Courtesy translation 

PARMALAT S.P.A. 

 

 

 

 

INFORMATION MEMORANDUM 

 

CONCERNING THE POSSIBLE ACTIVATION OF THE GUARANTEE CLAUSE 

 

CONTAINED IN ARTICLE 5.24.3 OF THE CONTRACT TO PURCHASE 

 

LACTALIS AMERICAN GROUP, INC. 

 

 

 

Prepared pursuant to Article 5 of the Regulation adopted by the Consob with Resolution  

No. 17221 of March 12, 2010, as amended by Resolution No. 17389 of June 23, 2010. 

 

 

 

 

 

July 2016 

 

 

This Information Memorandum has been made available to the public at the registered 

office  of  Parmalat  S.p.A.  (31  Via  Bixio,  Milan)  and  on  the  Company  website 

www.parmalat.com  and  through  the  authorized  storage  mechanism  “1Info” 

(www.1Info.it) on July 29, 2016. 

 

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CONTENTS 

 

DEFINITIONS ........................................................................................................................ 2 

FOREWORD............................................................................................................................ 4 

1.  NOTICE ............................................................................................................................ 6 

1.1.  Risks related to potential conflicts of interest deriving from transactions 

with related parties ......................................................................................................... 6 

2.  INFORMATION ABOUT THE TRANSACTION ................................................... 9 

2.1.  Description of the Transaction’s characteristics, modalities, terms and 

conditions ......................................................................................................................... 9 

2.2.  Identification of the related parties with whom the Transaction was 

executed and nature of the relationship..................................................................... 12 

2.3.  Indication of the Transaction’s economic motivations and benefits for 

Parmalat .......................................................................................................................... 13 

2.4.  Elements upon which the assessment of the Transaction was based ......... 15 

2.5.  Illustration of the economic and financial effects of the Transaction .......... 17 

2.6.  Effect of the Transaction on the compensation of the members of the 

management bodies of the Company and/or its subsidiaries. ............................... 17 

2.7.  Members of the management and control bodies, general managers and 

executives of the companies potentially involved in the transaction .................... 17 

2.8.  Indication of the corporate governance bodies or the Directors who 

conducted or participated in and/or the developed and/or approved the 

Transaction’s essential terms ....................................................................................... 18 

3.  ANNEXES ...................................................................................................................... 20 

 

 

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DEFINITIONS 

A list of the main terms used within this Information Memorandum is provided below. 

 

“Acquisition”  The  purchase  of  the  Equity  Interest  by  Parmalat  through 

LAG Holdings Inc. and Parmalat Belgium S.A. 

“Consob”  The  Italian National Commission  for Corporations  and  the 

Securities Exchange with offices in Rome, 3 Via G.B. Martini. 

“Control and Risk 

Committee” 

Parmalat’s  Control  and  Risk  Committee  (1),  comprised 

exclusively of independent Directors. 

“Equity Interest”  The equity  interests representing  the entire share capital of 

Lactalis American Group, Inc., Lactalis do Brazil ‐ Comercio, 

Importacao  e  Exportacao  de  Laticinios  Ltda  and  Lactalis 

Alimentos Mexico S. DE RL. 

“Information 

Memorandum” 

This information memorandum. 

“Issuer,” “Parmalat” or 

the “Company” 

Parmalat S.p.A., with registered office at 31 Via Bixio, Milan, 

Tax ID No. 04030970968, Milan R.E.A. No. 1790186. 

“Issuers’ Regulation”  The Regulation adopted by the Consob with Resolution No. 

11971 of May 14, 1999, as amended and integrated. 

“Opinion of the Related 

Party Committee” or the 

“Opinion” 

The Opinion  rendered by  the Related Party Committee on 

the Transaction, pursuant  to Article 6.1.3 of  the Procedure, 

on July 19,2016. 

“Related Party 

Committee” 

The committee with  jurisdiction over  reviewing Parmalat’s 

related  party  transactions,  a  function  that,  pursuant  to 

Article 5 of the Procedure, is performed by the Control and 

Risk Committee. 

“Related Party 

Procedure” or the 

“Procedure” 

The  Procedure  that  governs  Related  Party  Transactions 

approved  by  Parmalat’s  Board  of Directors  on November 

11,  2010,  as  amended  on March  7,2014, May  7,  2014  and 

April 16, 2015. 

“Sales Agreement”  The  sales  agreement  for  the  Equity  Interests  executed  on 

1  The  Control  and  Risk  Committee  was  established  most  recently  on  May  9,  2016;  in  its  previous 

configuration, it was called Internal Control, Risk Management and Corporate Governance Committee. 

 

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May 29, 2012 by Parmalat, in its capacity as purchaser, and 

BSA S.A., BSA  International S.A. and Groupe Lactalis S.A., 

in their capacity as sellers. 

“Transaction”  The possible activation of  the guarantee clause  set  forth  in 

Article 5.24.3 of the Sales Agreement. 

“Vendor Due 

Diligence” 

It identifies the due diligence performed by Ernst & Young 

on behalf of the sellers within the context of the Acquisition. 

 

 

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FOREWORD 

This  information memorandum  (the  “Information Memorandum”) was  prepared  by 

Parmalat S.p.A.  (the ”Issuer,” “Parmalat” or  the “Company”) pursuant  to Article 5 of 

the Regulation setting forth provisions concerning related party transactions, adopted by 

the Consob with Resolution No. 17221 of March 12, 2010, as amended, and pursuant to 

Article 9 of the Procedure Governing Related party Transactions approved by Parmalat’s 

Board of Directors, as amended on March 7, 2014, May 7, 2014 and April; 16, 2015 (the 

“Related Party Procedure” or the “Procedure”). 

The purpose of  this  Information Memorandum  is  to provide  the  shareholders and  the 

market with exhaustive information about the outcome of the assessment carried out by 

the Company to determine whether there was a basis for exercising the rights deriving 

from the clause stipulated in Article 5.24.3 of the Sales Agreement (the “Transaction”).

More  specifically,  in  the  Sales  Agreement,  in  addition  to  the  guarantees  that  are 

customary in similar transactions, the sellers provided express guarantees regarding the 

historical and prospective data provided to Parmalat as part of the due diligence process. 

Consistent with  this  approach,  the  abovementioned  clause  of  Article  5.24.3  included 

among the representations and warranties contained in the section entitled «Accuracy of 

Information,» states that: «All the projections and forward‐looking information, which have been 

supplied in any form to, or in the interest or for the benefit of, the Purchaser by the Sellers and/or 

their  directors,  officers, managers, Employees,  auditors,  counsels,  advisors  and  consultants,  in 

connection  with  the  preparation,  negotiation  and  execution  of  this  Agreement,  and/or  in 

contemplation  of  the  transactions provided  for hereunder,  are based  on  reasonable  assumptions 

and consistent with those assumptions». 

Based on this clause, if the prospective data provided by the sellers should be proven not 

to  have  been  based  on  reasonable  assumptions  and/or  not  to  have  been  developed 

consistent  with  those  assumptions,  the  buyer  would  be  entitled  to  be  indemnified, 

without any limitation, for the full amount of the damage suffered. 

The abovementioned guarantee can be activated within five years from the Acquisition’s 

closing date (which occurred on July 3, 2012). 

For  additional  information  regarding  the Acquisition,  please  consult  the  information 

memorandum concerning the Acquisition and the corresponding addendum, published 

by the Issuer on May 29, 2012 and June 27, 2013, respectively, as well as the information 

memorandum  concerning  the  implementation  of  the  purchase  price  adjustment 

mechanism published by  the  Issuer on  June  6,  2013,  all of which  are  available on  the 

Parmalat website (www.parmalat.com). 

The activities carried out by Parmalat’s Board of Directors, Control and Risk Committee 

and Related Party Committee included retaining the services of independent experts, as 

describe more in detail below, which enabled the abovementioned governance bodies to 

adopt  the  necessary  resolutions,  while  also  relying  on  and  taking  into  account  the 

analyses performed. More specifically, the following opinions were obtained: (i) a  legal 

opinion  rendered  by  Professor  Giorgio  De Nova  on November  24,  2014;  (ii)  a  legal 

opinion rendered by Professor Paolo Montalenti on October 23, 2015, with an addendum 

 

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of November  5,  2015;  (iii)  a  technical‐corporate  issue  opinion  rendered  by  Professor 

Mario Massari on March 18, 2016; and (iv) a legal opinion rendered jointly by Professors 

De Nova  and Montalenti on April  7,  2016. All of  these opinions  are  appended  to  the 

Opinion mentioned below, respectively, sub “B”, “C” e “D”, “E” and “F”. 

On July 19, 2016, the Related Party Committee rendered, unanimously, its opinion about 

the transaction pursuant to Article 6.1.3 of the Procedure (the “Opinion of the Related 

Party Committee” or  the “Opinion” and, being cognizant of  this Opinion, on  July 29, 

2016, the Board of Directors resolved by a majority vote, with Director Umberto Mosetti 

dissenting,  not  to  put  forth  any  compensation  or  indemnification  claim  for  damages 

caused  by  prospective  information  that  was  unreasonable  pursuant  to  and  for  the 

purposes  of Article  5.24.3  of  the  Sales Agreement.  The Opinion  of  the  Related  Party 

Committee,  together with  its  annexes,  is  appended  to  this  Information Memorandum 

sub 1 and is available on the Parmalat website (www.parmalat.com). 

The  assessments  of  the  Board  of Directors, Control  and Risk Committee  and Related 

Party  Committee  about  the  Transaction,  qualified  by  the  Board  of Directors,  for  the 

reasons specified below, as a highly material transaction, are being disclosed to market 

through  this  Information  Memorandum,  as  required  by  the  relevant  regulation. 

However, it is worth mentioning in this regard that, given the conclusions of the Related 

Party  Committee  and  the  corresponding  resolutions  by  the  Board  of  Directors,  the 

Transaction has a “negative” content, consisting of  the non‐activation of  the guarantee 

contained in Article 5.24.3  of the Sales Agreement. 

 

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1.  NOTICE 

An overview of  the main risks and uncertainties deriving  from  the Transaction, 

with special emphasis on those related to its nature as a related party transaction 

and those that could have a material impact on the Issuer’s activities is provided 

below. 

The content of the Notices must be read in conjunction with the other information 

presented in this Information Memorandum. 

 

1.1.  Risks related  to potential conflicts of  interest deriving from  transactions with 

related parties 

The  Transaction was  configured  by  Parmalat’s  Board  of Directors  as  a  highly 

material transaction with a related party because: 

1.  The Transaction  represents a phase of  the Acquisition, albeit conditional, 

since it would occur only in the presence of a possible contractual violation 

by the sellers; the handling of the this phase from a procedural standpoint 

is, in any case, specifically governed by the Sales Agreement; 

2.  Pursuant  to Article 2, Section 3, of  the Procedure, «whenever  a  transaction 

with a related party is carried out or requires multiple steps, the steps shall also be 

subject  to  the  Procedure,  regardless  of  their  materiality  based  on  individual 

thresholds»; 

3.  The Acquisition’s consideration exceeds the threshold of 100 million euros 

set  forth  in Annex  13.1  of  the  Procedure  for  the  purpose  of  qualifying 

highly material transactions; 

4.  Even  though  the  Transaction  has  an  undetermined  value,  its  close  link 

with  the Acquisition made  it  preferable,  in  keeping with  a  conservative 

approach,  to  include  the Transaction within  the  scope of  the Acquisition 

also with regard to the dimensional profile. 

The Acquisition was executed by Parmalat through its subsidiaries LAG Holding 

Inc.  and  Parmalat  Belgium  S.A.,  in which  the  Issuer  holds  indirectly  interests 

equal  to  their  entire  share  capital. Therefore  it qualifies  as  a  transaction with  a 

related party executed through subsidiaries. 

More specifically: 

(i)  the  Issuer  holds  the  entire  share  capital  of  Parmalat  Belgium  S.A.  (99% 

directly  and  the  remaining  1%  through  its  wholly  owned  subsidiary 

Dalmata S.p.A.); and 

(ii)  Parmalat Belgium S.A. holds the entire share capital of LAG Holding Inc.. 

The  Transaction’s  risk  profiles  related  to  the  existence  of  potential  conflicts  of 

interest  have  to  do  with  the  possibility  that  the  Transaction  could  produce 

 

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outcomes different from  those that  it might have had, had  it  involved unrelated 

parties. 

In this regard, please note that the Control and Risk Committee and the Related 

Party  Committee  were  involved  in  the  preparatory  phase  and  performed 

activities  functional  to  the  adoption  of  a  knowledgeable  and well  thought  out 

decision about the Transaction. 

Pursuant  to  Article  5  of  the  Procedure,  the  Related  Party  Committee  was 

informed of the Transaction’s terms and conditions and, at a meeting held on July 

19, 2016, it expressed, unanimously, its reasoned opinion that there was no basis 

for considering as “unreasonable” the assumptions used to construct the business 

plan underlying  the Vendor Due Diligence  for  the  reasons explained  in Section 

2.3, later in this Information Memorandum.  

Please note  that some members of  the Company’s Board of Directors,  in and no 

longer  in office, and an executive, no  longer  in office, were  served with notices 

informing  them  that  they  were  the  subject  of  investigations  concerning  the 

Acquisition. 

Some  of  the  parties  being  investigated  indicated  that  they were  informed  that 

their case had been closed. 

In addition,  information  carried  in  the press on February 5, 2016  indicated  that 

«the Preliminary Investigations Judge of Parma ordered the transmission to Rome of the 

file concerning the criminal investigation of the Parmalat‐Lactalis USA transaction […]. 

The Preliminary  Investigations  Judge ceded  jurisdiction  to Rome based on  the principle 

that jurisdiction belongs to the judge of the most serious crime, in this case hindering the 

oversight functions performed by the Consob which is based in Rome. […]» (2). 

It was later learned that the file at been forwarded to Milan’s Public Prosecutor on 

jurisdictional grounds; information then followed that Milan’s Public Prosecutor, 

claiming, in turn, that it lacked jurisdiction, raised a negative jurisdiction conflict 

that, pursuant to the applicable code, will be resolved by the Office of the General 

Prosecutor at the Court of Cassation. To the best of our knowledge, a decision has 

not yet been handed down. 

Please also note that Amber Capital UK LLP, acting on March 7, 2016 pursuant to 

and  for  the purposes of Article 2408 of  the  Italian Civil Code,  filed a complaint 

regarding facts that it deemed objectionable with regard to the Acquisition under 

different profiles  (conduct of  the Board of Directors; guidance and coordination 

activities  by  BSA  S.A.  over  Parmalat;  purposes  of  the Acquisition  transaction; 

marketing  expenses;  LAG’s  value  and  negotiations;  valuation  of  synergies; 

commercial agreements) with the Company’s Board of Statutory Auditors, which 

submitted  an  initial  report  to  the  Shareholders’  Meeting  on  April  29,  2016, 

reserving the right to conduct further activities. 

2 Release by the Reuters press agency of February 5, 2016, 4:41 PM.  

 

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Lastly, please note that the Directors Michel Peslier, in his capacity as an officer of 

companies belonging to the group headed by BSA S.A., Patrice Gassenbach, in his 

capacity as a consultant to the group headed by BSA S.A., and the Chief Executive 

Officer  Yvon  Guérin,  the  latter  due  to  the  fact  that  the  abovementioned 

investigations are ongoing, at a meeting held by Parmalat’s Board of Directors on 

July 29, 2016, disclosed any interest that, directly or on behalf of third parties, they 

may have in the Transaction by virtue of the situations mentioned above, thereby 

providing  the  affidavit  required  pursuant  to  Article  2391  of  the  Italian  Civil 

Called, and abstained from voting. 

 

 

 

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2.  INFORMATION ABOUT THE TRANSACTION 

2.1.  Description  of  the  Transaction’s  characteristics,  modalities,  terms  and 

conditions 

Starting in the second half of 2014, the Company, taking also into account certain 

variances between the projections contained  in the business plan and the results 

achieved, addressed the issue of verifying whether there was a basis for activating 

the guarantee clause contained  in Article 5.24.3 of  the Sales Agreement. To  that 

effect,  the  Company  requested  a  legal  opinion  from  Professor  De  Nova. 

Specifically, the following questions was submitted to Professor De Nova: 

«(a) What  is  the  interpretation  of Clause 5.24.3  of  the Contract  and which  rights does 

Clause 5.24.3 of the Contract convey to the Purchaser; 

(b) Under which  types  of  factual  circumstances  can  the guarantee  contained  in Clause 

5.24.3 of the Contract be activated by the Purchaser vis‐à‐vis the Sellers and, specifically, 

whether the variances between actual data and the prospective data supplied by the Sellers 

empowers the Purchaser to activate the guarantee contained in Clause 5.24.3. 

(c) Which verifications  should be  carried out by  the Purchaser  to ascertain whether  the 

conditions  for enforcing the guarantee are being met, and how  frequently and/or within 

which deadline this should be done.». 

