Parmalat Approves the Acquisition of Lactalis American Group Inc.

The acquisition approved constitutes a high material related-party transaction and it has been subject to the favorable opinion provided unanimously by the Internal Control and Corporate Governance Committee, which has jurisdiction over transactions of this type.

24 May 2012 --- Parmalat S.p.A. announces that the Board of Directors, unanimously approved a transaction of high strategic and economic impact: the acquisition of Lactalis American Group Inc..

Lactalis American Group Inc. operates mainly in the United States in the production and distribution of cheese and other dairy products. Its portfolio of proprietary and licensed brands includes international brands, such as “Galbani” and “Président,” and local brands, such as “Sorrento,” “Precious” and “Mozzarella Fresca.” The acquisition includes the distribution, on an exclusive basis, of the products of the Lactalis Group throughout the Americas. In 2011, Lactalis American Group Inc. reported revenues of $979.3 million and EBITDA of $84 million; its net financial assets amounted to $19.4 million as at December 31, 2012.

For Parmalat Group this transaction will offer many important development opportunities, in particular through:
- The entry into the U.S. dairy market, which is one of the largest in the world; - The increase in revenues provided by value-added products, such as cheese. Lactalis
American Group Inc. is active in “soft and fresh” cheese, currently virtually absent from Parmalat’s portfolio;
- The exploitation of opportunities deriving from the export from Canada to the United States of cheddar cheese “Black Diamond” brand with relevant important synergies in costs and revenues;
- The stronger competitive position in Latin America with the addition, to the current activities in Colombia e in Venezuela, of access in high growth markets, such as Brazil and Mexico with cheese products manufactured in Canada, the United States and Europe.

The acquisition computed on the basis of the enterprise value amounting to $904 million (9.5 times EBITDA forecasted for 2012) which will be adjusted to take into account the cash availability at the date of the end of the month closer to the closing and a price adjustment mechanism based on the EBITDA actually earned. The transaction will be totally financed by its own means and it will be completed within July 2012.

The acquisition approved constitutes a high material related-party transaction and it has been subject to the favorable opinion provided unanimously by the Internal Control and Corporate Governance Committee, which has jurisdiction over transactions of this type.

The Committee and the Board of Directors relied on the support of Mediobanca, which issues the required fairness opinion.