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Business

Breadmaker Rejects Pasta Producer's Offer

Kamps, Europe's largest bakery group, has rejected the Italian pasta giant Barilla's bid of 12 euro per share on the grounds that it reflects neither Kamps' growth prospects nor the potential for synergies.

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Can Barilla still lick Kamps?

Kamps AG, Europe's largest bakery group, on Monday evening rejected a takeover bid by Italy's Barilla, the world's largest pasta producer.

Barilla's cash offer of 12 euro per share, representing an 11 percent premium on Friday's closing share price, was deemed too low by the German company.

"The Kamps management board considers the proposed offer price as clearly inadequate. It properly reflects neither Kamps's prospects for growth nor the potential for synergies," the company said in a statement.

Shares in Kamps on Monday soared around 16 percent in a day to 12.50 euro before they were suspended from trading an hour before the market closed. Barilla went public with its offer after months of negotiations with Kamps' management failed to yield an agreement on price.

Barilla's bid is worth a total 992.4 million euros for the German group, and on top of that, it would have to assume just under 800 million euros in debt.

"We consider this a generous offer," said company chief Guido Barilla on Monday in Frankfurt. Barilla, which already owns a 2.07 percent stake in Kamps, wants to take over at least 50 percent of the share capital.

Barilla's principal banker, Banco Populari di Lodi, is also believed to hold shares in Kamps.

Company founder Heiner Kamps and Josef Boquoi, head of frozen-food specialist Bofrost, each hold stakes of more than 5 percent. The management also holds around 5 percent while the remaining stake of 80 percent-plus is in free float.

In 2001, Kamps raised revenue to 1.7 billion euro from 1.5 billion euro, but its operating profit fell to 86.7 million euro from 103.4 million euro. Net profit slumped to as little as 5.5 million euro from 47.3 million euro.

The company used credits to finance most of its expansion and the interest payments weigh heavily on its results.

Jadwiga Borbrowska, analyst at WestLB Panmure, believes a takeover of Kamps by Barilla would make sense. "The companies are a good fit and have little overlap," she said.

Up to now, Barilla's sole presence on the German market has been via crispbread producer Wasa, which it took over three years ago. A takeover of Kamps would double Barilla's sales, which last year totalled 2.45 billion euro.

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