Professor De Nova rendered his opinion on December 4, 2014. 

At a Board meeting held on December 4, 2014, the Chairman recommended that 

the Board  of Directors  follow  the path  suggested  by Professor De Nova  in  his 

opinion  and,  specifically,  (i) wait  until  the  beginning  of  2015  in  order  to  have 

access to actual data for LAG for the 2014 reporting year; and (ii) by a resolution 

discussed  and  deliberated  by  the  Board  of Directors,  retain  the  services  of  an 

independent  professional  to  perform  the  verifications  regarding  the 

reasonableness and adequacy of the prospective data recommended by Professor 

De Nova. At the abovementioned meeting, the members of the Control and Risk 

Committee indicated a need for performing more in‐depth analyses of a technical, 

financial and contractual nature. 

The Board  of Directors,  at  the meetings  held  on April  16  and March  13,  2015, 

resolved  to submit  to Professor Paolo Montalenti,  recommended by  the Control 

and Risk Committee,  the  following question: «Can Professor Montalenti specify,  in 

light  of  the documents  referred  to below  regarding  the “Share Purchase Agreement”  of 

May  29,  2012  concerning  LAG/LEA, what  are  the  guarantee  and  protection  tools  for 

Parmalat S.p.A. with regard to historical and prospective data and the different guarantee 

items, based also on an analysis of the technical financial reports that have been supplied 

thus  far, also  in  light of  the  fact  that  in  this  case  the  contract  in question  is between a 

controlling party and a controlled party? Can he also specify under which circumstances 

and with which modalities these tools can be activated?» 

Professor Montalenti  rendered his opinion on October 23, 2015,  followed by an 

addendum November 5, 2015. 

 

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The  Control  and  Risk  Committee,  based  on  the mandate  it  received  from  the 

Board of Directors «to perform the necessary in‐depth analyses on the issue in question 

[i.e., the contract for the acquisition of LAG and any other available remedies] and 

report to the Board, reserving the right, after performing the abovementioned analyses, to 

decide whether  it  should  retain  the  services of outside  consultants,» prepared  its own 

report, called “Report on the LAG acquisition,” a draft of which was approved by 

the Control and Risk Committee at its meeting of December 16, 2015, which, inter 

alia,  contains  considerations  regarding  the  assumptions  underlying  the 

projections  contained  in  the Vendor Due Diligence  and  some  simulations  and 

valuation exercises based on a comparison between key economic results for the 

2012‐2014  period  for  Lactalis American Group  Inc.  separately  and  the Vendor 

Due Diligence  the data. At  the same meeting of December 16, 2015,  the Control 

and  Risk  Committee  also  resolved  to  recommend  that  the  Board  of  Directors 

appoint an expert  in corporate  issues,  identified as Professor Mario Massari,  for 

assessing  the  preliminary  conclusions  reached  in  the  abovementioned  draft 

Report. On December  22,  2015,  Parmalat’s  Board  of Directors  resolved  to  ask 

Professor Massari  to  provide  a  technical‐corporate  opinion  in  response  to  the 

following  question:  «You  are  being  asked  to  render  a  technical‐corporate  opinion  in 

support  of  the  analyses  performed  by  the  Internal  Control,  Risk  Management  and 

Corporate  Governance  Committee  regarding  the  determination  of  whether  or  not  the 

assumptions  underlying  the  prospective  data  contained  in  the  Vendor Due  Diligence 

prepared by Ernst & Young are reasonable». 

Professor Massari rendered his opinion on March 18, 2016. 

At  a  meeting  held  on  March  30,  2016,  the  Board  of  Directors,  further  to  a 

discussion  regarding whether or not  the activation of  the  contractual guarantee 

should qualify as a related party transaction, resolved: 

‐ «to qualify the assessment as to whether or not the guarantee clauses contained in the 

“Share Purchase Agreement”  of May  29,  2012,  the  subject  to which was  the LAG 

acquisition,  as  a  highly  material  related  party  transaction  for  the  effects  of  the 

Regulation adopted by the Consob with Resolution No. 17221 of March 12, 2010, as 

amended»; 

and, in accordance with the recommendation by the Control and Risk Committee: 

‐ «to ask Professors Giorgio De Nova and Paolo Montalenti to prepare a joint opinion 

as to whether or not there  is a basis  for activating the guarantee provided by Clause 

5.24.3  of  the  Share  Purchase  Agreement,  based  on  the  corporate‐issue  opinion 

rendered by Professor Mario Massari with regard to ascertaining whether or not the 

assumptions underlying the prospective data contained in the Vendor Due Diligence 

are reasonable». 

On April  11,  2016,  after  receiving  this  additional  opinion  on April  7,  2016,  the 

Control and Risk Committee expressed the «opinion that there is no contractual basis 

for activating the clause set forth in Article 5.24.3 of the LAG sales agreement,» therefore 

asking  the  Board  of Directors  to  adopt  the  necessary  resolutions;  on  the  other 

 

11 

 

hand,  the Related Party Committee  chose not  to  render an opinion pursuant  to 

the Related  Party  Procedure,  resolving  by majority  vote:  «to  ask  Professor  Paolo 

Montalenti, who  is being given nunc pro tunc mandate to contact Professor Giorgio De 

Nova  to verify his availability  to undertake  the assignment detailed below together with 

Professor Paolo Montalenti,  to  prepare  a  report  in  response  to  the  following  question: 

«Can  the  designated  expert  indicate  whether  the  transaction  [not  the  exercise  of  the 

contractual guarantee] falls within the implementation scope of the Procedure for Related 

Party Transactions, considering  the remarks put  forth  in  the  introduction, and whether 

the transaction qualifies as a highly material transaction, in view of the fact that, on the 

one hand, the transaction could qualify as a development of a highly material transaction 

(the LAG acquisition) and, on the other hand, the valuations provided in Professor Mario 

Massari’s  report  provide  evidence  of  a  discrepancy  significantly  below  the  reference 

threshold for highly material transactions and equal to 100 million euros. If the Procedure 

for Related Party Transactions is applicable, what should be the subject and scope of the 

analysis  that  the Committee  is  required  to  perform  to  better  identify  and  substantiate 

Parmalat’s  corporate  interests,  as well  as:  (a)  if  the decision not  to  activate  the  clauses 

contained  in  the LAG  sales  agreement,  specifically with  regard  to Clause  5.24.3  of  the 

abovementioned agreement, could be deemed to be in the Company’s interest; (b) if there 

are,  and  what  are  they,  any  additional  contractual  and/or  legal  remedies  that  can  be 

activated to protect the Company’s interest, also in light of any facts potentially relevant 

pursuant to regulations governing guidance and coordination activities, as referred to in 

Article  2497  and  following  articles  of  the  Italian  Civil  Code,  and  any  issues  recently 

raised in the complaint pursuant to Article 2408 of the Italian Civil Code filed on March 

7, 2016 with the Board of Statutory Auditors and  forwarded  for their  information to all 

Directors, taking also into account the findings that the Board of Statutory Auditors will 

provide.»» 

At a subsequent meeting on April 14, 2016, the Board of Directors was informed 

of  these  two  resolutions  and,  noting  that  an  opinion  of  conformity  with  the 

Related Party Procedure had not be provided, did not adopt any  resolution on 

this  issue,  except  for  approving,  by  a majority  vote,  a  press  release  aimed  at 

supplementing the financial statement disclosure provided about the verifications 

carried out regarding the activation of the contractual guarantees provided under 

the Sales Agreement. 

Following the election of the new Board of Directors by the Shareholders’ Meeting 

of April 29, 2016, the Transaction was submitted to the Related Party Committee 

in its current composition, which met to review it on June 13, June 27 and July 19, 

2016. 

At the first of these meetings, the Related Party Committee gathered the relevant 

documents  and,  taking  into  account  (i)  the  resolution  by which  the  Board  of 

Directors,  on  March  30,  2016,  qualified  the  Transaction  as  a  highly  material 

Transaction with a related party and (ii) the remarks provided on that occasion by 

the Board of Statutory Auditors in that regard, resolved to revoke the resolution 

of April 11, 2016, for the part in which it requested an opinion on the applicability 

 

12 

 

of the Procedure, and suspend the effectiveness of the remainder of the resolution 

and,  consequently,  the  effectiveness  of  the  assignment  given  in  this  regard  to 

Professors Giorgio De Nova and Paolo Montalenti. 

At  the second meeting,  the Related Party Committee agreed  that the documents 

concerning the Transaction were complete and exhaustive. 

On  July  19,  2016,  the  Related  Party  Committee,  having  concluded  (i)  from  a 

formal standpoint, that a review of the complaint pursuant to Article 2408 of the 

Italian Civil Code was outside the scope of the activities related to the issuance of 

the Opinion and (ii) from a substantial standpoint, that  it could concur with  the 

recommendation made at the meeting of the Board of Directors of March 30, 2016 

by  the Board of Statutory Auditors  to  the directors to “suspend  for the time being. 

the  in‐depth  analyses  of  the  abovementioned more  general  issue  [i.e.,  the  content  of 

Amber Capital’s  complaint  pursuant  to Article  2408  of  the  Italian Civil Code], 

while  the  Board  of  Statutory Auditors  completes  its  verifications,”  revoked  also  the 

remaining part of the resolution adopted on April 11, 2016 regarding the request 

for an additional legal opinion and unanimously approved the Opinion. 

On July 29, 2016, the Board of Directors convened for a meeting and, having been 

informed of the Opinion of the Related Party Committee, resolved by a majority 

vote,  with  Director  Umberto  Mosetti  dissenting,  not  to  put  forth  any 

compensation  or  indemnification  claim  for  damages  caused  by  prospective 

information  that was unreasonable pursuant  to  and  for  the purposes of Article 

5.24.3 of the Sales Agreement. 

 

2.2.  Identification of  the  related parties with whom  the Transaction was executed 

and nature of the relationship 

The  Transaction was  configured  by  Parmalat’s  Board  of Directors  as  a  highly 

material transaction with a related party because: 

1.  The Transaction  represents a phase of  the Acquisition, albeit conditional, 

since it would occur only in the presence of a possible contractual violation 

by the sellers; the handling of the this phase from a procedural standpoint 

is, in any case, specifically governed by the Sales Agreement; 

2.  Pursuant  to Article 2, Section 3, of  the Procedure, «whenever  a  transaction 

with a related party is carried out or requires multiple steps, the steps shall also be 

subject  to  the  Procedure,  regardless  of  their  materiality  based  on  individual 

thresholds»; 

3.  The Acquisition’s consideration exceeds the threshold of 100 million euros 

set  forth  in Annex  13.1  of  the  Procedure  for  the  purpose  of  qualifying 

highly material transactions; 

4.  Even  though  the  Transaction  has  an  undetermined  value,  its  close  link 

with  the Acquisition made  it  preferable,  in  keeping with  a  conservative 

 

13 

 

approach,  to  include  the Transaction within  the  scope of  the Acquisition 

also with regard to the dimensional profile. 

The Acquisition was executed by Parmalat through its subsidiaries LAG Holding 

Inc.  and  Parmalat  Belgium  S.A.,  in which  the  Issuer  holds  indirectly  interests 

equal to their entire share capital. Therefore it qualifies as a transaction with the 

related party executed through subsidiaries. 

More specifically: 

(i)  the  Issuer  holds  the  entire  share  capital  of  Parmalat  Belgium  S.A.  (99% 

directly  and  the  remaining  1%  through  its  wholly  owned  subsidiary 

Dalmata S.p.A.); and 

(ii)  Parmalat Belgium S.A. holds the entire share capital of LAG Holding Inc.. 

The  Transaction’s  risk  profiles  related  to  the  existence  of  potential  conflicts  of 

interest  have  to  do  with  the  possibility  that  the  Transaction  could  produce 

outcomes  different  from  those  that  it  might  have  had,  had  it  not  involved 

unrelated parties. 

In this regard, please note that the Control and Risk Committee and the Related 

Party  Committee  were  involved  in  the  preparatory  phase  and  performed 

activities  functional  to  the  adoption  of  a  knowledgeable  and well  thought  out 

decision about the Transaction. 

Pursuant  to  Article  5  of  the  Procedure,  the  Related  Party  Committee  was 

informed of the Transaction’s terms and conditions and, at a meeting held on July 

19, 2016, it expressed, unanimously, its reasoned opinion that there was no basis 

for pursuing a compensation or  indemnification claim  for damages caused by a 

prospective information that was unreasonable pursuant to and for the purposes 

of Article 5.24.3 of the Sales Agreements, for the reasons explained in Section 2.3 

of this Information Memorandum. 

Lastly, please note that the Directors Michel Peslier, in his capacity as an officer of 

companies belonging to the group headed by BSA S.A., Patrice Gassenbach, in his 

capacity as a consultant to the group headed by BSA S.A., and the Chief Executive 

Officer  Yvon  Guérin,  the  latter  due  to  the  fact  that  the  abovementioned 

investigations are ongoing, at a meeting held by Parmalat’s Board of Directors on 

July 29, 2016, disclosed any interest that, directly or on behalf of third parties, they 

may have in the Transaction by virtue of the situations mentioned above, thereby 

providing  the  affidavit  required  pursuant  to  Article  2391  of  the  Italian  Civil 

Called, and abstained from voting. 

 

 

2.3.  Indication of the Transaction’s economic motivations and benefits for Parmalat 

The Board of Directors, in evaluating the Transaction, concurred with the remarks 

put forth by the Related Party Committee to the effect that there was no basis for 

 

14 

 

considering “unreasonable” the assumptions used to construct the business plan 

underlying  the  Vendor Due Diligence  and,  consequently  to  lodge  a  claim  for 

compensation  pursuant  to  and  for  the  purposes  of  Article  5.24.3  of  the  Sales 

Agreement. 

In  its Opinion about  the Transaction,  the Related Party Committee pointed out, 

inter alia, that: «the analyses performed by Professors De Nova, Montalenti and Massari 

appear  to be  reasonable  from a  factual,  technical and argumentative  standpoint and  the 

conclusions  that  they reached completely acceptable:  (also) by  the unanimous opinion of 

this Committee  there  appears  to  be no  basis  for  exercising  the  rights deriving  from  the 

clause stipulated  in Article 5.24.3 of  the Share Purchase Agreement of March 29, 2012 

[…]; and, consequently, there is no basis for pursuing a compensation or indemnification 

claim for damages caused by a prospective information that was unreasonable pursuant to 

and  for  the purposes of  the abovementioned clause,  in addition  to what was already  the 

subject of a settlement through the Price Adjustment Agreement of May 30, 2013.» 

Furthermore,  the  Related  Party  Committee  specified  that  the  “negative” 

assessment  stated  in  the  Opinion  was  not  due  to  lack  of  conformity  of  the 

“transaction – activation (or not) of a contractual guarantee close” with the criteria 

of the Company’s interest in the transaction and the positive effects of its terms, as 

well as its substantive and procedural correctness, but rather the belief of its lack 

of merit from a  technical  judicial standpoint, which could result  in the denial of 

any judicial claim, resulting in having to defray costs (also in terms of aggravated 

liability,  considering  the  awareness  resulting  from  the  extensive  and  in‐depth 

preparatory  analysis  carried  out)  and,  therefore,  an  absence  of  interest  and 

convenience in executing it. 

On July 29, 2016, the Board of Directors convened for a meeting and, taking into 

account the Opinion of the Related Party Committee, resolved by a majority vote, 

with Director Umberto Mosetti dissenting, not to put forth any compensation or 

indemnification  claim  for damages  caused by prospective  information  that was 

unreasonable  pursuant  to  and  for  the  purposes  of  Article  5.24.3  of  the  Sales 

Agreement. 

Director Mosetti voted against  the motion “both on  the merit,  for reasons regarding  the 

numerous and detailed criticisms of  the content of  the opinion of  the Committee  for Related 

Party Transactions (and of the partial and misleading reconstruction of the entire LAG affair 

provided  in  that  document),  and  with  regard  to  the  method  adopted  by  the  Committee, 

because, as the Director himself stated on multiple occasions, at meetings both of the Board of 

Directors  and  the  Committee,  the  opinion  rendered  by  the  Committee  for  Related  Party 

Transactions  should  not  have  been  limited  to  analyzing  a  specific  contractual  clause,  but 

should have taken into account the entire transaction and the context within which the LAG 

transaction was executed.” 

In the opinion of Director Mosetti “the fact that an analysis limited to a single contractual 

clause would not have produced a result different  from  the conclusion  that  the option of an 

action against the seller was not available was obvious from the start: as stated repeatedly in 

the  past,  the  LAG  sales  agreement  was  written  by  the  seller,  with  a  framework  of 

 

15 

 

“negotiations” that—as the Court of Parma verified—were characterized by extremely serious 

irregularities,  and,  consequently,  it was  obvious  that  abovementioned  agreement would not 

contain any clause providing effective protection for Parmalat.” 

