TotalFina SA has acquired 95.93% of Elf Aquitaine SA's total capital stock, following the close of its public exchange offer for its long-time rival. Totalfina claims it is the largest firm on the Paris exchange in terms of market capitalization and says the successful exchange offer is a critical step forward in establishing the new TotalFina Elf group.
However, the new organization will not be put in place until the European Commission has approved the merger. This is not expected before mid-February 2000. Meanwhile, Elf remains an affiliate of TotalFina. As the preparatory work towards the merger continues, a new chairman and chief executive officer will be appointed by Elf Aquitaine at a board meeting to be held Oct. 29.
New leadership
Elf's current chairman and CEO, Philippe Jaffré who opposed TotalFina's offer, will resign, and Pierre Vaillaud will be appointed interim leader of Elf.
Industry observers see Vaillaud as having the right profile for such a critical, if temporary, job. He: recently retired as chairman and CEO of Technip but at 64 is still a year shy of the traditional retirement age; has no other conflicts and thus time on his hands; and has strong experience leading an oil-related company. Vaillaud spent many years in key posts at Total before joining Technip. And, as Elf must be kept in operational form, he is deemed by many in industry as the right candidate to keep the acquired firm on its toes.
Thierry Desmarest, chairman and CEO of TotalFina, said in an interview to the economic daily La Tribune that, for the time being, Elf would have the status of TotalFina's affiliate. "Most probably we will retain Elf in the shape of a subsidiary," he said, "and its activities will be managed in a totally integrated manner within the operational management of the new group."
Issues
Discussing the golden share that the government said it would keep in the newly merged company, Desmarest said this applies to "the so-called sensitive subsidiaries-(Elf) Gabon, (Elf) Congo, Elf Antar France." It also applies if the company, which has taken control of Elf, in turn falls under another company's control: "So one can say globally that the golden share only affects Totalfina in the case of a change of control," Desmarest said, adding that he believes this to be highly unlikely.
Concerning the scrutiny by the European Commission of competition problems arising from the merger, Desmarest said that such problems were limited to France and involved motor oil distribution on toll roads, LPG, logistics (terminals and pipelines), and jet fuel supply at two airports.
Concerning a speculated merger with Italy's ENI, Desmarest asked for breathing space: "Total needs time to digest its two mergers with Fina and Elf. ENI's leaders have rightly understood this."
