The French Solution

AT FIRST BLUSH, IT SEEMS AN ODD MARRIAGE: YVES Saint Laurent, the high priest of Parisian chic, selling his financially burdened empire to France's pharmaceuticals and beauty-products company Elf Sanofi, itself a division of the state-owned petrochemical giant Elf Aquitaine. Look again. Elf Sanofi already owns such perfume brands as Oscar de la Renta, Van Cleef & Arpels and a share in Nina Ricci. The addition of YSL will create the world's third largest beauty-products group -- behind France's L'Oreal and Estee Lauder in the U.S.

The scent of recession permeating high fashion had left YSL with rising debt and shriveling profits. The new group, with estimated annual sales of $4.6 billion, will emerge from a complex $645 million share swap. The deal gives Elf Sanofi total control of YSL's lucrative perfume and cosmetics line, but will allow Saint Laurent and YSL chairman Pierre Berge to retain management control of their celebrated fashion activities until 2001 -- enough time to leave a lasting impression.

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CAPTION:THE ELF AQUITAINE GROUP