Director Mosetti  then pointed out  that “the  fact  that  the Board of Directors, after  several 

years  have  elapsed,  has  not  yet  assessed  the  availability  of  contractual  or  extra‐contractual 

remedies (in addition to the specific clause subject of analysis) that could be enforced against the 

seller,  which  exercised  guidance  and  coordination  activity  over  the  company,  constitutes 

negligent inertia on the part of the Board of Directors, which hopefully the Board of Statutory 

Auditors will remedy, further to a complaint pursuant to Article 2408 of the Italian Civil Code. 

“Lastly, Director Mosetti  cannot  help  pointing  out  that  the  opinion  of  the Committee  for 

Related Party Transactions is, in many parts, sketchy and partial and, consequently, runs the 

risk of providing the market with incomplete and misleading information.” 

The Board of Directors, being cognizant of the position taken by Director Mosetti, 

pointed out  that  (i)  the Opinion of  the Related Party Committee  is based and  is 

supported by  the unambiguous conclusions of  the opinions rendered by several 

prestigious  independent  experts, who  concluded  that  there was no  justification 

for pursuing against  the seller a valid and  legitimate compensation claim based 

on  Article  5.24.3  of  the  Sales  Agreement;  (ii)  the  abovementioned  lack  of 

justification  renders  devoid  of merit  from  a  technical  and  legal  standpoint  the 

pursuit of an action for damages that, consequently, would not produce concrete 

economic  benefits  for  the  Company:  and  (iii)  at  this  point,  Parmalat  does  not 

appear to have suffered any damage because of the Acquisition. 

 

2.4.  Elements upon which the assessment of the Transaction was based 

The Related Party Committee, in order to render its reasoned Opinion about the 

Transaction,  reviewed  and  took  into  account  the  documents  produced  by  the 

Company,  the preparatory activity carried out  in 2015 and  the  first half of 2016 

also  by  the  Internal Control Committee,  as well  as  the  finding  set  forth  in  the 

abovementioned opinions rendered by Professor De Nova on November 24, 2014, 

Professor  Montalenti  on  October  23,  2015,  with  an  addendum  following  on 

November 5, 2015, Professor Massari on March 18, 2016 and jointly by Professors 

De Nova and Montalenti on April 7, 2016. 

The  experts  attested  that  they met  the  independence  requirements  and did not 

have  any  economic  and  financial  relationship with  the  Issuer,  the  controlling 

parties,  the subsidiaries and  the companies under  the  joint control, nor with  the 

Directors of the abovementioned parties. 

According to Professor De Nova’s opinion: 

(i) if there should occur a negative variance for each of the 2012, 2013 and 2014 

reporting  years  between  the  aggregate EBITDA  set  forth  in  the  business 

plan  contained  in  the  Vendor  Due  Diligence  and  actual  EBITDA,  this 

would enable Parmalat to obtain from his counterparty an indemnification 

 

16 

 

corresponding  to  the  abovementioned  variance,  provided  certain 

conditions can be met; 

(ii) the first and fundamental condition is that the business plan was based on 

unreasonable assumptions and that the prospective data that arise from  it 

are not adequate with respect the assumptions; 

(iii) secondly,  there  must  be  a  negative  variance  with  respect  the 

abovementioned EBITDA data for one or more of the 2012, 2013 and 2014 

reporting years; 

(iv) thirdly,  if  there  is  such a variance,  the existence of a nexus of  immediate 

and  direct  causation  between  the  ascertained  unreasonableness  of  the 

prospective  data  and  the  negative  variance  in  EBITDA  in  the  sense 

specified above must be verified. 

According to Professor Montalenti’s opinion: 

(i)  the  concept  of  the  reasonableness  of  the  prospective  data  must  be 

understood  as  the probability  and  the normalcy of verification of  future 

events within  a  logically  consequential  argument  in  contraposition with 

the  exceptionality  of  unreasonable  events,  as  the  verification  concerns 

prospective  and  not  historical data, with  regard  to which  an  opinion  of 

conformity with the truth cannot be rendered; 

(ii)  the discrepancies  between  the projected data  for  2013  and  2014  and  the 

actual results appear, on  the  face of  it, not  insignificant but require more 

in‐depth  technical  analyses,  which  makes  it  appropriate  to  obtain  a 

technical‐corporate opinion; 

(iii)  even if the abovementioned in‐depth technical analyses were to lead to the 

conclusion  that a  claim  for  compensation  could be pursuable due  to  (aa) 

unreasonableness of the projections, (bb) quantifiability of the damage and 

(cc)  existence of  a  causation nexus,  there would  still  remain  a margin of 

discretion and, consequently, uncertainty, almost physiological. 

According to Professor Massari’s opinion: 

(i)  the assumptions underlying the business plan of the Vendor Due Diligence 

seem reasonable, there appearing to be no objective elements to claim that 

the  plan  projections  contained  in  the  Vendor  Due  Diligence  are 

unreasonable; 

(ii)  however,  the  business  plan  presents  two  problems with  regard  to  (aa) 

unfavorable  fluctuations  in  the  price  of  milk  which  could  require 

implementing  actions with  regard  to  prices,  costs  and  investments  that 

could jeopardize the marketing and innovation strategy taken into account 

in the projections of the Vendor Due Diligence; and (bb) the correlation that 

exists between the maintenance of the margins and the implementation of 

the strategy upon which the business plan is founded, which do not render 

unreasonable the assumptions underlying the projections contained in the 

 

17 

 

Vendor Due Diligence but  rather  represent known critical  issues  that are 

typical of the industry in question. 

Lastly,  in  accordance  with  the  joint  opinion  of  Professors  De  Nova  and 

Montalenti,  «it  being  understood  that  the  scope  of  the  […]  opinion  does  not  include 

questions concerning potential abuses of the guidance and coordination activity, in light 

of the opinion rendered by Professor Massari, there appears to be no unreasonableness of 

the  assumptions  and  therefore  there  is  no  basis  for  a  compensation  or  indemnification 

claim  for  damages  caused  by  unreasonable  prospective  information  (see Clause  5.24.3) 

beyond what was already settled with the Price Adjustment Agreement.» 

 

2.5.  Illustration of the economic and financial effects of the Transaction 

The Company prepared  this  Information Memorandum pursuant  to Article 5 of 

the  Regulation  setting  forth  provisions  concerning  related  party  transactions, 

adopted by the Consob with Resolution No. 17221 of March 12, 2010 and Article 9 

of  the  Procedure,  which  set  forth  the  obligation  to  publish  an  information 

memorandum whenever a highly material transaction is executed. 

Considering  the  conclusions  of  the  Opinion  rendered  by  the  Related  Party 

Committee, to the effect that there is no basis for considering “unreasonable” the 

assumptions  used  to  construct  the  business  plan  underlying  the  Vendor  Due 

Diligence, and the resulting decision of the Board of Directors not to activate any 

claim  for  compensation  based  on  the  projections  of  the  Sales  Agreement,  the 

Transaction will have no economic of financial effect on the Company. 

 

2.6.  Effect  of  the  Transaction  on  the  compensation  of  the  members  of  the 

management bodies of the Company and/or its subsidiaries. 

The Transaction does not have any  impact on the compensation of the members 

of the management bodies of by market and/or its subsidiaries. 

 

2.7.  Members  of  the  management  and  control  bodies,  general  managers  and 

executives of the companies potentially involved in the transaction 

Except as stated below, no members of  the Issuer’s Board of Directors, Board of 

Statutory  Auditors  or  of  any  subsidiary  of  the  Issuer  are  involved  in  the 

Transaction in the capacity as the related parties. 

Please note that (i) Director Michel Peslier is an officer of companies belonging to 

the group headed by BSA S.A. and (ii) the Director Patrice Gassenbach served as a 

consultant  to  the  group  headed  by  BSA  S.A.  Consequently,  at  the meeting  of 

Parmalat’s Board of Directors on July 29, 2016, before adopting a resolution about 

the  Transaction,  the  abovementioned  Directors,  (together  with  the  Chief 

Executive  Officer  Yvon  Guérin  for  reasons  of  correctness  in  view  of  the 

investigations  currently  ongoing,  as  stated  in  section  1.1  above)  disclosed  any 

 

18 

 

interest  that  they may  have  in  the  Transaction,  directly  or  on  behalf  of  other 

parties, by virtue of their abovementioned positions, specifying the nature, terms, 

origin  and  scope  of  said  interest,  thereby  providing  the  affidavit  required 

pursuant to Article 2391 of the Italian Civil Code and abstained from voting.  

On  the  date  of  this  Information Memorandum,  none  of  the  abovementioned 

Directors of Parmalat declared that he/she owned Parmalat common shares. 

For additional  information about  incentive plans based on  financial  instruments 

destined  for  Parmalat  Directors,  please  see  the  information  memorandum 

concerning the “2016 – 2018 Three‐year Cash Incentive Plan Also Based on Financial 

Instruments  of  the  Parmalat  Group”  prepared  pursuant  to  Article  84‐bis  of  the 

Issuers’ Regulation, approved by the Issuer’s Shareholders’ Meeting on April 29, 

2016, which is available on Parmalat’s website (www.parmalat.com). 

 

2.8.  Indication of the corporate governance bodies or the Directors who negotiated 

or participated in and/or developed and/or approved the Transaction’s essential 

terms 

the  Transaction  was  qualified  as  a  highly  material  transaction  executed  with 

related  parties  and,  consequently,  Parmalat  adopted  all  of  the  measures  and 

safeguards required by the Procedure. In this regard, please see the description of 

the transaction provided in this Section 2.1 above. 

The Related  Party Committee,  at  the meeting  held  on  July  19,  2016  expressed, 

unanimously,  its  reasoned  opinion  that  there  was  no  basis  for  activating  a 

compensation  or  indemnification  claim  for  damages  caused  by  unreasonable 

prospective information, pursuant to and for the purposes of Clause 5.24.3 of the 

Sales Agreement. 

In the process of preparing its Opinion, the Related Party Committee relied on the 

opinions  rendered  by  Professor  De  Nova  on  November  24,  2014,  Professor 

Montalenti on October  23,  2015, with  an  addendum  following on November  5, 

2015,  Professor  Massari  on  March  18,  2016  and  professors  De  Nova  and 

Montalenti jointly on April 7, 2016.  

Parmalat’s Board of Directors,  at  a meeting held on  July  29,  2016, having been 

informed of the Opinion of the Related Party Committee, consequently resolved 

by a majority vote, with Director Umberto Mosetti dissenting, not to put forth any 

compensation  or  indemnification  claim  for  damages  caused  by  prospective 

information  that was unreasonable pursuant  to  and  for  the purposes of Article 

5.24.3 of the Sales Agreement. 

The Directors Michel Peslier, in his capacity as an officer of companies belonging 

to  the group headed by BSA S.A., and Patrice Gassenbach,  in his  capacity as a 

consultant  to  the  group  headed  by  BSA  S.A.,  and  the  Chief  Executive Officer 

Yvon Guérin, for reasons of correctness in view of the fact that an investigation is 

still ongoing, abstained from voting. 

 

19 

 

Consequently,  the  resolution  of  the  Board  of  Directors  was  adopted  with  the 

favorable  vote  of  the  Directors  Gabriella  Chersicla  (Chairperson),  Pier  Giuseppe 

Biandrino, Nicolò Dubini, Angela Gamba and Elena Vasco. 

Director Mosetti voted against  the motion “both on  the merit,  for reasons regarding  the 

numerous and detailed criticisms of  the content of  the opinion of  the Committee  for Related 

Party Transactions (and of the partial and misleading reconstruction of the entire LAG affair 

provided  in  that  document),  and  with  regard  to  the  method  adopted  by  the  Committee, 

because, as the Director himself stated on multiple occasions, at meetings both of the Board of 

Directors  and  the  Committee,  the  opinion  rendered  by  the  Committee  for  Related  Party 

Transactions  should  not  have  been  limited  to  analyzing  a  specific  contractual  clause,  but 

should have taken into account the entire transaction and the context within which the LAG 

transaction was executed.” 

In the opinion of Director Mosetti “the fact that an analysis limited to a single contractual 

clause would not have produced a result different  from  the conclusion  that  the option of an 

action against the seller was not available was obvious from the start: as stated repeatedly in 

the  past,  the  LAG  sales  agreement  was  written  by  the  seller,  with  a  framework  of 

“negotiations” that—as the Court of Parma verified—were characterized by extremely serious 

irregularities,  and,  consequently,  it was  obvious  that  abovementioned  agreement would not 

contain any clause providing effective protection for Parmalat.” 

Director Mosetti  then pointed out  that “the  fact  that  the Board of Directors, after  several 

years  have  elapsed,  has  not  yet  assessed  the  availability  of  contractual  or  extra‐contractual 

remedies (in addition to the specific clause subject of analysis) that could be enforced against the 

seller,  which  exercised  guidance  and  coordination  activity  over  the  company,  constitutes 

negligent inertia on the part of the Board of Directors, which hopefully the Board of Statutory 

Auditors will remedy, further to a complaint pursuant to Article 2408 of the Italian Civil Code. 

“Lastly, Director Mosetti  cannot  help  pointing  out  that  the  opinion  of  the Committee  for 

Related Party Transactions is, in many parts, sketchy and partial and, consequently, runs the 

risk of providing the market with incomplete and misleading information.” 

The Board of Directors, being cognizant of the position taken by Director Mosetti, 

pointed out  that  (i)  the Opinion of  the Related Party Committee  is based and  is 

supported by  the unambiguous conclusions of  the opinions rendered by several 

prestigious  independent  experts, who  concluded  that  there was no  justification 

for pursuing against  the seller a valid and  legitimate compensation claim based 

on  Article  5.24.3  of  the  Sales  Agreement;  (ii)  the  abovementioned  lack  of 

justification  renders  devoid  of merit  from  a  technical  and  legal  standpoint  the 

pursuit of an action for damages that, consequently, would not produce concrete 

economic  benefits  for  the  Company:  and  (iii)  at  this  point,  Parmalat  does  not 

appear to have suffered any damage because of the Acquisition. 

 

20 

 

3.  ANNEXES 

1.  Opinion  rendered  by  the  Related  Party  Committee  on  July  19,  2016 with  the 

following annexes: 

sub A list of relevant documents; 

sub B opinion rendered by Professor De Nova on November 24, 2014; 

sub C and D opinion  rendered by Professor Montalenti on October 23, 2015, 

with the subsequent addendum on November 5, 2015; 

sub E opinion rendered by Professor Massari on March 18, 2016; 

sub F opinion rendered jointly by Professors De Nova and Montalenti on April 

7, 2016. 

 

1

Committee for Related Party Transactions

Opinion of the Board of Directors on the exercise (or non-exercise) of the rights arising from

the clause stipulated in Section 5.24.3 of the Share Purchase Agreement of May 29, 2012

between B.S.A. S.A., Groupe Lactalis S.A. and B.S.A. International S.A., on the one hand, and

Parmalat s.p.a., on the other hand, the subject of which is the transfer of the entire share

capital of Lactalis American Group Inc. (in turn, owner of the entire share capital of: Sorrento

Lactalis Inc., Lactalis USA Inc., Lactalis Deli Inc., Mozzarella Fresca Incorporated, Lactalis

Retail Dairy Inc., S.C.C. Properties Inc. and Lactalis Export Americas SAS), Lactalis do Brasil

– Comercio, Importação e Exportação de Laticinios Ltda and Lactalis Alimentos Mexico

S.deRL.

1. Foreword

The Company’s Board of Directors, at a meeting held on March 30, 2016, resolved «to qualify the

assessment as to whether or not the guarantee clauses contained in the Share Purchase Agreement of May 29 2012, the

subject of which was the LAG acquisition, as a highly material related party transaction for the effects of the Regulation

adopted by the Consob with Resolution No. 17221 of March 12, 2010, as amended» with specific reference to the

stipulation set forth in Clause 5.24.3 of the abovementioned agreement. For the purposes of and

pursuant to the abovementioned Regulation and the Procedure governing related party transactions

adopted by the Company, this Committee carried out an assessment, which included an analysis, study

and an evaluation of relevant documents — truly unusual for their number and scope — made

available by the Company and included in the list annexed to this document under letter “A,” arriving

at the formulation of this opinion.

2. Remarks about the qualification as a related party transaction of the exercise of the

rights stipulated in clauses of agreements between related parties

Given the singularity of the question about the qualification as a highly material related party

transaction of the exercise (or non-exercise) of the rights arising from the clause stipulated in Section

5.24.3 of the Share Purchase Agreement of May 29 2012 (hereinafter, also “SPA”), the subject of which

was the transfer of the entire share capital of LAG (this acronym being, hereinafter, understood to

mean in short all of the companies listed in the introduction), some preliminary remarks seem in order.

2

The resolution of the Board of Directors mentioned in the Foreword, in itself decisive for

providing an answer to the abovementioned question, was adopted after an lengthy, detailed and in-

depth discussion — the report of which runs from page 61 to page 82 of the recorded minutes of the

meeting — from which it is possible to deduce the reasons for the resolution, which, inter alia, make

reference to the last sentence of Article 2 of the Company’s Procedure governing related party

transactions currently in effect, which reads as follows: ««whenever a transaction with a related party is 

carried out  in or requires multiple steps, the steps shall also be subject to the Procedure, regardless of 

their materiality based on individual thresholds […].»

