis already owns 29% of Parmalat.

Trading in Parmalat shares was suspended ahead of the statement.

The battle for control of Parmalat has become a hot political issue in Italy, with the company becoming bound up in issues of national identity amid fears over the increasing strength of French foreign investors in Italy.

French luxury goods group LVMH has announced it is to buy Italian jeweller Bulgari, while Italian and French investors are also battling over the Italian power generator Edison.

Some analysts believe Lactalis will face further competition in its bid for complete control of Parmalat.

"Lactalis did the best thing they could do," said Simone Ragazzi, an analyst at Italy's Centrobanca.

"The next step will probably be an Italian counter-bid," he added.

French President Nicolas Sarkozy is due to meet Italian Prime Minister Silvio Berlusconi in Rome on Tuesday to discuss tensions over migrants from North Africa entering France through Italy. It is expected that the future of Parmalat will also be discussed.

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