PARIS: The board of Alitalia accepted a \747 million takeover offer from Air France-KLM on Sunday, seizing at the eleventh hour a financial lifeline after months of political indecision and labor resistance that have drawn the money-losing Italian flag carrier near the edge of bankruptcy.

After a marathon meeting that began Saturday and lasted more than 10 hours, Alitalias board issued a statement shortly after midnight announcing its “unanimous” approval of the offer. The $1.17 billion deal now awaits approval from Rome - which owns 49.9 percent of the airlines shares - as well as the national and European Union competition regulators.

Under the terms of proposal, the French-Dutch carrier said it would exchange one of its shares for every 160 of Alitalia stock, valuing the Italian airline at \139 million, or about 10 euro cents a share. That represents a discount of more than 80 percent to Alitalias closing share price Friday of 53 cents. Air France-KLM also said it would buy all of Alitalias outstanding convertible bonds, worth around \608 million as of Friday.

Air France-KLM also said that it would inject \1 billion of capital into Alitalia through an offering of new shares to existing shareholders once the takeover was complete.

Air France-KLM said that pending the approval of the Italian government and Alitalias unions, it expected to win approval for the deal from European Union regulators by the end of June.

Many Italians learned of the deeply discounted offer - well below the roughly \1 billion that had been predicted in reports last week - as they prepared for Palm Sunday celebrations.

“Alitalia has given a painful yes to the French,” the Italian business daily Il Sole-24 Ore wrote in an editorial published Sunday. The newspaper described the decision as “hard to digest,” but said that it was “the only concrete solution” for the airline.

The Italian government has spent roughly \4.3 billion over the past five years trying to keep Alitalia afloat. But the European Union has barred Rome from giving any further financial assistance to the airline.

“I think that the government has acted to arrive at a positive solution,” Italys labor minister Cesare Damiano said. He added that the government would study the impact of Air France-KLMs plan on Alitalia employees before rendering its final decision.

Airline executives warn that soaring fuel prices and the risk of a recession in the United States could wipe out much of the airline industrys anticipated profits this year, despite steady increases in global demand for air travel. Some say the expected slowdown may increase pressure on airlines in Europe and North America to merge.

“If you believe that 2008 is going to be a very bad year economically then obviously to the extent that they can get through consolidation of the industry quickly then Air France can present this to the Italians as an alternative to going bust on their own in this environment,” said Dan Solon, an independent airline analyst based in Barcelona.

“In a way, the economic situation opens the possibility for a pragmatic solution.”

Maurizio Prato, chief executive of Alitalia, has long supported a combination with Air France-KLM, as the option that would give his airline the best chance of long-term survival in an increasingly crowded aviation market.

In recent years, Alitalia has faced fierce competition from discount airlines, including domestic rivals like Air One as well as foreign ones like easyJet and Ryanair. Its share of the Italian air travel market has fallen to around 30 percent from more than 80 percent a decade ago.

But political pressure for Alitalia to remain in Italian hands has been strong. After considering a number of domestic offers of questionable financial viability - and a failed auction last summer - the center-left government of Prime Minister Romano Prodi reluctantly agreed in December to enter exclusive negotiations with Air France-KLM.

Prodis government collapsed in January, however, throwing the process into doubt as new elections were called for April 13 to April 14. Silvio Berlusconi, the former prime minister who is leading in opinion polls, initially insisted that Alitalia should not be sold to a foreign rival, although he has since softened his position.

According to Italian news media reports late last week, the Finance Ministry is expected to meet on Monday to decide on the proposal.

Jean-Cyril Spinetta, chairman of Air France-KLM, is expected to formally present the plan to Alitalias union leaders on Tuesday.

Without the acquiescence of politicians and labor leaders, Alitalia risks running very low on cash before the April elections. The carrier disclosed on Feb. 29 that its cash reserves were down to \282 million at the end of January, down 23 percent from Dec. 31.

(11-30) 08:19 PST Mountain View, Calif. (AP) —

Google Inc. plans to bid for wireless spectrum in an upcoming government auction, raising the possibility the Internet’s leading search engine will become a wireless service provider.

