TotalFina, Elf merge to form 48.7 bn oil giant

PARIS, SEPT 14: Abruptly ending their acrimonious two-month takeover battle, TotalFina SA and Elf Aquitaine SA surprised markets Monday by announcing they had agreed to a friendly merger that turns the combined concerns into the world8217;s fourth-largest oil company.

The agreement came after TotalFina sweetened its all-share-bid for Elf by 9.2 per cent, raising the value to 48.7 billion 47 billion euros, offered vague promises to look more closely into a more aggressive industrial plan for the newly merged group8217;s chemical activities, and agreed to equal representation by TotalFina and Elf on the merged group8217;s executive committee and board. Elf chairman Philippe Jaffre, though, said he will step down as soon as the merger is completed, leaving the giant in the hands of TotalFina chairman Thierry Desmarest.

The negotiated outcome cuts short what promised to be an epic European takeover battle and also marks a triumph for Desmarest. Not only is the final agreement tailored along the lines of Desmarest8217;sstrategic project 8211; Jaffre, in launching a reverse takeover bid for TotalFina, sought a demerger of chemical assets 8211; but the move caps TotalFina8217;s transformation from also-ran to oil major. Through the takeovers of Belgium8217;s Petrofina last year and now Elf, Desmarest creates France8217;s biggest company in terms of stock-market caitalisation, with a value of more than 95 billion euros.