In general, it is worth mentioning that guarantee clauses contained in agreements for the sale of

controlling equity interests — but similar remarks could be made for other agreements as well — entail

the fact that the relationship does not end with the implementation of the principal transmittive task, but

continues over time with the performance of ancillary tasks that require additional activities by the

parties: these clauses usually require that, upon the occurrence of a presumed event set forth in them,

their enforcement follows the manifestation of intent of the empowered party within a specified

deadline. In other words, the enforcement of a contractual guarantee clause is an autonomous act of

determination — intended as a definitive statement of transactional intent — by a party versus the

other party; determination that, while based on a previous stipulation, is separate and unilateral and

merely optional and, therefore, occurring eventually with respect to the one originally adopted to

execute the corresponding agreement. This decision entails the exercise of a right/power that

establishes between the parties a separate legal relationship, intended to produce additional economic

effects with respect to those already established with agreement; or, in a negative case, does not permit

the establishment of the abovementioned new relationship and, consequently, the production of the

corresponding effects. If the agreement to which the guarantee clause belongs is an agreement between

related parties, the enforcement (or non-enforcement) of the clause appears to be part of the broader

notion of “transaction” adopted by the Consob Regulation, acquiring the characteristics — in accordance

with the most recent and learned interpretations by the commentators(1) — of a juridically relevant fact

that has an impact on the respective financial spheres of the parties, irrespective of its conformation

and juridical qualification, and, consequently, by the corresponding statute: on the other hand, it is

obvious at the practical level that the correlation between the parties could “pollute” the autonomy of

decision of the party empowered to enforce the guarantee clause, becoming (particularly in the case of

non-enforcement), from an economic standpoint, a type of palindromic (i.e., moving the opposite

direction than usual) tunneling, in which, instead of obtaining private benefits from control, adverse

effects are avoided. (1) G. Liace, Le operazioni con parti correlate, Milan, 2016, pages 5 and following.

3

Consequently, the rendering by this Committee of an opinion to the Board of Directors appears

to be juridically justified, in light of the Consob Regulation and the Procedure adopted by the

Company, mentioned above, even though the peculiarities of the specific “transaction” in question have

an impact on its content and conclusions.

3. Description and significance of the transaction; nature of the relationship

As stated above, the “transaction” being reviewed consists of whether the exercise (or lack

thereof) of the rights arising from the clause stipulated in Section 5.24.3 of the Share Purchase

Agreement of May 29, 2012 between B.S.A. S.A., Groupe Lactalis S.A. and B.S.A. International S.A.,

on the one hand, and Parmalat s.p.a., on the other hand, the subject of which is the transfer of the

entire share capital of Lactalis American Group Inc. (in turn, owner of the entire share capital of:

Sorrento Lactalis Inc., Lactalis USA Inc., Lactalis Deli Inc., Mozzarella Fresca Incorporated, Lactalis

Retail Dairy Inc., S.C.C. Properties Inc. and Lactalis Export Americas SAS), Lactalis do Brasil –

Comercio, Importação e Exportação de Laticinios Ltda and Lactalis Alimentos Mexico S.deRL.

As to whether this transaction qualifies as highly material or less material, this Committee, with

regard to and in compliance with the provisions and instructions of the Consob Regulation and the

Procedure adopted by the Company, was informed of the resolution adopted by the Board of Directors

on March 30, 2016 and, consequently, conducted its activities in accordance with Article 6.1.3 of the

abovementioned Procedure, entitled «Handling of highly material transactions.» However, as stated in the

remarks that will be provided in the conclusions section of this opinion, the materiality classification

does not have special effects (the provisions of Article 5 of the Consob Regulation and Articles 6.1.2

and 9 of the Company’s Procedure notwithstanding with regard to the preparation and publication of

an Information Memorandum).

Lastly, with regard to the nature of the correlation, it arises from the statutory control

(embodied in the exercise of the guidance and coordination activity) by B.S.A. S.A. over Parmalat s.p.a.

4. Remarks about the transaction

4.1. General considerations

The clause set forth in Section 5.24.3 of the Share Purchase Agreement of May 29, 2012, which

is structured in accordance with the Anglo-American contract model, calls for the following

4

representations and warranties: «All the projections and forward-looking information, which have been supplied in

any form to, or in the interest of, or for the benefit of, the Purchaser by the Sellers and /or their directors, officers,

managers, Employees, auditors, counsels advisors and consultants, in connection with the preparation, negotiation and

execution of this Agreement, and/or in contemplation of the transactions provided for hereunder, are based on reasonable

assumptions and consistent with those assumptions.»

Pursuant to Clause 7.3.1, Letter (b), of the Share Purchase Agreement, the enforceability of the

guarantee clauses has a validity of five years from the closing date, i.e., it expires on July 3, 2017.

However, the abovementioned contracts is the epicenter of an extremely complex event

involving the sale of LAG by Lactalis to Parmalat, after the latter had become a related party of the

former, which held a controlling interest of 83.3%(2); an event that developed over the years, involving

different periods and levels, summarized below:

- the negotiations phase and the conclusion of the agreement;

- the Price Adjustment phase in accordance with the provisions set forth in Clause 2.3 of the

Share Purchase Agreement, which resulted in a price reduction of US$ 130 million, down

from US$ 904 million to US$ 774 million;

- the phase of the proceedings pursuant to Article 2409, Section 7, of the Italian Civil Code,

activated by the public prosecutor further to a brief filed by Amber Capital UK LLP

(hereinafter also “Amber Capital”), before the lower court and at the appellate level;

- lastly, the phase of the complaint filed with the Board Statutory Auditors again by Amber

Capital.

In general and, so to speak, immanent terms, the Consob carried out an intense and detailed

oversight activity over the entire transaction.

Overall, through the different phases, the parties developed a truly enormous number of

consulting documents of a technical, economic, corporate, financial and legal type, the scope of which

make makes it exceedingly difficult gaining control over them and summarizing their conclusions.

Nevertheless, it seems appropriate and, perhaps, necessary to preface any specific remark about

the stipulations that embody the “transaction” subject of this opinion with an overview of the salient

facts and documents of the various phases — except for the last phase, i.e., the one of the complaint

filed pursuant to Article 2408 of the Italian Civil Code with the Board Statutory Auditors by Amber

(2) Stock ownership interest held by B.S.A. S.A. on the transaction's closing date.

5

Capital, which fall outside the scope and limits of this opinion — while trying not to lose focus and

effectiveness.

As explained in greater detail later in this document, the Company’s Board of Directors, the

Internal Control, Risk Management and Corporate Governance Committee and the Company’s

Committee for Related Party Transactions devoted extensive attention and performed in-depth

analyses with regard to the specific issue of Clause 5.24.3 of the Share Purchase Agreement of May 29,

2012; more specifically, this Committee was particularly surprised by the magnitude of the effort

applied in terms of time, thought and other resources, including financial ones, to fully research, with

extreme concern for scrupulously applying the relevant rules — perhaps, it may be said, beyond the

limits of what appeared to be necessary — the subject matter, complex that it may have been; and, on

the other hand, by the fact that all this was not sufficient to placate an extremely sharp internal debate

within the corporate entities and organizations, perhaps not immune to the aim of pursuing individual

interests and personal animus. More specifically, with regard to the issue of the representations and

warranties referred to in Clause 5.24.3, its interpretation and the rights deriving from it, the

circumstances upon the occurrence of which this clause may be enforced and the verifications that

must be carried out to ascertain the existence of the conditions for its enforcement, the Company:

- asked Professor Giorgio De Nova to render an independent impartial opinion, which he did

on November 24, 2014 and is annexed to this document under Letter “B”;

- subsequently, asked Professor Paolo Montalenti to provide another independent impartial

opinion — in response to a similar question but with a broader scope, concerning in general

the guarantee and protection tools available to the Company under the Share Purchase

Agreement of May 29, 2012, which was provided on October 23, 2015 followed by an

addendum on November 5, 2015, annexed to this document under Letters “C” and “D”;

on the basis of a recommendation contained in both of these opinions, albeit with a

different emphasis;

- then asked Professor Mario Massari to provide a technical-corporate opinion, delivered on

March 18, 2016 and annexed to this document under Letter “E,” indicating whether or not

the assumptions underlying the prospective data contained in the Vendor Due Diligence

Report originally prepared by Ernst & Young (“VDD”), which are referenced in the

abovementioned clause; lastly, based on the content of Professor Massari’s opinion;

- asked Professors De Nova and Montalenti to render an independent impartial opinion,

provided on April 7, 2016 and annexed to this document under Letter “F,” indicating if

there was a basis for enforcing the guarantee provided under Clause 5.24.3 of the Share

Purchase Agreement of May 29, 2012.

6

Obviously, special attention will be paid to the content of these opinions.

The documents collected and organized to construct the merit framework of this opinion, a

review of which will be summarized below, together with the opinions mentioned above, constitute a

complete and exhaustive supporting framework — and, perhaps, even excessive — for the assessment

that the Committee is required to perform: consequently — considering that a large part of these

documents were provided or it is reasonable to assume that they were provided, based on their content,

for the purpose of the truth and specifically that the opinions of Professors De Nova, Montalenti and

Massari were accompanied by declarations of independence — it was not thought necessary to require

the support of new independent experts or ask for new opinions.

4.2. Overview of the negotiations and contract signing phase and the price

adjustment phase – The proceedings pursuant to Article 2409 of the Italian Civil

Code

As mentioned earlier in this document, the LAG acquisition was the subject of proceedings

pursuant to Article 2409 of the Italian Civil Code activated by the office of the Public Prosecutor at the

Court of Parma on July 31, 2012, further to a brief filed by Amber Capital, carried out initially before

the Court of Parma and subsequently before the Bologna Court of Appeals, where the proceedings

came to a conclusion on May 9, 20104. In this regard, based on the information that can be gleaned

from the corresponding documents, it is reasonable to believe that the transaction was examined in

each one of its aspects, from the phase of its inception, through the negotiations phase, the execution

of the agreement, the Price Adjustment phase and subsequent phases.

More specifically, the Court carried out a detailed review of these events in its interim decision

of March 29, 2013, in which it pointed out some irregularities concerning the negotiations phase and

asked the Board of Directors to carry out all necessary verifications to enforce the contractual

guarantees (in addition to the abovementioned Clause 5.24.3 of the Share Purchase Agreement of May

29, 2012 about the reasonableness of the prospective data contained in the VDD, Clause 5.24.2 about

the veracity of the historical data supplied by the sellers) and, specifically, to «make the utmost and most

timely efforts to verify any indicators signaling the lack of veracity of the historical data supplied and/or reasonableness of

the prospective data utilized within the framework of the Vendor Due Diligence prepared by Ernst & Young pursuant to

Clauses 5.24.2 and 5.24.3 of the agreement called Share Purchase Agreement.» In addition, the Court appointed

and ad Acta Commissioner responsible for verifying the independence of any professionals appointed by

the Company to perform analyses concerning the Price Adjustment (Professors Mario Cattaneo, Marco

Ziliotti and Paolo Andrei, in turn supported by PricewaterhouseCoopers, about whose independence

the Court did not express any doubts) and support the Board of Directors in this phase.

7

Upon the completion of this activity — which, as mentioned before, resulted in the definition

of a final price that was US$ 130 million less than the provisional price initially paid — the Court of

Parma handed down its final decision (on November 11, 2013) in which, while basically confirming its

earlier findings, stated that «the acquisition of LAG, Lactalis Brazil and Lactalis Mexico produced undeniably

positive effects for Parmalat S.p.A also from a financial standpoint, specifically with regard to the income contributed by

the abovementioned companies» and that «as the record the proceedings shows, Parmalat S.p.A. will value the acquired

companies in its financial statements for amount equal to US$ 1,320 million, further to the result of an impairment test

performed by Professor Buttignon, with a remarkable increase well above the maximum estimated by Mediobanca,»

therefore concluding in this sense that no damage appeared to have been caused by the transaction

«considering that, because the abovementioned amount is significantly higher than the consideration paid [...] it is

presumably sufficient to neutralize any potential damage that the companies could incur due to the described reduction in

marketing expenses» (pages 25 and 26 of the Decree of November 11, 2013).

The Court also recognized the full independence of the abovementioned professionals

Professors Cattaneo, Ziliotti and Andrei, to whom the Company had entrusted, by a resolution of the

Board of Directors of June 24, 2013, the task of producing a report on the negotiating activity carried

out originally by the Related Party Committee and it’s advisor Mediobanca and a critical analysis of the

methods use in the various opinions generated in connection with the proceedings pursuant to Article

2409 of the Italian Civil Code. This document, issued on September 20, 2013, contains conclusions that

differ in some respects from those of the Court, in the sense that it found no irregularities in how the

negotiations were conducted nor in the conduct of the corporate governance bodies and failed to find

profiles showing lack of independence on the part of Mediobanca, concluding in this case as well that

no damage had occurred.

As for the verifications concerning contractual guarantees, the Court confirmed, also in its final

decision of November 11, 2013, that the Board of Directors «made extensive and timely efforts to identify the

presence of any indicators pointing to a lack of veracity of the historical data supplied» (page 13 of the Court

Decree). And yet, with regard to the reasonableness of the prospective data, in light of some

considerations provided by the ad Acta Commissioner, discussed in the next paragraph, the Court did not

reach the same conclusion, finding that: «In any event, as noted by the members of the Committee for Related

Party Transactions, the activities carried out thus far cannot be deemed to be in any way preclusive for Parmalat S.p.A. of

the enforcement of the guarantees provided by Clauses 5.24.3 and 5.24.4 of the Sales Agreement within the stipulated

five-year deadline, which, under present circumstances, excludes that such a situation, while potentially a source of damage,

does exist.» (page 13 of the abovementioned decree).

8

The Bologna Court of Appeals then amended, by Decree of May 9/26, 2014, the decisions of

the Court of Parma, declaring the cessation of the disputed issues concerning the revocation of some

Directors who were no longer in office, denying the Public Prosecutor’s request to revoke reelected

Directors and fully compensating expenses. In these proceedings as well, the Court recognized «the

clearly positive effect for Parmalat» of the Price Adjustment process and expressed reservations regarding

damages as follows: «It is also important to note that the damage alleged by the Public Prosecutor […] cannot be

deemed to have been “ascertain” given the non-adversarial nature of the proceedings pursuant to Article 2409 of the

Italian Civil Code» (pages 5 and 6 of the Decree of May 9, 2014). The Court of Appeals ruling with

regard to expenses, mentioned the conclusions of the lower court about the fact that Parmalat’s Board

of Directors made «the utmost and most timely efforts to verify any indicators signaling the lack of veracity of the

historical data supplied» (page 6 of the abovementioned Decree).

The Committee was informed that some members of the Company’s Board of Directors, in

office and no longer in office, and an executive, no longer at the Company, were served with notices

informing them that they were the subject of investigations concerning the LAG Acquisition.

Some of the parties being investigated indicated that they were informed that their cases had

been closed.

In addition, information carried in the press on February 5, 2016 indicated that «the Preliminary

Investigations Judge of Parma ordered the transmission to Rome of the file concerning the criminal investigation of the

Parmalat-Lactalis USA transaction […]. The Preliminary Investigations Judge ceded jurisdiction to Rome based on the

principle that jurisdiction belongs to the judge of the most serious crime, in this case hindering the oversight functions

performed by the Consob which is based in Rome. […]»(3)

It was later learned that the file had been forwarded to Milan’s Public Prosecutor on

jurisdictional grounds; information then followed that Milan’s Public Prosecutor, claiming, in turn, that

he lacked jurisdiction, raised a negative jurisdiction conflict that, pursuant to the applicable code, will be

resolved by the Office of the General Prosecutor at the Court of Cassation. To the best of our

knowledge, a decision has not yet been handed down.

4.3. Remarks about the activities carried out by the Company subsequently to the

proceedings pursuant to Article 2409 of the Italian Civil Called – Opinions by

professors De Nova, Montalenti and Massari.

(3) News release by the Reuters press agency of February 5, 2016, 4:41 PM.

9

4.3.1 In light of the considerations provided above, the Company’s Board of

Directors agreed not to carry out any further reviews of the overall transaction — which, incidentally, is

still the subject of the abovementioned complaint pursuant to Article 2408 of the Italian Civil Code,

filed by Amber Capital with the Board of Statutory Auditors — nor with regard to the enforcement of

contractual Clause 5.24.2 regarding the veracity of the historical data supplied by the sellers, with regard

to which, as shown above, the activities carried out thus far were found to be fully satisfactory by the

judicial authorities.

