French tobacco firm Seita has agreed to a merger with Spain's Tabacalera to create the world's fourth biggest tobacco group, a source close to the Seita group said after a Tuesday board meeting.

The source said the merger ``between equals'' would create a group with operational headquarters in Paris and a stock market listing in both Paris and Madrid. The merger terms are equivalent to 19 Tabacalera shares for every six Seita stock and the new company will be jointly headed by Seita boss Jean-Dominique Comolli and Tabacalera chief Cesar Alierta, the source said. The Spanish state will retain a golden share for one year in the new group, to be called Altadis, the source said. An exceptional dividend of five euros net would be paid to Seita shareholders, the source added. The deal will bring France's renowned Gitanes and Gauloises cigarettes under the same umbrella as Tabacalera's Fortuna and Ducados brands. The alliance will create the world's fourth biggest tobacco group in terms of product volume after Philip Morris, BATand Japan Tobacco .

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