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PetroFina, Total seal deal
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December 1, 1998: 7:55 a.m. ET
France's Total buys Belgian co. to create the world's sixth largest oil company
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LONDON (CNNfn) - In the latest move toward consolidation in the oil industry, French oil group Total is buying Belgium's PetroFina in a deal which values PetroFina at $12.9 billion and will create the world's sixth largest oil company.
Total will pay cash for 41 percent of the stock and exchange shares for the remainder.
Investors had expected an all-stock deal, and Total shares plunged more than 11 percent to 625 in Paris Tuesday.
Under the agreement, PetroFina shareholders will receive 9 shares in the new company for every 2 PetroFina shares.
The deal values PetroFina (PPT) shares at 19,482 Belgian francs, well above Friday's closing price of 14,250. The shares were suspended Monday pending an announcement. PetroFina shares soared more than 21 percent Tuesday to 17,300.
The new firm, which will be called Total Fina, will be the third largest oil company in Europe. It will boast total sales of $53 billion and net income of $1.92 billion.
The combined company will have market capitalization of $39 billion. Total's market capitalization is $29.5 billion while PetroFina's is $9.3 billion. The new company will be listed in Paris, Brussels and New York.
The deal will help Total (PFP) diversify internationally as well as boost its refining and marketing operations.
PetroFina's major shareholder, Belgian financier Albert Frere, has been trying to sell his 30 percent stake for several months.
Both Elf Aquitaine of France and ENI of Italy had reportedly been interested in buying PetroFina.
Total said it expected earnings per share would grow by 10 percent within three years as a result of the merger. It expects operating income to rise by 2 billion French francs ($350 million) a year within the same time frame.
Total said the new company would benefit from productivity gains, particularly in the North Sea, and allow it to expand in deep offshore exploration in Angola and the United Sates.
The oil merger wave started in August when British Petroleum launched a takeover for Amoco. Exxon and Mobil Tuesday plan to announce details of their merger. 
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