Air France to buy Alitalia for euro 138m
Yesterday, Alitalia’s board unanimously accepted Air France-KLM’s bid to acquire the airline in a deal valued at euro 138 million.
Air France-KLM submitted a proposal to Alitalia on March 14th, aimed at combining Alitalia and the Air France-KLM Group and acquiring control of the Italian airline.
The proposal covers a share exchange offer on Alitalia shares and a cash offer on Alitalia bonds.
Air France-KLM also stated it would underwrite fully a capital increase for a total of euro 1 billion, the proceeds of which would be largely directed towards funding the commercial re-launch of Alitalia.
Air France-KLM’s plan calls for a network organised around the international and intercontinental hub of Rome-Fiumicino, the centre for domestic Italian routes, and around European and selected inter-continental destinations operating from Milan.
This would give Alitalia a combination of hubs from north to southern Europe, organised around a network linking Europe to the rest of the world. The airline would also benefit from the support of global sales forces and investment in products and services aimed at reinforcing and developing the Alitalia brand.
Alitalia has reportedly been losing more than USD 1 million a day. The Air France-KLM deal should enable the airline to return to profitability as early as 2009.
The Air France-KLM offer is conditional on a number of factors, including authorisation from the relevant competition authorities (expected by end-June 2008), and the endorsement of Alitalia’s shareholder, the Italian Ministry of Economy & Finance and its undertaking to tender its shares and bonds, and the formal agreement of Alitalia’s unions.