The Board of Directors instead focused on Clause 5.24.3 concerning the reasonableness of the

assumptions underlying the prospective data contained in the VDD. The activities carried out in this

regard in the course of the proceedings pursuant to Article 2409 of the Italian Civil Code, at the Court’s

request, differently to from those for the verification of the veracity of historical data, were not found

to be fully satisfactory.

Specifically, the Board of Directors awarded to Deloitte Financial Advisory s.r.l. (hereinafter

also “Deloitte”) an assignment involving verification of the presence of any indicators suggesting that

the prospective data might have been unreasonable and Deloitte reached the following conclusion:

«Based on the evidence supporting the assumptions and the elements used to develop the Prospective Data for the 2012-

2014 period and taking into account the information provided in Paragraph 4, we have not become cognizant of facts that

could induce us to believe, at this point, that the abovementioned assumptions and elements did not provide a reasonable

basis for the preparation of the Prospective Data, assuming that the hypothetical assumptions concerning future events and

the actions of the Company’s management bodies, summarized in Paragraph 4 above, do in fact materialize. However, it

is important to keep in mind that due to the uncertainty about the occurrence of any future event, regarding both the actual

occurrence of the events and the scope and timing of their occurrence, the variances between the actual data and the amounts

projected in the Prospective Data could be significant, even if the events projected in the hypothetical assumptions

summarized in Paragraph 4 above were to materialize.» In this regard, Deloitte specifically referenced the

International Standard on Assurance Engagements (ISAE) 3400 entitled The examination of Prospective Financial

Information, published by the IFAC – International Federation of Accountants.

Consequently, the Board of Directors, meeting on June 24, 2013, resolved to confirm that,

based on the reviews performed, no indicators suggesting that the prospective data used within the

framework of the abovementioned VDD were unreasonable were identified.

However, the ad Acta Commissioner, Professor Angelo Manaresi, in his report filed on June 14,

2013, criticized the results of the work performed by Deloitte, claiming that, in his opinion, Deloitte did

not perform an econometric valuation of the possible overstatement of prospective results due to the

reduction in marketing investments. Deloitte responded to this criticism with a letter dated June 20,

10

2013 in which it pointed out that such valuations were beyond the scope of its assignment and that,

anyhow, such valuations would not have been possible give the lack of any knowledge about the

marketing investments of the competitors, would not have been possible given the absence of any

information about the marketing investments carried out by LAG. In the abovementioned letter,

Deloitte also referred to another analysis performed by the Boston Consulting Group at the request of

Professors Angelo Provasoli Pietro Mazzola, whose services were retained by some directors for the

purpose of performing an assessment of LAG concerning the reasonableness and feasibility of the

industrial plan contained in the VDD, which reached conclusions in line with those of Deloitte. This

opinion has been published on the Company website.

With regard to this issue, as mentioned above, the Court of Parma concurred with the remarks

put forth by the ad Acta Commissioner to the effect that the work performed by Deloitte (and by the

Boston Consulting Group) was not sufficiently thorough but thought that this issue was irrelevant, as

Parmalat had the option of enforcing the corresponding guarantee within a deadline of five years.

From this, specifically, derives the right to implement additional verifications regarding

exclusively the possible enforcement of Clause 5.24.3 regarding the prospective data.

This Committee, in turn, charged with rendering an opinion specifically regarding the

abovementioned enforcement and on this issue alone, will not address again other issues, regarding

which there is by the way ample information available in Company documents and, specifically, in the

abovementioned court decisions (currently published on the Company website), and in the

abovementioned Report of September 20, 2013 by the independent experts Professors Cattaneo, Zilotti

and Andrei (also available on the Company website), which, as mentioned above, discusses in detail the

origin of the transaction, the negotiation phase, the conduct of the corporate governance bodies and

their advisors, the content of the Share Purchase Agreement of May 29, 2012 and the content of the

numerous opinions and numerous valuations provided regarding LAG.

4.3.2 The activities carried out by the Board of Directors regarding the specific issue,

aside from a series of initiatives not directly related to the issue in question, but still relevant to a certain

extent (such as an analysis of LAG’s industrial plants, their verification by the independent advisor

Blain & Co., the analysis by this advisor of the reasons underlying the 2014 variances, the approval of

the annual impairment tests), included as the first step, at the Chairperson’s request, the rendering of a

legal opinion by Professor Giorgio De Nova regarding the interpretation of the Clause 5.24.3 of the

Share Purchase Agreement.

Specifically, Professor De Nova was asked the following questions:

11

«(a) What is the interpretation of Clause 5.24.3 of the Agreement and which rights does Clause 5.24.3 of the

Agreement convey to the Purchaser?

(b) Under which type of factual circumstances can the guarantee contained in Clause 5.24.3 of the Agreement be

enforced by the Purchaser versus the Sellers and, specifically, whether the variance in the actual data versus the

prospective data supplied by the Sellers empowers the Purchaser to enforce the guarantee contained in Clause

5.24.3 ;

(c) which verifications should be carried out by the Purchaser to ascertain the existence of the conditions for enforcing

the guarantee and how frequently and/or within which deadline.».

As indicated by Professor De Nova at a meeting of the Board of Directors held on December

4, 2014, his opinion, annexed to this document sub “B,” shows that, should there be a negative

variance for each of the 2012, 2013 and 2014 reporting years between the aggregate EBITDA

presented in the business plan contained in the VDD and the EBITDA actually reported, this would

enable Parmalat to obtain from his counterparty any indemnity corresponding to the abovementioned

variance, provided certain conditions can be met.

According to Professor De Nova, (i) the first and fundamental condition is that the business

plan was based on unreasonable assumptions and that the prospective data that arise from it are not

consistent with the assumptions; (ii) secondly, there must be a negative variance with respect the

abovementioned EBITDA data for one or more of the 2012, 2013 and 2014 reporting years; and (iii)

thirdly, if there is such a variance, the existence of a nexus of immediate and direct causation between

the ascertained unreasonableness of the prospective data and the negative variance in EBITDA in the

sense specified above must be verified.

That said, Professor De Nova discussed the meaning of the English expression «Reasonable

Assumption» adopted in the clause in question. In this regard, he pointed out that this expression is

intentionally generic and that, to avoid tautological explanations, reference must be made to cases in the

law in which a verification of the reasonableness of prospective data is required, as is the case of

mergers following a leveraged buyout (Article 2501-bis, Section 4, of the Italian Civil Code), which states

that «The experts’ report pursuant to Article 2501-sexies, provides an attestation of the reasonableness of the indications

contained in the merger proposal pursuant to Section Two above.» Specifically, Professor De Nova concluded that

this reasonableness assessment must be carried out consistent with company rules and corporate

practices, which brings to the fore principle ISAE 3400, which deals with The examination of Prospective

Financial Information (4).

(4) As mentioned above, these are the same criteria as those that Deloitte used.

12

Beyond a control of the reasonableness of the assumptions, in the opinion of Professor De

Nova, there must also be consistency, also quantitatively, of the projections made based on these

assumptions. To that effect one must verify that, based on reasonable assumptions, the prospective data

derived reflect a proportionality relationship with the assumptions and that, consequently, are not

excessive, exaggerated or to optimistic.

Another problematic profile of this clause addressed by Professor De Nova consists of the fact

that the issue is about a representation and warranty, for which it should derive that, by virtue of the

generic “bring down” clause set forth in section 5.1 of the SPA, the data guaranteed by the seller should

be truthful not only on the signing date but also on the closing date. As a result, the reasonableness of

the prospective data should exist not only on the date of preparation of the Sellers Business Plan, (March

8, 2012), but also on the closing date (July 3, 2012). In the opposite sense, points out Professor De

Nova, one could argue that it is a representation and warranty the subject of which are the «projections or

forward-looking information» referred to the date of preparation of the Sellers Business Plan, as a result of

which it is excluded by its very nature from the bringing down. In Professor De Nova’s opinion, this is

a debatable point in the sense that both approaches can be justified, one based on the letter of the

contract and the other one based on reasonableness considerations.

Moreover, also in Professor De Nova’s opinion, the clause in question is not a profitability

clause in the strict sense, as it is not directed to guarantee the fact that companies will achieve the

prospective data contained in the Sellers Business Plan but only the reasonableness of the prospective

data contained in it. Specifically, for the purpose of enforcing the buyer’s right to receive

indemnification, it is not sufficient that there exists the abovementioned negative variance in the

EBITDA data, but the two abovementioned conditions of (i) unreasonableness of the assumptions or

inconsistency of the projections made based on the assumptions and (ii) existence of a causality nexus

between the negative variance in question and the unreasonableness of the assumption or inconsistency

of the deduction must also be met.

Lastly, after discussing the definition of the damage (in his opinion equal to the EBITDA

variances reported compared with the plan’s EBITDA), Professor De Nova recommended that an

expert be asked to verify the reasonableness of the assumptions and/or the consistency of the

projections.

4.3.3 At the same Board meeting of December 4, 2014, the Chairperson

recommended that the Board of Directors follow the process suggested by Professor De Nova in his

opinion and, specifically, (i) wait until the beginning of 2015 in order to have access to actual data for

LAG for the 2014 reporting year; and (ii) by a resolution discussed and deliberated by the Board of

13

Directors, retain the services of an independent professional (different from Deloitte) to perform the

verifications regarding the reasonableness and consistency of the prospective data recommended by

Professor De Nova.

The Chairman then in charge of the Internal Control, Risk Management and Corporate

Governance Committee, which also serves in the capacity as Committee for Related Party Transactions

(hereinafter also the “Committee”), indicated the need that this issue be discussed in depth at a

Committee meeting. In turn, another Committee member specified that on that occasion he did not

intend to adopt «any resolution regarding the issue in question since a meeting of the Internal Control, Risk

Management and Corporate Governance Committee, which also serves in the capacity as Committee for Related Party

Transactions, will be held in the immediate future. Since the transaction in question is a transaction with a related party,

that venue appears to be more appropriate for conducting the proceedings regarding the issue at hand. In that venue, in the

opinion of Professor Mosetti, it will be appropriate to conduct more in-depth analyses both of a financial and contractual

nature. Based on the findings developed with the abovementioned analyses, the Committee will determine which

recommendations should be submitted to the Board of Directors regarding which procedure should be followed» (page 168

of the corresponding minutes).

4.3.4 The Committee, in its previous configuration, met as often as 19 times(5) to

carry out the analyses requested by is Chairman. In turn, the Board of Directors devoted 11 meetings(6)

to this issue, a number that, however, does not include meetings in which LAG was discussed, as

meetings in which the results and/or plans of the US subsidiary were presented or issues concerning it

were discussed should be added to the main meetings listed in the footnotes.

The abovementioned analyses went through an initial phase, during which the Committee

reviewed the documents and discussed various issues related to the topic in question (7).

In this context, the Committee and the Board of Directors were provided with a presentation

the production of which had been assigned to Bain & Co, entitled “LAG – 2014 & 2015-18 plan

assessment” the subject of which was an analysis of LAG’s performance in 2014 and verification of its

2015-2018 business plan. The abovementioned document, for the part relevant in this context,

(5) These are the meetings of: December 11, 2014, January 19, 2015, February 26, 2015, March 13, 2015, April 13,

2015, May 11, 2015, July 16, 2015, July 28, 2015, October 8, 2015, October 29, 2015, November 6, 2015, November 10, 2015, November 19, 2015, December 11, 2015, December 16, 2015, March 1, 2016, March 14, 2016, March 22, 2016 and April 11, 2016.

(6) These are the meetings of: December 4, 2014, February 27, 2015, April 16, 2015, May 13, 2015, July 30, 2015, October 8, 2015, November 10, 2015, December 22, 2015, March 21, 2016, March 30, 2016, and April 14, 2016.

(7) These are the meetings of: (i) December 11, 2014 and January 19, 2015, at which the Committee was provided with the various documents already available on the Company website and other documents, as well as the pre-closing data for 2014 of LAG, with comparisons with the business plan; and (ii) February 26, 2015, during which a presentation prepared by Bain & Co containing an analysis of the results for 2014 and the reasons for their variance compared with the business plan and a glorification of the 2015-2018 plan.

14

provided explanations of the reasons for the variance of the 2014 LAG results compared with the

business plan contained in the VDD, reasons that are primarily identified in the fact that in that year

the price of milk increased by an extraordinary 24%, compared with the 6% increase projected in the

budget (in the VDD, the price was projected to remain constant since it was not possible to foresee,

over the time span being considered, the prices of a commodity that follows a fairly volatile trend).

This phase ended with a decision to submit to the Board of Directors a recommendation to

obtain and other legal opinion(8).

The Board of Directors, at the meeting held on April 16, 2015, resolved to retain the services of

Professor Paolo Montalenti, recommended by the Committee, and tasked the Committee with

preparing the text of the query. At the next meeting of May 13, 2015, the Board resolved to submit to

Professor Montalenti the following suggested question: «Can Professor Montalenti specify, in light of the

documents referred to below regarding the “Share Purchase Agreement” of May 29, 2012 concerning LAG/LEA, what

are the guarantee and protection tools for Parmalat S.p.A. with regard to historical and prospective data and the different

guarantee items, based also on an analysis of the technical financial reports that have been supplied thus far, also in light

of the fact that in this case the contract in question is between a parent company and a subsidiary? Can he also specify

under which circumstances and with which modalities these tools can be activated?»( 9)

4.3.5 Professor Montalenti provided the Committee with a preliminary opinion at the

meeting of July 16, 2015. He then delivered to the Committee and the Board of Directors a draft of his

opinion on October 3, 2015. This opinion was reviewed, with him in attendance, first at a Committee

meeting and then at a meeting of the Board of Directors, both held on October 8, 2015.

The abovementioned opinion is also annexed to this document (under Letter “C”). The content

of this opinion, as presented by Professor Montalenti at the Committee meeting of October 8, 2015 is

described below: «Professor Montalenti specified that in his opinion he analyzed legal issues without discussing those of a

(8) This was discussed for the first time, at the request of Chairman Perotta, at the meeting of March 13, 2015. The

proposal for the Board of Directors and the text of the query were approved on April 13, 2015 and May 11, 2015, respectively. (9) St the meeting the following documents was selected for submission to Professor Montalenti:

- Share Purchase Agreement of May 29, 2012 with annexes; - Information Memorandum of May 29, 2012 on the acquisition; - Consob’s requests and an addendum to the Information Memorandum of June 27, 2012; - Vendor Due Diligence; - Comparative financial statements and schedules; - Deloitte e PwC reports on the verification of the prospective and historical data, respectively, contained in the

VDD; - Bain Report submitted to the Board of Directors on February 27, 2015; - Reports of the ad Acta Commissioner Angelo Manaresi of May 16, June 14 anf September 9, 2013; - Decisions by the Court of Parma and the Bologna Court of Appeals regarding the proceedings pursuant to Article

2409 of the Italian Civil Code; - Independent impartial opinion by Professor G. De Nova of November 24, 2014.

15

technical and financial nature underlying the business documents that he was provided with. He also commented the general

profiles of contractual clauses relevant for the purposes of the opinion and noted that the definition of “liabilities” provided in

Clause 1.2.54 of the LAG acquisition agreement (hereinafter in brief the “Agreement”) is extremely broad and aimed at

including any negative amount, of any nature, liquid or illiquid, certified or not certified. The inclusion in this category of

responsibilities and obligations, including those merely determinable and, most importantly, not affected by a validity

timeframe and/or predetermined incurrence modalities is particularly significant. He pointed out that the liability extension

clause is particularly significant with regard to the planned, prospective and projected information and financial data

governed by the Agreement. He specified that the interpretation of the Agreement is governed by Italian law and,

consequently, the provisions of Article 1362 and subsequent articles of the Italian Civil Code are applicable. He

emphasized that the Agreement contains an integrative provision particularly significant for interpretation purposes because

it is designed to specify the level of professional knowledge – and, hence, of reliability – of the information supplied. Clause

1.3.2 of the Agreement clearly establishes the required level of knowledge and expressly specifies its importance in relation to

the representations and warranties provided by the Sellers to the Purchaser. The required level of knowledge is higher than

the average standard, including that of professionals — «in addition to actual knowledge» — and should be equivalent to

the highest standard of a qualified manager «chief executive officer, chief operating officer, chief financial officer or general

counsel.» In addition, the diligence standard is also specified because it is correlated with the exercise of a specific activity,

i.e., the «due diligence» and «professional enquiry» activity. It is thus that this more burdensome valuation gauge must be

applied to determine whether or not professional diligence was exercised in the disclosure of accounting, economic and

financial information of the acquired companies. Professor Montalenti specified that the “general interpretation clause” –

establishing the “maximum” standard of professional diligence for knowledge (and, consequently, representation) of data and

information — has its general effect on the section of the agreement concerning the «representations and warranties of the

sellers.» The standard is specifically applicable to the contractual provisions regarding the Accuracy of Information, i.e., the

general veracity rule (Article 5.24.1) the information about historical data (Article 5.24.2) and prospective data (Article

5.24.3). Similar conclusions also apply with regard to the interpretation of the contractual rules governing indemnification

(Article 7.1 and subsequent articles of the Agreement). Consequently, the accuracy, completeness and veracity of information

must be verified in accordance with an assessment criterion based on a standard of the utmost professional diligence.

