Italian flag-carrier Alitalia’s board of directors has voted unanimously to accept a binding takeover offer from SkyTeam alliance partner Air France-KLM.

The agreement will centre on an exchange of one Air France-KLM share per 160 shares in Alitalia.

Air France-KLM shares are trading at around €16 ($24.90), which means the agreement values Alitalia shares at only around €0.10 – more than 80% below their €0.54 trading price.

Alitalia’s market capitalisation had been about €750 million at the close of trading last week. But the lower share value put forward in the Air France-KLM offer reduces the Italian operator’s capitalisation to €138 million.

Air France-KLM will provide a capital injection of €1 billion under the agreement which includes an offer to buy back Alitalia convertible bonds at a price of €0.3145.

In a statement Alitalia says that it will retain its identity, logo and livery and continue to benefit from its membership of SkyTeam.

Alitalia’s board will also adopt a new three-year plan for 2008-10, as part of the integration process, which it says is in “close continuity” with the survival plan drawn up by the airline last year.

This new business plan envisages turning around the company and generating a positive operating margin in 2010.

Source:'s sister premium news site Air Transport Intelligence news