Alitalia Board Accepts Air France-KLM Acquisition Bid

Alitalia's board of directors yesterday gave Air France-KLM Group approval to acquire the financially strapped Italian airline. Air France-KLM expects the deal to close by the end of June, but only after Alitalia shareholders, unions and the Italian government approve the transaction.

Air France-KLM said it is offering one of its shares for every 160 Alitalia shares, "equivalent to 8.7 million Air France-KLM shares for 100 percent of Alitalia," valued at less than €150 million. Air France-KLM also "proposes to acquire the convertible bonds issued by Alitalia at their current market value of €0.3145 per bond, or a total of €608million."

Air France-KLM plans to restructure and relaunch Alitalia, though the airline would maintain its own "brand, livery and logo, which will develop alongside with the products of the enlarged group," Alitalia said in a statement.

Air France-KLM said the acquisition "should enable Alitalia to return to operating profit as early as 2009, and to rapidly move to operating margin levels in line with those of other major European airline companies." Alitalia would benefit from the group's global sales force and €1 billion in capital to invest in products and services, Air France-KLM said, noting the deal "will give Alitalia the means to restart its development, and in consequence, consolidate its position as the national leader."