Professor Montalenti added that the Agreement’s purchase price should be considered as having been definitively set

pursuant to an agreement reached by the parties within the framework of the “Price Adjustment” procedure. In Professor

Montalenti’s view, this agreement, which was reached in May/June 2013, must be viewed as a settlement because, on that

occasion, the parties avoided possible litigation without using an arbitrator and by means of mutual concessions. Professor

Montalenti pointed out that the “Prize Adjustment” contractual clause is independent of the other clauses concerning the

reasonableness of prospective data. He then discussed the clause that governs marketing expenses. This clause requires that

the parties must not only be cognizant but must also agree that marketing expenses will be carried out, i.e., incurred, in

accordance with (i) guidelines and (ii) precisely determined parameters. Specifically, these expenses must first of all be in

accordance with the projections of the business plan and, second of all, incurred in accordance with the additional criterion of

16

(i) the ordinary course of business and (ii) best management practices. He also emphasized that prospective information

regarding marketing expenses has an impact within the scope of this clause on the accuracy of information. The issue is then,

concretely, how to determine whether or not the marketing expenses and other key economic indicators regarding prospective

data presented by the Sellers are “truthful” pursuant to and for the purposes of the contractual provisions. He noted that the

reliability of projections necessarily entails a degree of tolerance in view of the fact that prospective data by their very nature

present characteristics of uncertainty. However, the relevant degree of approximation cannot be that of the common man, as

it must fall within limits that are even narrower than the normal standards of professional diligence for the reasons presented

above. If there is a material variance between prospective and actual data, it will be necessary to determine:

(i) whether the decrease in growth prospects, to be defined and quantified, was caused by a negligent lack of reliability

in the prospective data;

or

(ii) whether it was caused by a restrictive management decision imposed by the parent company over the subsidiary.

In both cases, the variance, if material, is relevant, subject to verification of the causality nexus.

The variance, if material, will not be relevant for indemnification purposes if it is:

(i) caused by unforeseeable market reasons;

or

(ii) fruit of an independent (and not externally imposed) choice on the part of the Company.

Professor Montalenti specified that in corporate or contract law there are no direct references to this issue. However,

a reference point in the legislation that has strong affinity with the issue in question can be found, in his opinion, in the

leveraged buyout provisions of Article 2501-bis and subsequent articles of the Italian Civil Code. Article 2501-sexies of

the Italian Civil Code requires that reports by experts contain an attestation of the «reasonableness» of the data contained

in the merger proposal. This new legislation is characterized by a twofold profile. The regulation of transactions involving a

company’s own shares is no longer based on the absolute prohibition of financial assistance but rather on its permissibility

conditional on the fulfillment of disclosure obligations. The leveraged buyout is expressly allowed conditional on precise

obligations of (a) transparency and (b) rationale. Professor Montalenti emphasized that, in his opinion, the expert’s

«attestation» required by the new law consists of a sort of certification/verification of the plan prepared by the Directors the

subject of which is the «reasonableness of the information provided in the merger proposal» and thus entails a judgment no

longer regarding the veracity of the accounting data, but rather a “valuation of the feasibility, reliability, likeness, and

absence of irrationality, illogicalness and arbitrariness of the prognosticated projections.” A valuations strictly on the merit of

the transaction is thus excluded. The commentators who analyzed this specific issue more in-depth have taken the approach

of viewing the concept of reasonableness as a synonym of “likelihood and normality of verification of future events, within the

framework of a logically consequential argument in contraposition with the exceptionality of unreasonable events, as the

verification concerns prospective data rather than historical data, with regard to which a judgment of conformity with the

truth cannot be given.” Professor Montalenti then underscored that it is crucial to assess whether the circumstance of the

variance between prospective data and results can constitute an element of unreasonableness. He then stated that if between

17

prospective data and “actual” data, regarding the economic and financial position of the acquired company and subsequently

realized, there is a difference that, in light of the judicial parameters presented above and technical-financial parameters, can

be deemed to be greater than the reasonableness standard, the conclusion will have to be that there occurred any inaccuracy of

information. With regard to the damage, Professor Montalenti pointed out that any claim for compensation must be based

on an economic damage suffered and must be proven. In principle, in the case of unreasonable prospective information, the

damage would consist of the failure to achieve the desired actual result compared with the result presented in the prospective

data. (...)

It then appears to be necessary or at least appropriate:

1) to request a technical-corporate-financial opinion that answers the question as to whether, in light of the criterion

of reasonableness as specified based on legal and technical criteria, the discrepancy between prospective data and

actual data can be deemed to be unreasonable;

2) to request a technical-financial opinion that answers the question as to whether the difference between the

prospective 2013 – 2014 EBITDA, computed taking all of the components into account, and the EBITDA

computed at the end of the reporting period gives rise to a damage suffered by the Purchaser

3) to verify whether an unreasonable variance compared with the prospective data is the result of decisions

independently made by the Purchaser and not decisions imposed by the parent company.

Professor Montalenti pointed out that, after the abovementioned technical-corporate verifications are completed, any action

must be filed by July 3, 2017, which is the expiration deadline for legal actions provided in the Clause 7.3.1, Letter (b),

of the Agreement. He then concluded noting that if the technical-financial opinions were to lead to the conclusion that a

claim for compensation could be configured because the projections were unreasonable, the damage could be quantified and

there was a causality nexus, there would still be a margin for discussion and thus for an almost physiological uncertainty

regarding this issue. Considering this uncertainty, even if the conditions for litigation were to exist, a settlement would be

preferable to and arbitration or judicial dispute.» (pages 94 to 100 of the corresponding minutes).

Professor Montalenti thus reached conclusions that are not different from those of Professor

De Nova, except with regard to the determination of the damage. Specifically, both consider the

unreasonableness of the assumptions upon which the prospective data contained in the VDD are

based, in the sense specified by both, and the existence of the causality nexus between said

unreasonableness and the lesser performance by the acquired company compared with the one

presented in the business plan as an essential prerequisite to enforce the contractual guarantee.

However, with regard to the damage incurred, Professor De Nova defines it, as stated above, as the

variance between “prospective” EBITDA and “actual” EBITDA, while Professor Montalenti

introduces the possibility that the multiplier of 9.5 times mentioned in the contract could be applied to

the variance, but emphasizing that this is a question of a merely technical nature. It is worth mentioning

that Professor Montalenti felt that the year 2012 should be excluded from the scope of potential

18

applicability of Clause 5.24.3, as the variances for that year have already been the subject of a settlement

by the parties through the Price Adjustment.

4.3.6 The presentation of Professor Montalenti’s opinion was followed by a

discussion among committee members as to whether it would’ve been appropriate to entrust to a third

independent experts the technical-corporate analyses that both legal experts found necessary. At the

same meeting of October 8, 2015, a Committee member stated that he had «reservations about the

appointment of another expert, considering all of the documents already obtained and emphasized that the Directors

possess adequate know-how for the necessary assessments, for which they are legally responsible.». In turn, the

Committee Chairman took the floor «also to express reservations about the appointment of the umpteenth expert.»

(page 99 of the corresponding minutes).

Besides, Professor Montalenti, in his opinion officially rendered on October 23, 2015, had

mentioned the use of an independent expert only as a possibility («possibly», «if appropriate»). By a letter

dated November 5, 2015 (annexed sub “D”), he then specified that in his opinion it would have been

«advisable, if not necessary, to request a technical-corporate opinion from an independent expert about the different profiles

specified in our opinions [i.e.: his own and that of Professor De Nova]».

At the meetings held on October 29, 2015 and November 6, 2015, the Committee then decided

not to use an expert in this phase.(10)

In this context, upon a request by Committee member, the Company’s management prepared a

document called “Focus LAG,” which contains, inter alia, a comparison of key economic results for the

2012-2014 period of Lactalis American Group Inc., separately, with the data of the VDD, for valuation

purposes. This document, a draft of which was given to Professor Montalenti and cited in his opinion,

was reviewed by the Board of Directors initially at the meeting of October 8, 2015 and, subsequently, at

the meeting November 10, 2015, during which, the Board of Directors, having been informed of the

Committee’s decision not to use, in that phase, a third independent expert and of the discussion that

arose about this issue, confirming the assignment «to carry out the necessary in-depth analyses of the issue in

question [i.e., the LAG acquisition agreement and any possibly available remedies], and report any findings to

the Board of Directors, reserving the right to determine, based on those findings, whether relying on the support of external

consultants was appropriate.» (page 119 of the corresponding minutes).

(10) October 29, 2015: «The Committee unanimously concurred with the position not to use, at the present time, the support of an

expert for the investigative activities discussed in the course of the meeting»; November 6, 2015: «The Committee unanimously confirmed the decision not to proceed, at the present time, with the appointment of an expert for the investigative activities regarding the LAG acquisition, in line with the decision made at the meeting of October 29, 2015».

19

The “Focus LAG” document was further analyzed at Committee meetings on November 19,

2015 and December 11, 2015, as amended by the Company’s management, further to discussions with

the Committee, and later used to prepare a report, a draft of which was approved at a meeting held on

November 16, 2015, in which the Committee also resolved to recommend to the Board of Directors

the appointment of an expert in corporate issues, identified as Professor Massari, and a new legal expert

to review his work.(11)

This Draft Report provided a valuation of LAG prepared by the Committee, using as a

reference the “Focus LAG” document, developed with the discounted cash flow method (adopting the

same key parameters as those used by Mediobanca in connection with the acquisition), replacing the

data of the business plan contained in the VDD with the actual data for 2012, 2013 and 2014, the pre-

closing data for 2015 and the prospective data for 2016-2018. This valuation produced the amount of

US$ 775.8 million (in line with the price paid of US$ 774 million). The Report also provided alternative

valuation hypotheses containing some restatements of the abovementioned data and basic parameters

(regarding the tax rate, the computation of terminal value, the investments in marketing and the growth

rate of revenues in the computation of prospective cash flow) that produced amounts ranging between

US$ 677.4 million and US$ 531.3 million. The Report then contained a brief review of the work

performed by Deloitte in light of the investments and the results actually achieved by the investee

companies, from which the Committee drew the conclusion that «it would seem sufficiently evident that the

conditions for declaring that the assumptions used as the basis for the prospective data supplied to the acquirer were

reasonable are lacking.» (page 149 of the corresponding minutes).

For the sake of full disclosure, the resolution adopted by the Committee on that occasion is

reproduced below:

«The Committee unanimously resolved:

a) to approve the Draft Report showing that the requirement of reasonableness does not appear to have been met

with regard to the prospective data used as a reference for constructing the business plan on the basis of which

LAG’s value was determined and, consequently, how to identify a range of values that can be used as a basis to

define the indemnification owed by the Seller to the Acquirer ranging between US$ 96 million and US$ 242

million. The Draft Report is being annexed to the minutes of the meeting;

b) to request, as already announced at the meeting of the Board of Directors of November 10, 2015 and

recommended by the esteemed jurists Polo Montalenti and Giorgio De Nova, a technical-corporate opinion

provided by an independent expert to confirm from a technical standpoint the analysis carried out by the

(11) At the meeting, the Committee Chairman specified that the document in question was a «preliminary document

pending the appointment of experts and the acquisition of the product of their work, since the experts could identify opportunities for additional in-depth analyses and/or clarifications» (page [136] of the corresponding minutes). This clarification was then emphasized at the meeting of the Board of Directors of December 22, 2015.

20

Committee and a legal opinion, also provided by the independent expert, that can frame the analysis within the

proper legal framework and assist, when necessary, in the preparation of the required documents. Both

professionals will have to be of high standing and characterized by the utmost independence […]» (page 137 of

the corresponding minutes).

4.3.7 At the meeting of the Board of Directors of December 22, 2015, the Draft

Report on the Acquisition of LAG of December 16, 2015 was the target of severe criticisms by one of

the Directors, who pointed out several mistakes under different profiles, including, specifically, the fact

that data and criteria developed ex post (and even restated) were applied to valuations and methods that

clearly can be used only in an ex ante approach (approach that, by the way, the jurist queried

emphasized as the one to adopt in their opinions). Equally objectionable, also according to the same

Director, was deemed to be the assessment of “unreasonableness” of the prospective data, despite the

fact that it was stated hypothetical terms, because this assessment too was based on an ex post

approach and because it did not take into account the numerous verifications to the contrary cited in

the report of September 20, 2013 by Professors Cattaneo, Ziliotti and Andrei and the opinions

mentioned therein.

At that meeting, the Board of Directors, after a lengthy debate specifically focused on the

possibility of involving an additional legal expert, resolved:

«a) to take cognizance of the Preliminary Draft of the Report of the Internal Control, Risk Management and

Corporate Governance Committee regarding the LAG acquisition;

b) to request a technical-corporate opinion from an independent expert to confirm from a technical standpoint the

analysis performed by the Committee;

c) to appoint as the Committee’s independent expert for the purposes of item b) above Professor Mario Massari.»

(pages. 32 and 33 of the corresponding minutes).

4.3.8 In February 2016, following the resignations of two Directors, one of whom was

a member of the Committee, the replacement Director, at the first Committee meeting and later at a

meeting of the Board of Directors, raised some issues regarding the fact that a question had not been

addressed to Professor Massari and about the modalities adopted by the Committee or its individual

members to identify the documents that were supplied to him. In addition and more in general, the

new Director did not agree with the method followed by the Committee to render its opinion about the

Draft of the Report on the LAG Acquisition before submitting it to the opinion of a third party,

because this would have created a problem of independent judgment on the part of the advisor in the

case of diverging opinions (minutes of the meetings of the committee of February 25, 2016 and March

1, 2016; minute of the meeting of the Board of Directors of February 29, 2016).

21

The following question was then addressed to Professor Massari: «You are being asked to provide a

technical-corporate opinion for the purpose of confirming the analyses performed by the Internal Control, Risk

Management and Corporate Governance Committee with regard to ascertaining whether or not the assumptions underlying

the prospective data contained in the Vendor Due Diligence prepared by Ernst & Young were reasonable.»

Professor Massari delivered an initial preliminary presentation of the verification carried out in

the course of the committee meeting of March 1, 2016. On March 7, 2016, a draft of his opinion was

forwarded to Directors and the members of the Board of Statutory Auditors, with Professor Massari

reviewing the content of his opinion at the Board meeting of March 21, 2016, after a corresponding

Committee meeting held on March 14, 2016 period. An official version of the opinion was produced

on March 18, 2016.

The relevant portion of the abovementioned opinion (annexed this document sub “E”), as

presented by Professor Massari himself at the meeting of the Board of Directors held on March 21,

2016, are transcribed below: «Professor Massari prefaced his remarks by stating that, after reviewing the copious

documents that he received, he became convinced that in order to provide a useful contribution in support of the

Committee’s assessments, it was indispensable to carry out a simplification process, with the aim of focusing only on the

fundamental issues.

In that regard, he reviewed all of the documents transmitted to him, he focused on the “primary” documents,

which include the vendor due diligence (and the reports related to it) and Mediobanca’s fairness opinion, and the most

recent company documents (specifically, the business plan assessments by Bain & Co. and the documents produced in

2015, with special emphasis on the legal opinions provided by Professors De Nova and Montalenti, which originated the

assignment entrusted to him).

The work carried out by Professor Massari intends, on the one hand, to provide an answer to the fundamental

question as to whether or not the assumptions underlying the data contained in the vendor due diligence are reasonable

and, on the other hand, to provide a critical commentary of the work performed by the Committee. Specifically, the subject

of the question asked of Professor Massari was “a technical-corporate opinion for the purpose of confirming the analyses

performed by the Internal Control, Risk Management and Corporate Governance Committee with regard to ascertaining

whether or not the assumptions underlying the prospective data contained in the Vendor Due Diligence prepared by Ernst

& Young were reasonable.” This review, in his opinion, must take into account the analysis performed by the committee

with regard to LAG’s valuation. Moreover, the remarks set forth in the “Focus LAG” document do not constitute a true

valuation but merely an exercise aimed at understanding ex post if there existed the conditions for performing more in-

depth analyses regarding the reasonableness of the assumptions underlying the prospective data contained in the vendor due

diligence.

That said, Professor Massari pointed out that the LAG acquisition constitutes a transaction for the relocation of

assets within the BSA Group. Technically, it involves a transfer of intercompany flows, in itself absolutely normal and

22

legitimate, but which requires a certain degree of caution due to the fact that the buyer (Parmalat) is a company listed on

the stock exchange and, consequently, transfers of value that could penalize Parmalat’s minority shareholders must be

avoided.

As a result, the use of the multiple method does not seem appropriate, because a sample of perfectly comparable

transactions might not be available. Because the transaction is an intercompany transaction, the net present value of the

flows that are being transferred with the transaction in question becomes significant. Consequently, it should be valued with

the discounted cash flow (“DCF”) method developed by using the reference parameters of the group to which the company

belongs, adjusting in part those parameters, when risk issues are present.

