A new advisory science has been born this year in Europe: how to launch and defend hostile bids. The aggression and free-flowing finance are straight out of America, but the old continent's politics add an extra level of difficulty. The latest landmark battle, following the struggles for Telecom Italia, Gucci and Société Générale, is raging in the French oil sector. TotalFina's raid on Elf Aquitaine, and Elf's counter-attack, highlight once again the primacy of politics in shaping French business. The battle also provides Europe-wide lessons for the M&A tactical manual.
TotalFina versus Elf is firmly stuck in a Parisian courtroom. Bidder and defender have both appealed against the regulatory approval given to the adversary's actions, and rulings are due by mid-October. Thereafter, the market will have a short period to pick the winner. Elf was the first to resort to the law; it did so because it desperately needed to buy time. Its defence plan, thought up by Morgan Stanley, Goldman Sachs and Lazard Frères, was proving difficult to sell to institutional investors. But so cunning was TotalFina's raid that the defence advisers, now privately pessimistic about their chances, had few options.
A link-up between France's two oil powers has been rumoured recurrently throughout the 1990s.