Parmalat, the Italian food and drinks giant, has turned down a bid from largest shareholder and French dairy giant Lactalis to buy the whole of the business.

The company said that its board of directors had met today (17 May) to review Lactalis's EUR3.4bn (US$4.83bn) bid for the 71% of the group it does not already own. After looking at the offer and an analysis of the bid from advisers Goldman Sachs, Parmalat said its directors had "unanimously concluded" that Lactalis had not reflected "the value of Parmalat in the context of a change of control transaction".

The announcement is the latest twist in a saga that began in March when Lactalis built a 29% stake in Parmalat.

Lactalis's investment attracted criticism from business and political circles in Italy, with concern that one of the country's apparently "strategic" companies could fall into foreign hands.

Amid talk that a national consortium could be set up to buy Parmalat, Lactalis last month tabled a full takeover offer for the company.

On Friday, Lactalis received a boost when Italy's share watchdog gave the green light to its bid, which is worth EUR2.60 a share.

However, there had been speculation that Goldman Sachs would advise Parmalat that Lactalis's bid was too low. In March, in one of the two transactions through which Lactalis built its 29% stake in Parmalat, the Galbani cheese owner paid three funds EUR2.80 a share for 15.3% of the company.

Last week, Parmalat CEO Enrico Bondi faced pressure from shareholders not to accept Lactalis's offer. One investor said it would be "unacceptable" for Parmalat's board to approve the bid when Lactalis had already paid more for part of its stake.