Specifically, in the case of transactions that take place within a group it is not always possible to determine a

convincing market value. This is because often the assets being transferred present characteristics that limit the number of

potential buyers (from the viewpoint of the seller) or the number of comparable target companies (from the viewpoint of the

buyer).

In this regard, Professor Massari pointed out that while it is true that the primary subject of this review was the

reasonableness of the assumptions underlying the prospective data contained in the vendor due diligence, it is also true that

an analysis that seeks to explain the sources of the value of the transferred asset can help rationalize the review of the

reasonableness of the abovementioned assumptions.

It is in fact complicated to perform ex post analyses concerning the reasonableness of prospective data because there

is always the risk of falling into the psychological distortion of “Monday morning quarterbacking,” when, instead, it is

well known, based both on the scientific literature and practice, that such analyses must be carried out rigorously with an

ex ante logic. This means that the reasonableness of the assumptions underlying the plan can be evaluated exclusively

based on the information available at the time when the plan was constructed.

As for the requirement of the reasonableness of the assumptions, Professor Massari pointed out that from a

methodological standpoint, in his report he made reference to Italian Valuation Principles (IVP) and the International

Standard of Assurance Engagement (ISAE) 3400 "The Examination of Prospective Financial Information" published

by the IFAC - International Federation of Accountants.

In his opinion, these principles must be viewed within the framework of the company’s organization and the

reality of the business subject of the plan.

Specifically, the conditions that help qualify the reasonableness of a plan have to do with the fact that

assumptions:

a) must not appear to be misaligned compared with the microeconomic and microfinancial parameters supplied by

authoritative sources;

b) must not appear to be misaligned compared with the dynamics projected in the target markets;

c) must be compatible with the behaviors that competitors are expected to adopt consistent with rational analyses;

d) must be compatible with the company’s tangible, intangible and management resources;

e) must be compatible with the ability to gather the financial resources needed for the plan.

23

Consequently, a simple classification of business plans can be developed, making a distinction between (i)

technically incorrect plans; (ii) plans with obvious inconsistencies; (iii) plans with particular implementation difficulties

(often these plans are defined as “challenging” or “ambitious”). The business plan contained in LAG’s vendor due

diligence falls within the last category.

The problem inherent in category (iii) has to do mainly with the structural cyclicality and volatility of the price of

raw milk.

Therefore, even though over the medium-term LAG has proven that it is capable of maintaining specific average

EBITDA values, even in the face of said volatility, there is no doubt that in the years adversely affected by the cycle of raw

milk prices, as was the case in 2014, consequences arise that could delay the plan’s objectives or adversely affect certain

objectives.

That said, LAG’s strategy according to the plan – aimed at developing and leveraging the strength of its brands

(which includes the migration of dairy products to the national Galbani brand) and strengthening the President brand for

deli products — is absolutely rational and supportable.

The achievement of the plan’s objectives requires overcoming some critical issues mainly related to the central role

played by investments in marketing and capex, which could be constrained or delayed by a negative trend for milk prices in

some years.

The analysis performed by Bain & Co., which Professor Massari calls objective and reliable, acknowledges that

this problem also affects LAG’s competitors and, thus, represents a structural characteristic of the sector in question.

Therefore, Professor Massari concludes stating:

- the plan in question was based on an acceptable strategy;

- there were elements capable of supporting this strategy, including in particular the strength of the two

abovementioned brands.

From an ex ante perspective, the plan does present some problems. Specifically, in an unfavorable context for the

procurement of raw milk, LAG, in order to defend its market share in the dairy segment, could have been forced to lower

prices. Moreover, the defense of margins through a policy of cutting marketing costs could have compromised the brand

migration strategy. These problems were confirmed by the market evolution during the period subsequent to the plan and

caused a delay in the achievement of the plan’s targets.

The foregoing comments refer to the 2012-2014 plan, contained in the vendor due diligence.

However, according to what Bain claims, in 2015 — a highly favorable year that offsets the unfavorable

situation of 2014 — the plan’s objectives were achieved to a certain degree and, specifically, Bain reports that the brand

migration process was completed.

In light of the foregoing remarks, Professor Massari believes that:

- the plan’s long-term strategic approach (leverage the value of the “strong” brands) is totally acceptable, as noted

also in the Plan Assessment produced by Bain & Co;

24

- the assumption that any unfavorable fluctuations in the cost of milk can be transferred to prices, sales volumes

remaining equal makes the plan challenging, since it would require a high ability to manage the market and

respond to the defensive policies that competitors may implement; however, the following must be considered:

o the vendor due diligence provides extensive and detailed information about the strategy underlying the

plan and the problems associated with the projections;

o there is a specific mention of the effects on margins of unfavorable fluctuations in the price of milk that

are not recoverable through increases in sales prices;

o these are problems that are typical of this industry and so well known that they can be discounted;

o in cases similar to the one being discussed here the quality of the information used to evaluate the

assumptions underlying the plan becomes particularly relevant; specifically, if the plan does more than

just provide action guidelines for management but also provides an information basis for determining a

given value or a given price, the information underlying the plan’s assumptions are expected to facilitate

the use of techniques to address uncertainty (sensitivity analysis, scenario analysis, Montecarlo

simulation and so on); in this regard, the VDD supporting documents appear to be sufficiently detailed;

o the completeness of the information must also be assessed in relationship to the recipient of the

information; in the case in point, the recipient is an operator in the milk sector.

Therefore, in Professor Massari’s opinion, there are no objective elements that justify claiming that the plan’s

projections contained in the VDD are unreasonable because, as stated by Bain & Co., LAG was able to maintain on

average, over the long-term, it’s margins of profitability. Secondly, the brand migration and margin protection strategy is

based on leveraging highly recognizable brands (Presidents and Galbani) with market strength.

Professor Massari’s report is based on data received until March 1, 2016, which is the date when he presented

the results of his work to the Committee.

Subsequently, additional data, such as the results of the impairment test and the actual LAG data, became

available. He reviewed these numbers as well, which confirmed the conclusions he had reached. Specifically, the results for

2015 are comparable to those projected for 2014, which confirmed a postponement of the plan’s target attributable to the

characteristics typical of the business in question. Moreover, Bain had already clearly indicated that 2014 should be

viewed as an exceptionally unfavorable year, while 2015 should probably be considered as a very favorable year.

It is also true that the evolution of LAG’s plans, from 2012 to today, shows as systematic downward revision of

the plan’s objectives. However, when looking at Bain’s latest Plan Assessment, the characteristics of strong growth that

could be found in the previous business plans is no longer present. Indeed, it often happens that plans are ambitious.

Nevertheless, in 2015, LAG reported EBITDA of more than 100 million, which makes it a business unit within

important cash flow generation and the ability to support such cash flow during less favorable market periods..» (pages

from 37 to 41 of the corresponding minutes).

25

As for the main condition mentioned in the opinions of the two abovementioned jurists

regarding the “unreasonableness” of the assumptions underlying the business plan, Professor Massari

reached the conclusion that: «there are no objective elements that justify claiming that the plan’s projections contained

in the VDD are unreasonable because, as stated by Bain & Co., LAG was able to maintain on average, over the long-

term, it’s margins of profitability. Secondly, the brand migration and margin protection strategy is based on leveraging

highly recognizable brands (Presidents and Galbani) with market strength.» (page 41of the corresponding

minutes).

4.3.9 Following the completion of the presentation by Professor Massari and the

ensuing discussion, the Chairperson of the Board of Directors, also at the meeting of March 21, 2016,

acknowledged that the Internal Control, Risk Management and Corporate Governance Committee had

not «delivered to the Board of Directors its opinion to complete the extensive and detailed effort launched almost a year

and half earlier in connection with the LAG transaction,», specifying that «this opinion is mandatory in order to allow

the Board of Directors to adopt a resolution with regard to this issue. The Chairperson also pointed out that he asked

Professor Perotta to submit this opinion with an email that should have been sent the past Thursday. Consequently, the

Board of Directors, on that occasion and in accordance with the required procedure for related party transactions could only

acknowledge being cognizant of the exhaustive presentation provided by Professor Massari and asked the Committee to

submit a written and reasoned opinion to conclude its activity. Once the Board of Directors receives this opinion, it will

meet again to adopt the relevant resolutions.» (page 51 of the corresponding minutes).

The Committee Chairman then declared that «he concurred with the Chairperson about the need to

formalize the conclusions of the Committee on the issues at hand at the next Committee meeting, already scheduled for the

next day at 5:30 PM.» However he also raised a series of issues, that became the subject of an extensive

discussion, concerning mainly the fact that within the Committee different positions had developed

among its members «regarding the interpretation of how the work of the Committee should proceed.» (pages 52 and

53 of the corresponding minutes).

4.3.10 At the meeting of March 22, 2016, after the Chairperson of the Board of

Directors repeated his request that the Committee delivered its opinion (12), the Committee approved,

by majority vote, the text of the “opinion” prepared by its president, which is transcribed below:

«The Internal Control, Risk Management and Corporate Governance Committee (“the Committee”), with

regard to the investigative activity carried out at the request of the Board of Directors for the purpose of

assessing the possibility of enforcing the contractual clauses contained in the LAG sales agreements, with the

(12) The following occurred: «Ms. Chersicla, Chairperson of the Board of Directors took the floor to repeat a request to receive the

Committee opinion in completion of the assigned investigative task. She pointed out that the Committee was required to provide the opinion pursuant to the Procedure for Related Party Transactions. She then emphasized that any dispute with the majority shareholders must be well motivated since the company would incur costs that could be substantial.» (page 158 of the corresponding minutes).

26

aim of protecting the Company’s interest;

— given the legal opinions rendered by Professor Giorgio De Nova (at the request of the Chairperson of the

Board of Directors) and Professor Paolo Montalenti (at the request of the Board of Directors, or proposal

by the Committee);

— taking into account the information provided in the report submitted by the Committee to the Board of

Directors on December 22, 2015;

— given the subsequent technical-corporate opinion rendered by Professor Mario Massari (at the request of

the Board of Directors, on a proposal by the Committee);

BEING COGNIZANT

of the assessment provided by Professor Mario Massari about the absence of the conditions for considering as

technically “unreasonable” the assumptions underlying the construction of the business plan included in the

vendor due diligence prepared by E&Y;

BEING ALSO COGNIZANT

of the fact that the detailed opinion provided by Professor Mario Massari, which confirmed to large extent

the validity and the accuracy of the methodology applied to the work performed by the Committee,

nevertheless points to several problems with regard to the business plan and its underlying assumptions, as

well as the qualification of the entire transaction not as a related party transaction but as a reallocation of

assets within the group in accordance with a guidance and coordination logic;

REMITS

to the Board of Directors the decision whether it would be appropriate to make the decision as to whether or

not the activation of any action for compensation or indemnification based on the abovementioned

contractual clauses conditional on a further review of a legal nature — possibly entrusted to Professor Paolo

Montalenti, author of the latest legal opinion in this regard — to be carried out taking into account the

conclusions of the opinion rendered by Professor Mario Massari;

ASKS

the Board of Directors to also consider, with due care, the possibility of carrying out additional verifications,

with the aim of determining if there exist the conditions for activating actions for compensation or otherwise

designed for the Company’s protection, based not on the contractual clauses but rather on the remedies

available under the law, specifically with regard to those provided in the area of guidance and coordination

pursuant to Articles 2497 and subsequent articles of the Italian Civil Code, taking into account the

absence of a declaration of the existence of a unified management at the time the facts occurred and the

different findings of the documents and investigating activity that arose on the occasion of the complaint filed

with the Board of Statutory Auditors pursuant to Article 2408 of the Italian Civil Code, a copy of which

was delivered to the members of the Committee (pages 160 and 161 of the corresponding minutes).

27

This opinion was approved by the Committee with the favorable vote of its Chairman Riccardo Perotta and

the Director Umberto Mosetti. The Director Nicolò Dubini cast a dissenting vote.» (page 165 of the

corresponding minutes).

For the sake of full disclosure, the reasons for the dissenting vote cast at the Committee

meeting by a Committee members are reproduced below as they were stated by the dissenting member

at the Board meeting of March 30, 2016, reasons that were not listed in the “opinion” delivered to the

Board of Directors.

«1) on March 14, 2016, the Director Nicolò Dubini concurred with the statement of the Committee

Chairman, listed in the minutes of the meeting of the Board of Directors of February 18, 2016, according

to which “if the third parties whose services were retained by the Board of Directors should conclude that the

requirement of the reasonableness of the prospective data underlying the construction of the business plan on

the basis of which LAG’s value was determined could be met, no tools would be available to claim any

indemnification from the counterparty,” therefore concluding that this was the Committee’s final position,

albeit contrary to the opinion of Professor Mosetti;

2) on today’s date [i.e., March 22, 2016], the Chairman took a different position submitting the current

prepackaged opinion. […] However, the “opinion” is not an opinion but a simple remission to the Board of

Directors of the decision whether or not an umpteenth legal opinion is necessary. This circumstance is

particularly serious, not only because it confirms the Committee’s lack of independence deriving from the

method followed and the difficulty it faces in disregarding the preliminary position stated at the meeting of

the Board of Directors of December 22, 2015, despite the fact that this position was rejected by the expert

chosen by the Committee, but because it constitutes a failure to perform the task assigned by the Board of

Directors and satisfy the requests repeated by the Board of Directors at the meetings of March 18 and 21,

2016, as well as those received from the Consob;

3) moreover, this failure cannot be justified in light of the fact that, based on the legal opinions rendered by

Professors De Nova and Montalenti and the opinion of Professor Massari, there existed all of the elements

necessary for concluding that the requirement of lack of reasonableness cannot be met with regard to the

assumptions underlying the prospective data contained in the Vendor Due Diligence prepared by Ernst &

Young and consequently, the conditions required to enforce the contractual guarantee contained in the LAG

sales agreement versus the Seller cannot be met. It is also worth mentioning that Professor Massari, in

discussions at meetings of the Committee and the Board of Directors held on March 21, 2016, also

excluded the occurrence of the damage in light of the results of the latest impairment test approved by the

Company with Bain’s support;

4) the Committee’s “opinion” provides an incorrect reading of the opinion rendered by professor Massari,

who (i) does not appear to have rendered an opinion about the “validity and accuracy of the method followed

28

by the Committee in its work,” (ii) did not detect “significant” problems with the business plan but rather

the usual problems in plans of this type, expressly excluding that these problems invalidate the assessment

that the assumptions underlying the plan are reasonable (see Section 9.12 on page 44 of his opinion) and

(iii) while having concluded that the acquisition of LAG constitutes a “reallocation of assets within the

group,” did not “qualify the entire transaction as a transactions between independent parties … in

accordance with a guidance and coordination logic”;

5) the “request” that concludes the Committee’s opinion is totally unorthodox and is not part either of the

attributions or the functions of the Committee, particularly in the case of an issue in which the Board of

Statutory Auditors is directly involved.”

According to Mr. Dubini, it is quite obvious that the Committee has no intention of defining the

abovementioned opinion but is attempting to postpone indefinitely the performance of this task which it is

required to perform by virtue of the resolutions adopted by the Board of Directors (pages 66 and 67 of

the minutes of the Board of Directors meeting of March 30, 2016).

4.3.11 At a subsequent meeting of the Board of Directors held on March 30, 2016, the

Committee Chairman, in response to the objections raised by the Chairperson of the Board of

Directors for the fact that the document submitted «did not constitute an opinion by the Committee for Related

Party Transactions, prepared in accordance with the requirements of the corresponding procedure,» stated that «the

opinion in question was in reality provided by the Internal Control, Risk Management and Corporate Governance

Committee.» He then also stated that, in his opinion, the Committee for Related Party Transactions «had

never been involved in this issue, as all requests regarding it were addressed to the Internal Control, Risk Management

and Corporate Governance Committee» (pages 62 and 63 of the corresponding minutes). Lastly, further to

the objections raised by the Chairperson and the ensuing discussion regarding the qualification for

enforcing (or not enforcing) the LAG contractual guarantees in a related party transaction —

qualification questioned by the Committee Chairman and one of its members — the Committee

Chairman stated that «if this was the requests of the Board of Directors, he pointed out that, for the purpose of issuing

such an opinion, it will be necessary to obtain a legal opinion the need for which was emphasized by the Committee since

this past month of December» (page 76 of the corresponding minutes).

