UPDATE 2-Parmalat denies delisting rumors in face of criticism

* France's Lactalis took control of Parmalat in 2011

* Minority investors, minister criticised U.S. buy

* Italy prosecutors probing Lactalis America deal-source

* Shares closed up 4 percent on delisting talk

(Adds Parlamat statement on probe)

MILAN, Oct 5 (Reuters) - Italian food group Parmalat, controlled by French cheesemaker Lactalis, on Fridaydenied a newspaper report about a possible delisting of itsshares.

The speculation came as investors and an Italian ministercriticised Lactalis for depleting Parmalat of its cash byacquiring sister unit Lactalis American Group, a U.S. cheesemanufacturer.

Financial daily Il Sole 24 Ore reported on Friday that theBesnier family, which controls Lactalis and Parmalat, wasmulling a delisting of Parmalat from the Milan stock exchange tohave free rein in running the group.

"On the basis of current knowledge, the news and rumorsrelated to a possible delisting of the company's shares arecompletely unfounded," Parmalat said in a statement filed withthe stock exchange.

Parmalat shares closed up 4.17 percent on Friday at 1.75euros, outperforming a slightly positive food and beveragesector .

Analysts say the Besnier family would have to pay over 600million euros ($784 million) to buy almost 17 percent offloating capital.

"The family can take any decision. They may want to be freefrom continuous scrutiny over their strategy, but it's difficultto say," said a Milan-based consumer analyst who was notauthorized to talk to the media and asked not to be named.

The takeover of Parmalat last year, which closely followedthat of jeweller Bulgari by French luxury giant LVMH ,triggered a protectionist defence in Italy. However, an Italiancounter-bid for the cash-rich food giant failed to emerge.

The 4.3 billion euro acquisition of Parmalat remains a sorepoint with investors and the Italian government, and criticismmounted after Parmalat bought Lactalis America, based inBuffalo, New York, in May.

Minority shareholders have questioned the use of part of a1.5 billion-euro cash pile to finance the $900-plus million U.S.buy.

Parmalat has repeatedly said the deal, which was unanimouslyapproved by the group's board and its internal control andgovernance committee, was only motivated by industrialsynergies, market expansion and EBITDA growth prospects.


Prosecutors in the northern Italian city of Parma, whereParmalat is based, have opened a probe into the U.S. deal, ajudicial source said on Friday confirming earlier media reports.

The probe is at a preliminary stage and does not target aspecific crime or person, the source said.

In a statement, Parmalat reaffirmed that the purchase ofLactalis American Group was made in the interest of the company,transparently and at fair terms.

The probe follows a complaint filed by market regulatorConsob which asked whether the cash acquisition was damaging thegroup.

Italy Industry Minister Corrado Passera, a member ofmoderate Mario Monti's government, reignited the debate thisweek when he said that Lactalis had "taken everything away" whenit snapped up Parmalat.

Parmalat dismissed Passera's criticism saying it had agreedwith unions an investment plan in Italy despite the countrybeing in recession.

Parmalat plans to invest 180 million euros to grow 4 percentin Italian sales over next three years.($1 = 0.7657 euros)

(Reporting by Antonella Ciancio, additional reporting by ElisaAnzolin and Danilo Masoni; Editing by Leslie Gevirtz and RichardChang)

((Antonella.Ciancio@thomsonreuters.com)(+39 0266129722)(ReutersMessaging: antonella.ciancio.thomsonreuters.com@reuters.net))