Elf Sanofi is offering a four-for-five share swap. At the Fr1,087 at which its shares were suspended, the agreed deal values Yves Saint Laurent shares at Fr870 and the whole company at Fr3.39bn ( pounds 400m). Yves Saint Laurent shares were suspended at Fr630.
Pierre Berge, chairman of Yves Saint Laurent, is to continue to run the fashion side of the business, which accounted for only 18 per cent of total sales of Fr3bn in 1991.
It is understood that Mr Berge, who is nearing retirement, will manage the fashion interests for seven years.
Mr Berge and Yves Saint Laurent himself controlled 43 per cent of the shares.
In recent months Mr Berge, who has been the financial mastermind behind the growth of the 30-year-old business, has made no secret of his desire to sell a stake. However, the scale of the deal took analysts by surprise yesterday.
Along with many of its competitors, Yves Saint Laurent has been hit by the downturn in the luxury goods market.
In the first half of last year, net profits slid from Fr41m to just Fr2.6m.
Elf Sanofi, predominantly a pharmaceuticals business, reported a 12.5 per cent rise in sales to Fr15.8bn in the first nine months of last year.
For Elf Sanofi the merger doubles the size of its beauty products division at a stroke to a combined turnover of Fr6bn and catapults it into the top three fine fragrance and cosmetics names in the world.
Its portfolio of brands already includes Roger & Gallet, Stendhal, Van Cleef & Arpels, and Oscar de la Renta. The company also has a stake in Nina Ricci.
Jean-Francois Dehecq, chairman and chief executive officer of Elf Sanofi, said the addition of Yves Saint Laurent was the culmination of a 20-year corporate strategy.
'The prospects it affords, in both terms of growth and synergies, are considerable,' he said.
Yves Saint Laurent's portfolio of fine fragrances includes some of the world's top-selling brands, such as Opium and Paris.
Last year it launched Soin Precurseur de Beaute, a range of skincare products, considered a sector of the market with long-term growth potential. Sales of the range last year were Fr140m.
It has a strong presence in five European markets - Germany, France, Italy, the UK and Spain.Reuse content