Alitalia Agrees to Air France Buyout

ROME -- Alitalia has agreed to be bought by Air France-KLM, the world's biggest airline by revenues, in a deal valuing the near-bankrupt airline's equity at just 138 million euros -- far less than expected.

The sale of the loss-making airline is a hot issue ahead of Italy's general election on April 13-14 and Air France-KLM has stipulated that it wants approval from the next government as well as from Alitalia's labor unions.

Opposition leader Silvio Berlusconi criticized the sale, saying he favored an Italian solution.

The takeover will end the 60-year independence of a global Italian brand but also avoid the airline going broke as its cash reserves dry up and the European Union banning any more state aid.

The airlines said Air France-KLM had offered one share for every 160 shares as part of its binding offer, valuing Alitalia's stock at 10 euro cents a share -- an 81 percent discount to the record low price seen at Friday's close.