Jeanjean and Laroche are to merge, the two French wine groups announced yesterday in a deal that values Laroche at EUR24.7m (US$36.4m).

The deal, which remains subject to the approval of the AMF, will create one of France's leading wine producers with over 1,450 hectares of vineyards and a turnover of about EUR200m, with almost 50% of that coming from abroad.

The new group will be named once the merger has taken place.

The deal will see Jeanjean absorb Laroche by offering to buy 11% of Laroche's capital for EUR13.38 per share. Jeanjean will also offer to exchange its own shares for the remaining capital of Laroche.

Antoine Leccia, CEO of Jeanjean said: "This merger... is essential to meet the challenges of the wine world." He added that the deal would provide long-term synergies and "significant cost savings".

Michel Laroche, CEO of Laroche, said: "In a difficult economic climate, this merger with the group Jeanjean offers us tremendous opportunities for growth. By pooling our expertise [the deal] gives us the means to continue the development of high-end brands both in France and abroad and greatly improve the profitability of the two groups."

In a statement released to the Bourse, Jeanjean said it will launch a capital increase of between EUR5m and EUR7m in order to boost the shareholders equity of the new entity.