Italy's outgoing government approved Alitalia's takeover by Air France-KLM yesterday, but the carrier's strike-prone unions attacked the deal and the European Commission insisted on being consulted.
Shares in Alitalia closed down nearly 27 percent to 0.39 euros. Air France-KLM offered one share for every 160 shares of Alitalia, valuing it at only 0.10 euros a share, or €138 million, and will buy back its bonds.
The takeover would end the 60-year independence of a global Italian brand. But it would also avoid the airline going broke as its cash reserves quickly dry up.
Alitalia does not have any alternative to Air France-KLM's offer, Italian economy ministry undersecretary Alfiero Grandi said ahead of the emergency cabinet meeting on Monday that gave the green light to the deal.
The sale of the government's 49 percent stake in Alitalia, whose workforce of about 19,000 is highly unionised, is a hot issue ahead of the general election in Italy on April 13-14.
The offer price is an 81 per cent discount to Friday's close and was backed by Alitalia management at the weekend. The French firm attached conditions including approval from unions and the government and a €300 million bridge loan from Italy's Treasury.