The BBC reports 16 March 2008, 09:31 GMT
"Troubled Italian carrier Alitalia has agreed to be bought by rival Air France for a cut-price 138m euros(£106m:$215m) in a move to save the state airline.
The Italian government, which holds 49.9% of Alitalia, failed to sell the company by auction in 2007.
Alitalia has lost money for five years, and has struggled to clinch a buyout.
Air France-KLM offered one share per 160 Alitalia shares, valuing Alitalia at a low-value 0.10 euros a share.
That is a 81% reduction on Alitalia's current share price.
The offer includes plans for a 1bn euro capital injection by the Franco-Dutch airline, which says it will also pay 608m euros to buy back Alitalia bonds.
The proposed purchase could become a hot topic in Italy's general election, being held on 13 and 14 April.
'National leader'
Alitalia, which is struggling under 1.2bn euros of debt, is hoping the tie-up will generate significant savings.
There are a number of hurdles to be overcome before the deal is sealed. Air France-KLM are seeking support for the move from Italian trade unions.
The Italian government must also agree to sell its shares, and the country's stock market and European Union competition regulators must also give their backing.
Air France-KLM has a restructuring plan for Alitalia to enable it "to rediscover the means of its development and to consolidate its status as a national leader". And it said Alitalia will maintain its national identity within the Air France-KLM group after the takeover, which could be completed by mid-2008."