The Federal Communications Commission is auctioning the 700 megahertz spectrum to increase bandwidth for mobile phone and Internet services. Television stations will be giving up that coveted section of the airwaves Д it is extremely powerful, adept at going through walls Д when they switch to digital transmission in February 2009.

“Consumers deserve more competition and innovation than they have in today’s wireless world,” said Google CEO Eric Schmidt in a statement Friday.

Google will apply to bid for the “C Block” of the spectrum Д which carries a reserve price of $4.6 billion Д because regulators stipulated that whoever operates it must allow its users to download any software application they want to a mobile device. Google’s bid was not unexpected, as it played a leading role in lobbying the FCC to open the spectrum.

“Regardless of how the auction unfolds, we think it’s important to put our money where our principles are,” wrote Chris Sacca, Google’s head of special initiatives, in a company blog.

Mobile phone companies now force subscribers to use proprietary software to operate handsets on their network, but Google has indicated it plans to challenge that business model. The company announced several weeks ago that it will develop software for mobile devices.

On Tuesday, Verizon Wireless announced it would open its network to devices other than the ones it currently supports.

Google plans to file its application to bid on Monday, which is the FCC deadline. The auction begins Jan. 24.

Google stock was up $3.87 at $700.87 in morning trading.

NEW YORK: Turmoil has chilled U.S. markets for initial public offerings, but it is unlikely to stop Visas attempt to burn its name into the record books when it comes to market this week.

U.S. stock markets fell Friday, with the SP 500 index losing more than 2 percent, dragged down by a sudden cash crunch at Bear Stearns that forced the U.S. Federal Reserve to intercede.

Against that backdrop, Visa is steaming ahead to list its shares on the New York Stock Exchange under the symbol “V.” The listing is expected Wednesday.

Visas banking owners, who stand to reap in the region of $10.2 billion in the offering, may be pushing for the share offer, analysts said. “It is all the more critical that this happens now,” said Francis Gaskins, president of the research firm IPOdesktop.com.

Under Visas plans, 406 million Class A common shares will be sold to the public for between $37 and $42 apiece, raising between $15 billion and $17 billion, or more if demand is there.

It is seen as largest-ever initial public offer in the United States, and second worldwide to Industrial Commercial Bank of China, which raised $22 billion in 2006, according to Reuters Data.

Hopes are high for Visas offer, following a more than fourfold jump in shares for its smaller rival MasterCards initial public offer, which raised $2.4 billion in 2006.

Plans for the Visa deal “started long before anyone heard the words subprime crisis, but now all those banks could use a big payday,” said David Robertson, publisher of the Nilson Report, a semimonthly credit card industry trade journal.

The rich payday from Visas share offer could prove timely for bank owners, with mounting credit losses plaguing many lenders.

JPMorgan Chase, which has not been as badly hit by the credit crisis as some Wall Street peers stands to be $1 billion richer from the offer. The offering could prove a blessing for Bank of America, which could see proceeds of up to $600 million, and up to $260 million for Citigroup, both of which have recorded large write-downs as a result of the subprime mortgage and credit crisis.

Underwriters, led by JPMorgan and Goldman Sachs, also could gain hefty fees from the deal, which could help make up for a 55 percent drop in share offer activity versus the same time last year, according to Renaissance Capitals IPOhome.com.

The Visa deal is expected to generate fees of $500 million, or more if well received.

“Unless there is bank failure after bank failure in the next few days I would expect Visa to come,” said Scott Sweet, managing director of IPOboutique.com. MasterCards stock was little touched by the stock market woes Friday, Sweet added.

MasterCard closed Friday down $1.07, or 0.5 percent, at $208.65. Its market value is about $27 billion.

Visa and MasterCard are not directly exposed to rising defaults and late payments consumers because they process transactions unlike rivals American Express and Discover Financial Services which issue cards.

“There are people who think it is going to, in short order, match MasterCards price,” said Gaskins. “But I dont think that is logical.”

He said Visa would probably grow at a less dramatic clip given its much-larger size, which is likely to be expressed in Visas tracking a steady stock rise.

Global card transaction volume may increase about 11 percent a year through 2012, with fastest growth outside the United States, according to Robertsons Nilson report.