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Elf to fight takeover
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July 8, 1999: 11:35 a.m. ET
French oil giant plans 'major project' to fend off hostile advance by TotalFina
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LONDON (CNNfn) - French oil giant Elf Aquitaine stiffened its opposition to the hostile $44 billion takeover bid by TotalFina Thursday and said it planned "a major project" to fend off the predator.
However, the company declined to comment on speculation that it was seeking a white knight.
Total's bid "will fail," said Elf Chairman Philippe Jaffre. "I'm convinced of that."
He told senior executives that Total's "aggressive approach" had dealt a fatal blow to the chances of any cooperation.
His remarks, relayed to CNNfn.com by Elf officials, appeared to rule out the prospect of a merger of equals between the two companies, a prospect Jaffree had maintained was a possibility.
"We could have worked together to find satisfactory solutions," an Elf official told CNNfn.com. "We had looked at a tie-up but [TotalFina's] hostility and haste destroyed the relationship."
Jaffre told colleagues that three factors weighed against a link with Elf before its industrial rival launched its bid Monday, a move immediately dubbed "hostile" by Elf.
He cited the duplication of exploration and production sites, overcapacity in refining and the need to dispose of chemical assets as the primary reasons to nix a deal. Analysts had praised the strategic fit of the two companies.
Elf has until July 22 to formally respond to Total's 4-for-3 stock swap offer which would have created the world's fourth-largest oil company with a market value of over $85 billion.
Elf Aquitaine (PAQ) shares fell 2.7 percent to 174.1 euros by midday but remain more than 20 percent above their pre-bid level. TotalFina (PFP) stock dipped 0.75 percent to 130 euros.
Elf has yet to schedule a board meeting to consider the bid and would say only that its defense would be based on a "major project". This immediately led to speculation of a counter bid for Total, a takeover of its own to push itself out of Total's reach or the attraction of a white knight.
Takeover talk has centered on British Gas (BG), whose shares climbed almost 3 percent to 392 pence by in afternoon trading Thursday. The U.K. firm declined to comment, but analysts pointed to the significant overlap in the North Sea gas assets of both firms.
Outside Paris, Europe's second-tier oil companies remained in focus as industry consolidation gathers pace.
Repsol, Spain's largest oil company, saw its stock dip 1 percent to 19.95 euros on the first day of trading of 240 million new shares. The capital increase, which boosts Repsol's market value by around 20 percent, is being used to partially fund the acquisition of Argentina's YPF.
Britain's second-largest independent oil explorer, Enterprise Oil (ETP), denied reports that it was seeking to raise 1 billion pounds ($1.56 billion) to fund expansion or a major acquisition.
-- from staff and wire reports
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