Companies News / Europe
 

Financial Times :

Total Fina in E42bn hostile bid for Elf

By Our Summaries Staff

Total Fina of France made an unsolicited E42bn ($42.92bn) all-stock offer for rival Elf Aquitaine on Monday, in a bid to create the world's fourth biggest oil group.

Elf executives branded the approach hostile and said they would be meeting as soon as possible to discuss the development.

Elf shares rose sharply after a hold on trading in both groups was lifted at 1200 GMT. By the close of trade Elf was 21.52 per cent higher at E176.90, while Total shares were 0.78 per cent or E1 higher at E128.

The hostile bid, an unusual move in mainland Europe, was seen as a further step towards consolidation in the oil sector.

Analysts were waiting for a statement from the French government which owns a golden share in Elf. Total said the bid had been discussed at a ministerial level but there was no confirmation of speculation that the government would use its power to create a French industrial champion and support the takeover.

Total Fina's offer is four of its shares for every three Elf shares which amounts to a 15 per cent premium on the latest closing prices. It said the deal would lift earnings per share by at least 20 per cent, assuming a constant environment over the coming years.

But Elf claimed the takeover would not be in its shareholders' interest, saying its own shares had doubled in value over the past three years. It said: "This offer has not been the subject of any study or discussions with Elf's management and is therefore considered as being hostile."

Total Fina had earlier said it hoped the unsolicited bid would soon become friendly and acceptable to both sides. Thierry Desmarest, Total Fina chairman said: "The combination of Total Fina and Elf is a large-scale industrial project driven by the exceptional strategic fit of the two groups.

"This will benefit the customers, employees, and shareholders of the new group thanks to the increased competitiveness of each segment and the outlook for stronger growth.

"I believe that it is necessary today to join forces to assure continued solid growth and to take our place as an oil major of the first rank at a time when the industry is restructuring on a global scale."

He estimated that the deal would allow the combined group to achieve annual pre-tax synergies of about E1.2bn over a three-year period.

Total Fina said the takeover would result in 4,000 job losses with the combined group's France-based operations taking 50 per cent of the cuts. The offer was conditional on it receiving the support of 66.7 per cent of Elf shareholders.