A day after state-sponsored talks aimed at finding a consensual solution to the five-month battle collapsed, BNP moved swiftly to seek to regain the initiative by raising the total value of its double-barreled bids to $41 billion from $37 billion initially. BNP's sweetened bids come through a cash payout to Societe Generale shareholders, a so-called certificate of guaranteed value for Paribas holders and modified terms for both of its original all-share offers.

With its revised bids, which still require regulatory approval, BNP seeks to thwart a nearly $20 billion agreed merger between Societe Generale and Paribas. Thursday night, French regulatory authorities gave the green light to Societe Generale's own sweetened bid for Paribas, unveiled last month,under which it is adding a cash payout of up to 1.5 billion euros ($1.55 billion) to its initial all-stock offer. The Committee for Credit and Investment Institutions said it would rule on BNP's sweetened offer July 7. Thursday in Paris, Paribas shares gained 3 per cent, or 3.3 euros, to close at 112 euros, while Societe Generale shares rose 2.63 per cent, or 4.50 euros, closing at 175.40 euros. BNP shares fell back 1.73 per cent, or 1.40 euros, to close at 79.40 euros.

BNP Chairman Michel Pebereau continues to say his proposed three-way tie-up is "friendly and will associate the three banks on an equal footing." Societe Generale and Paribas said they would call board meetings soon to respond officially to the revised bid, but officials at both banks described the sweetened offer as "stingy" and reaffirmed their rejection of a three-way alliance.

With its new bids, BNP is offering Societe Generale shareholders two options: Under the first option, BNP added a cash sweetener of 60 euros to its initialshare-swap offer of 15 BNP shares for seven Societe Generale shares. This bid would represent a maximum cash payout of 890 million euros if all Societe Generale shareholders opt for it. Alternatively, BNP offered to exchange five Societe Generale shares for 11 BNP shares, up to a limit of 30 per cent of Societe Generale's share capital. BNP said its principal offer represents a premium of 6.6 per cent over Societe Generale's closing price Wednesday.

For Paribas holders, BNP is now offering 29 BNP shares for 20 Paribas shares, up from its previous offer of 11 BNP shares for eight Paribas shares. In addition, BNP would also give Paribas holders 13 "guaranteed value certificates" for every 20 shares tendered. These certificates are a security guaranteeing holders a cashpayment if a stock trades below a specified price. Under BNP's offer, holders would receive a cash payment of up to 20 euros per certificate if the average price of BNP shares over a 20-day period ending July 1, 2002, is below 100 euros. In aworst-case scenario, this would represent a maximum payout of 2.1 billion euros. BNP says its bid represents a 15 per cent premium on Paribas's closing price Wednesday, but just a 2 per cent premium over Societe Generale's sweetened bid for Paribas.