In the course of the meeting, among various speakers, the Chairman of the Board of Statutory

Auditors took the floor and, with regard to the “request” contained in the Committee document

regarding verifications about possible compensatory remedies alternative to those provided

contractually, stated the following: «Professor Rutigliano acknowledged that the issues regarding the LAG

acquisition were indeed discussed, debated and analyzed on various occasions, as mentioned by Ms. Vasco. But it would

also true that this issue was raised again due to the filing of a complaint pursuant to Article 2408 of the Italian Civil

29

Code by the shareholder Amber Capital. As a result of this complaint, the Board of Statutory Auditors, as mandatorily

required, is proceeding with the performance of the necessary verifications in order to render an opinion on this issue, at

least in part, as early as the next Shareholders’ Meeting. It is well known that the powers held by the Board of Statutory

Auditors are much more invasive and powerful than those attributed to individual Directors and, consequently, in this

phase the Board of Statutory Auditors has been working and will continue to work with all of the means at its disposal,

with the help of the Company’s organization, to study in depth the issues at hand. In view of these considerations,

Professor Rutigliano indicated that he did not believe it would the appropriate at this point for the Board of Directors and

the Committee to reopen the more general issue (regarding whether the requirements could be met for activating actions for

compensation, or otherwise intended to protect the Company, that are not based on contractual clauses but rather on legal

remedies) until the Board of Statutory Auditors concludes its review activities. Moreover, the task of the Board of

Statutory Auditors is not to absolve of convict, but rather to ascertain the facts based on the information it will obtain.

Consequently, while the Board of Statutory Auditors cannot impede the initiatives of Directors, it recommends that all

analyses of the abovementioned more general issue be temporarily suspended, while waiting for the Board of Statutory

Auditors to complete its review.» (page 74 of the corresponding minutes).

The Chairman of the Board of Statutory Auditors also address the issue of the qualification for

enforcing the contractual guarantees in a related party transaction, stating the following: «Professor

Rutigliano, speaking on behalf of the Board of Statutory Auditors, expressed the opinion that an assessment as to

whether or not the requirements can be met to enforce the guarantee provided by Clause 5.24.3 of the Share Purchase

Agreement concerns a transaction with a related party. Moreover, even if there were elements of uncertainty in this regard,

a conservative approach would recommend the adoption of the more restrictive and conservative interpretation. In view of

these considerations, the Board of Statutory Auditors believes that the question at hand concerns not just a transaction

with a related party but actually a transaction with the utmost related party, i.e., the parent company» (page 78 of the

corresponding minutes).

The Board of Directors, with the favorable votes of all of its members (including the

Committee Chairman) and the dissenting vote of a Director and Committee member, resolved, as

mentioned above: «to qualify the assessment as to whether or not the conditions could be met to enforce the guarantee

clauses contained in the Share Purchase Agreement of May 29, 2012, the subject of which was the acquisition of LAG,

as a highly material related party transaction for the effects of the Regulation adopted by the Consob with Resolution No.

1722 of March 12, 2010, as amended.» (page 80 of the corresponding minutes).

In addition, the Board of Directors unanimously resolved «to authorize the Chairperson of the Board

of Directors to entrust to Professors Giorgio De Nova and Paolo Montalenti the assignment of preparing a joint opinion

as to whether or not the requirements can be met to enforce the guarantee provided by Clause 5.24.3 of the Share Purchase

Agreement, taking into account the corporate issue opinion rendered by Professor Mario Massari with regard to

30

ascertaining whether or not the assumptions underlying the prospective data contained in the Vendor Due Diligence are

reasonable.» (page 80 of the corresponding minutes).

4.3.12 Professors De Nova and Montalenti rendered their opinion on April 7, 2016,

annexed to this document sub “F,” stating the following: «In conclusion, it being understood that any questions

concerning any abuses in guidance and coordination are outside the scope of our opinion, we believe that, in light of

Professor Massari’s opinion, the assumptions are not unreasonable and, consequently, there is no basis for a compensation

or indemnification claim for damages caused by unreasonable prospective information (see Clause 5.24.3) beyond what

was already settled with the Price Adjustment Agreement.»

4.3.13 On April 11, 2016, the Committee — which up until that point had always met

and always adopted all resolutions in a single context, whether or not they involved related party

transactions — held two separate meetings, one in the capacity as Internal Control, Risk Management

and Corporate Governance Committee and the other one in the capacity as Committee for Related

Party Transactions.

During the first meeting it approved an opinion with the following text, as offered by its

Chairman:

«The Internal Control, Risk Management and Corporate Governance Committee (“the Committee”), with

regard to the investigative activity carried out at the request of the Board of Directors for the purpose of

assessing the possibility of enforcing the contractual clauses contained in the LAG sales agreement, with the

aim of protecting the Company’s interest,

- being cognizant of the legal opinions rendered by Professor Giorgio De Nova (at the request of the

Chairperson of the Board of Directors) and Professor Paolo Montalenti (at the request of the

Chairperson of the Board of Directors, upon a proposal by the Committee);

- taking into account the content of the report provided by the Committee to the Board of Directors on

December 22, 2015

- being cognizant of the subsequent technical-corporate opinion rendered by Professor Mario Massari (at

the request of the Chairperson of the Board of Directors, upon a proposal by the Committee);

BEING COGNIZANT

of the assessment provided by Professor Mario Massari about the absence of the conditions for considering as

technically “unreasonable” the assumptions underlying the construction of the business plan included in the

vendor due diligence prepared by E&Y, even though this opinion confirms the validity and correctness of the

methodology followed by the Committee in his work and qualifies the entire transaction not as a transaction

between independent parties but as a reallocation of assets within the group consistent with a guidance and

coordination approach;

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BEING ALSO COGNIZANT

of the joint opinion rendered by Professors De Nova and Montalenti, which confirms from a legal standpoint

the conclusions reached by Professor Massari with regard to the contract clause contained in Article 5.24.3;

RENDERS THE OPINION

that the contractual requirements for enforcing the clause contained in Article 5.24.3 of the LAG sales

agreement cannot be met and, consequently, recommends that the Board of Directors adopt the necessary

resolutions and

ASKS

the Board of Directors to also consider, with appropriate care, the opportunity of carrying out additional

verifications, with the aim of determining if there exist the conditions for pursuing actions for compensation to

or otherwise designed for the Company’s protection, based not on the contractual clauses but rather on the

remedies available under the law specifically with regard to those provided in the area of guidance and

coordination pursuant to Articles 2497 and subsequent articles of the Italian Civil Code, also in relation to

the complaint pursuant to Article 2408 of the Italian Civil Code filed with the Board of Statutory Auditors

on March 7, 2016 and forwarded for their information to all Directors, taking also into account all of the

findings that the Board of Statutory Auditors will deliver.

This opinion was approved with the favorable vote of Chairman Perotta and Director Mosetti. Director

Dubini approved the opinion limited to the part concerning the inability to meet the contractual requirements

for enforcing the clause contained in Article 5.24.3 of the LAG sales agreement for the reasons put forth on

multiple occasions, which shall be deemed to have been cited in full here by reference.» (pages 170 and 171

of the corresponding minutes).

At the second meeting, the Committee resolved by majority vote: «to ask Professor Paolo

Montalenti, who is being given nunc pro tunc mandate to contact Professor Giorgio De Nova to verify his availability to

undertake the assignment detailed below together with Professor Paolo Montalenti, to prepare a report in response to the

following question: «Can the designated expert indicate whether the transaction [not the enforcement of the contractual

guarantee] falls within the implementation scope of the Procedure for Related Party Transactions, considering the remarks

put forth in the introduction, and whether the transaction qualifies as a highly material transaction, in view of the fact

that, on the one hand, the transaction could qualify as a development of a highly material transaction (the LAG

acquisition) and, on the other hand, the valuations provided in Professor Mario Massari’s report provide evidence of a

discrepancy significantly below the reference threshold for highly material transactions and equal to 100 million euros. If

the Procedure for Related Party Transactions is applicable, what should be the subject and scope of the analysis that the

Committee is required to perform to better identify and substantiate Parmalat’s corporate interests, as well as: (a) if the

decision not to enforce the clause contained in the LAG sales agreement, specifically with regard to Clause 5.24.3 of the

abovementioned agreement, could be deemed to be in the Company’s interest; (b) if there are, and what are they, any

32

additional contractual and/or legal remedies that can be activated to protect the Company’s interest, also in light of any

facts potentially relevant pursuant to regulations governing guidance and coordination activities, as referred to in Article

2497 and following articles of the Italian Civil Code, and any issues recently raised in the complaint pursuant to Article

2408 of the Italian Civil Code filed on March 7, 2016 with the Board of Statutory Auditors and forwarded for their

information to all Directors, taking also into account the findings that the Board of Statutory Auditors will provide.»

(pages 189 and 190 of the corresponding minutes).

4.3.14 At the meeting of April 14, 2016, the Board of Directors took cognizance of

these two resolutions and, pointing out that the opinion pursuant to the procedure required for related

party transactions had not been rendered, did not adopt resolutions on the issue at hand, except for

approving, by majority vote, a press release aimed at supplementing the financial disclosures provided

with regard to the verifications made regarding the enforcement of the contractual guarantees

contained in the Share Purchase Agreement.(13)

4.3.15 Subsequently to the election of a new Board of Directors by the Shareholders’

Meeting of April 29, 2016, the Committee in its current composition took over responsibility for these

issues and met to review them on June 13, 2016, June 27, 2016 and July 19, 2016.

At the first meeting, it gathered all of the documents mentioned in the list annexed sub “A” and,

after having jointly «obtained cognizance of the resolution adopted by the Board of Directors on March 30, 2016, cited

at the beginning of the meeting, fully concurring with all of the conclusions reached by the Board of Statutory Auditors and

Directors in this regard at the abovementioned meeting and based on the considerations developed by the Chairman and

the assessments expressed by the Committee members at the meeting,» (page 1 of the corresponding minutes) in

light of the considerations stated at the beginning of this opinion, unanimously resolved «to revoke the —

based on the knowledge of the resolution adopted by the Board of Directors on March 30, 2016 and for the motivations

provided just now in support of considering the issue of the enforcement, or non-enforcement, of the guarantee provided by

Clause 5.24.3 of the Share Purchase Agreement of May 29, 2012, the subject of which was the transfer of the entire

share capital of LAG, as falling within the scope of the implementation of the Company’s Procedure Governing Related

Party Transactions — the resolution of the Committee for Related Party Transactions of April 11, 2016, in the part in

which it assigned to the designated expert the task of rendering an opinion on the following question: whether the

transaction [non-enforcement of contractual guarantees] falls within the scope of implementation of the Procedure

Governing Related Party Transactions,» thereby revoking the engagement assigned in this regard, to the best of his

(13) As mentioned earlier in this document, these developments were also addressed by the regulatory authority,

which on multiple occasions asked the Board of Directors to complete its analyses on this issue and report the findings in its Report on Operations. Most recently, the Consob requested information about this transaction by communication dated April 28, 2016, to which the Company responded with a letter dated May 9, 2016, providing the Consob with the minutes of Committee meetings and the relevant meetings of the Board of Directors, plus the opinions reviewed on those occasions, within an addendum sent on July 7, 2016, with additional minutes of meetings.

33

knowledge, on April 18, 2016 to Professors Giorgio De Nova and Paolo Montalenti,» as well as «to suspend, at this

stage, notwithstanding the different subsequent determination adopted by the Committee further to the activity planned as

above, the remaining part of the resolution adopted by the Committee for Related Party Transactions on April 11, 2016,

thereby suspending the effectiveness of the engagement assigned in this regard, to the best of his knowledge, on April 18,

2016 to Professors Giorgio De Nova and Paolo Montalenti and ask the Chairman to communicate this resolution to

Professors Giorgio De Nova and Paolo Montalenti.» (pages 3 and 4 of the corresponding minutes).

At the second meeting, a consensus was reached about the completeness and exhaustiveness of

the supporting documentation supplied.

On July 19, 2016, the Committee, consequently and for the sake of consistency, revoked the

remaining part of the resolutions adopted on April 11, 2016 regarding the request for a new, further

legal opinion. On that occasion, the Committee also acknowledged that it was aware of the

circumstance, already mentioned above, that Amber Capital UK LLP by a complaint dated March 7,

2016, pursuant to and for the purposes of Article 2408 of the Italian Civil Code, reported facts that it

deemed objectionable with regard to the LAG acquisition under different profiles (conduct of the

Board of Directors; guidance and coordination activities by BSA over Parmalat; cash pooling

transaction; purposes of the Acquisition transaction; marketing expenses; LAG’s value and

negotiations; valuation of synergies; commercial agreements) with the Company’s Board of Statutory

Auditors, which submitted an initial report to the Shareholders’ Meeting on April 29, 2016, reserving

the right to conduct further activities. In this regard, however, the Committee believes, on the one hand

and from a formal standpoint, not differently from the considerations made with regard to letter (b) of

the question addressed to Professors De Nova and Montalenti, that a review of the complaint filed by

Amber Capital is beyond the scope of the activities entrusted to the Committee by the Board of

Directors for the purpose or rendering this opinion and, anyhow, that with regard to the

abovementioned complaint the Committee lacks any unofficial procedural power, as well as any other

power to initiate actions; on the other hand and from a substantial standpoint, that it should fully

concur, together with the majority of the Board of Directors, with the recommendation made to the

Directors by the Board of Statutory Auditors at the meeting of the Board of Directors of March 30,

2016 «that all analyses of the abovementioned more general issue [i.e., and the contents of the complaint

pursuant to Article 2408 of the Italian Civil Code filed by Amber Capital] be temporarily suspended, while

waiting for the Board of Statutory Auditors to complete its review». (14).

(14) Also the Committee Chairman in office at the time of those “requests” at a meeting of the Board of Directors

on April 14, 2016 stated the following: «Professor Perotta specified that, in his opinion, the Committee did not intend to disregard the opinion of the the board of Statutory Auditors according to which, the Board of Directors must eventually address the issues set forth in the complaint filed by the shareholder Amber Capital pursuant to Article 2408 of the Italia Civil Code, following the conclusion of the review that the Board of Statutory Auditors will perform with regard to this issue.» (page 135 of the corresponding minutes).

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5. Assessments and conclusions

Within the framework outlined thus far of the evermore complex and structured transaction

involving the sale of LAG by Lactalis to Parmalat, the analyses performed by Professors De Nova,

Montalenti and Massari appear to be reasonable from a factual, technical and argumentative standpoint

and the conclusions that they reached completely acceptable: (also) by the unanimous opinion of this

Committee there appears to be no basis for exercising the rights deriving from the clause stipulated in

Article 5.24.3 of the Share Purchase Agreement executed on March 29, 2012 by B.S.A. S.A., Groupe

Lactalis S.A. and B.S.A. International S.A., on the one hand, and Parmalat s.p.a., on the other hand, the

subject of which is the transfer of the entire share capital of Lactalis American Group Inc. (in turn,

owner of the entire share capital of: Sorrento Lactalis Inc., Lactalis USA Inc., Lactalis Deli Inc.,

Mozzarella Fresca Incorporated, Lactalis Retail Dairy Inc., S.C.C. Properties Inc. and Lactalis Export

Americas SAS), Lactalis do Brasil – Comercio, Importação e Exportação de Laticinios Ltda and Lactalis

Alimentos Mexico S.deRL.; and, consequently, there is no basis for pursuing a compensation or

indemnification claim for damages caused by prospective information that was unreasonable pursuant

to and for the purposes of the abovementioned clause, in addition to what was already settled through

the Price Adjustment Agreement of May 30, 2013.

Having said this, it is now necessary to develop some final considerations about the nature and

importance of this opinion in terms of the Consob Regulation and the Procedure adopted by the

company, keeping in mind the absolute peculiarity of the “transaction – enforcement (or non-

enforcement) of a contractual guarantee clause” subject of the review.

As a rule, a negative opinion by the independent Directors with regard to the implementation of

a transaction with a related party — binding on the Board of Directors when the transaction is a highly

material transaction — is the result of an assessment of nonconformity of the transaction with the

criteria, as stated in the regulations, that it must be in the Company’s interest, its terms must be

advantageous and it must be substantially and procedurally fair. These nonconformities indicate a

potential danger of shielding private benefits from the control and preclusive effect of a negative

opinion — except for the potential effects of the whitewash system — and avoid an unjustified

prejudice for the issuer.

Now therefore, this so-to-speak “normal” configuration of the negative opinion and its

rationale do not seem to fit in our case: the valuation expressed above is not the result of identified

nonconformities of our “transaction – enforcement (or non-enforcement) of a contractual guarantee

35

clause” with the abovementioned criteria, but rather a perceived lack of justification from a technical

legal standpoint. It is true that from such lack of justification could result the dismissal of a possible

lawsuit and the resulting obligation to pay court costs (also in terms of aggravated liability, given the

knowledge deriving from the broad and in-depth investigative activity carried out) and, consequently, a

lack of interest and economic benefits in pursuing it.

Ultimately, for these reasons this Committee recommends to the Board of Directors, on the

one hand, to become cognizant of the content of this opinion; on the other hand, to conclude that the

issue of the enforcement of the rights arising from the clause stipulated in Article 5.24.3 of the Share

Purchase Agreement of May 29, 2012 is reserved for its jurisdiction and disposition, pursuant to Article

8, section 1, letter a) of the Consob Regulation.

Milan, July 19, 2016

(Piergiuseppe Biandrino) (Nicolò Dubini) (Angela Gamba)

Available only in Italian