Alitalia's board on Sunday unanimously accepted Air France-KLM's bid valued at euro747 million ($1.16 billion) in a move to save the struggling national carrier.
The Air France-KLM offer values the airline at euro139 million, far less than expected, based on a share swap of one Air France share for every 160 Alitalia shares. The Franco-Dutch carrier also said it will pay euro608 million for convertible shares.
The Franco-Dutch carrier says it will inject euro1 billion (US$1.56 billion) in capital once the deal is complete.
Alitalia's board issued a statement accepting the offer after a marathon meeting that went some 16 hours into early Sunday. Air France says it welcomes Alitalia's decision.
Air France has said it wants to have union approval before the deal is finalized. It also must be approved by the Italian government, which is selling its 50 percent share, as well as the stock market regulator and EU competition authorities.