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Elf plans to fight unsolicited $43 billion takeover bid from rival TotalFina—calls all-stock bid hostile TotalFina launched its offer July 5 in an attempt to create the world’s fourth largest oil company in terms of capitalization; bid has backing of French government by The Associated Press
Elf Aquitaine SA chairman Philippe Jaffre vowed July 6 that the French oil company will fight an unsolicited $43 billion takeover bid from rival TotalFina SA.
In a speech to senior management, Jaffre said it was too early to outline Elf’s defense, but he predicted that Total’s bid would fail.
TotalFina launched its offer July 5 in an attempt to create the world’s fourth largest oil company in terms of capitalization. The proposed group also would be Europe’s biggest.
Elf has rejected the all-stock bid as hostile, although the bid has the backing of the French government.
Poor timing, says Jaffre Jaffre said TotalFina’s offer was badly timed because the merger would lead to a duplication of exploration and production activities as well as over capacity in refining operations.
Another factor against a merger would be the need to sell the chemical assets of the combined group at some point, Jaffre said in comments to Elf staff that were released to news media.
“I won’t hide from you that we have ourselves studied the idea of a linkup with Total, but (these) three issues have convinced us that it was premature,” Jaffre said.
Jaffre said TotalFina’s chairman, Thierry Desmarest, had not attempted to convince Elf of the merits of his proposal.
“We might have been able to work together to find satisfactory solutions, but hostility and the poor timing instantly destroys the key degree of trust between equals needed to build a real merger,” Jaffre said.
“Elf is master of its own destiny,” Jaffre said. “The Total bid will fail.”
Total and Elf have been under presser to increase their size because of the recent consolidation in the oil sector. Total moved first by concluding a merger with Belgium’s Petrafina.
Elf failed in a hostile bid to take over Norway’s Saga Petroleum at the end of May.
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