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TotalFina rejects Elf again
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August 10, 1999: 4:31 a.m. ET
French oil groups set to fight on in bitter takeover battle
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LONDON (CNNfn) - TotalFina's board formally rejected a hostile takeover offer from domestic rival Elf Aquitaine Tuesday, ending hopes of a rapprochement in France's bitter oil battle.
A thawing of relations between the companies appeared imminent Monday after comments from Elf chairman Philippe Jaffré seemed to indicate the possibility of a negotiated solution.
TotalFina launched a surprise $44 billion bid for Elf in early July, and Elf responded with a counter-offer of its own for TotalFina.
Elf's management was angered by the TotalFina offer, pointing out the two companies had discussed a friendly tie on several occasions.
On Monday, Jaffré indicated that the two sides could meet if TotalFina boss Thierry Desmarest dropped his insistence on keeping the chemicals units as part of a combined group. Elf proposed merging the companies and then spinning off or selling their joint chemicals activities.
Both stocks rose sharply Monday in Paris on hopes a negotiated deal would end a messy and expensive takeover battle.
TotalFina's board said Tuesday the disposal of the chemicals operations would create a large tax liability, and lead to higher costs in refining activities.
The board also noted, "As an industrial project, the Elf plan is not substantially different from the one proposed by TotalFina except for the spin off of the chemicals [unit]."
The board voted unanimously to reject the Elf offer, and advised shareholders to ignore it.
Separately, TotalFina announced first-half earnings.
A lower average oil price and reduced European refining margins were culpable for an 18 percent decline in operating earnings to 8 billion French francs ($1.3 billion). The company said the recent revival in the crude price would benefit its earnings in the second half.
In Paris early Tuesday TotalFina shares rose 0.92 percent to 120.7 while Elf-Aquitaine slipped 0.49 percent to 164.6.
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TotalFina
Elf Aquitaine
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