The fully-priced sale by Spain's Ebro Puleva of its diary business has strengthened the case for investing in Italian peer Parmalat, which is trading on far lower multiple, Icap analysts have said.

Ebro Puleva achieved a "great price" in agreeing to sell its liquid milk business, Puleva, on Monday for E630m, the broker said.

The figure, significantly better than the E400m that Icap had expected, represents a multiple of 9.4 times Puleva's earnings before interest, tax, depreciation and amortisation (ebitda) last year.

That is significantly greater than the 5.8 times ebitda on which Parmalat, the Parma-based dairy and fruit juice group, trades.

"The read-across for Parmalat is net positive on valuation grounds," Icap said, restating a "buy" rating on the company's shares.

Paramalat shares closed up E0.46 at E1.954 in Milan.

Anti-trust probe 

For Ebro Puleva investors, the "very full exit multiple" achieved on the dairy disposal, to France's Groupe Lactalis, had raised the prospect of a large cash return, the broker added.

However, Spanish anti-trusts regulators have placed a cloud over Ebro by including the company in a probe into price fixing in the rice market.

The inquiry comes as Ebro, Spain's largest rice group, is reportedly interested in a purchase of the rice division of SOS Coporacion, which is also being investigated.

Furthermore, Caja Duero and Caja Espana, the banks, are believed to be considering sales of Ebro stakes following their proposed merger.

Shares in Ebro close down 4.8% at E13.61 in Madrid on Tuesday, adding to their 0.8% loss in the last session.

Drive into Spain 

Lactalis's victory in the Puleva auction appears part of a drive into the Spanish market, with the group last month unveiling the purchase of Forlasa, the group behind Manchego cheese.

Lactalis, Europe's largest dairy group, beat rival interest reported from the likes of Spain's Central Lechera Asturiana, Parmalat and PAI Partners, the private equity group which owns half of the Yoplait yoghurt empire.