* Acquisition makes Total major competitor for EDF
* Total pays 30 pct premium on Direct Energie's last close
* No decision yet on Direct Energie brand name
* Direct Energie shares jump to level of offer(Adds analyst comment, background on peers)
By Geert De Clercq and Bate Felix
PARIS, April 18 (Reuters) - Oil company Total saidit will buy a majority stake in French electricity retailerDirect Energie in a 1.4 billion euro ($1.73 billion)deal that beefs up its challenge to state-owned market leaderEDF.
The deal is part of Total's strategy to grow its low-carbonenergy assets to 20 percent of total assets by 2035 from 5percent today and comes as other global oil and gas majors alsoshift to more renewable energy and electricity.
"This friendly takeover is part of the group's strategy toexpand along the entire gas-electricity value chain and todevelop low-carbon energies," CEO Patrick Pouyanne said.
Shortly after being appointed CEO in 2014 Pouyanne saidelectricity will be the energy of the 21st century. Since thenTotal has bought upstart power vendor Lampiris, batteryspecialist Saft and renewable energy firm Eren, putting togetheran a mini-electricity utility.
With Direct Energie, Total has acquired the biggestindependent challenger to French market leader EDF, as well as aportfolio of gas-fired and renewable energy power plants.
Rival Royal Dutch Shell made a similar move inFebruary, buying British-based retail power provider FirstUtility, which serves around 825,000 homes.
Shell also supplies power to industrial customers in Britainand has recently acquired a solar power company in the country.
Several oil majors are also entering the business ofelectric vehicle charging in order to hedge their petrolstations businesses.
"Total was already ahead of its peers in terms of M&Aspending on renewables and other clean technologies. This dealshows it is serious (about this strategy)," said Wood Mackenzieresearch director Valentina Kretzschmar.
Total will pay the controlling shareholders of DirectEnergie 1.4 billion euros for 74.33 percent of its capital.Direct Energie's board has unanimously approved the takeover.
Once the deal is completed, Total will launch a tender offerfor the rest of Direct Energie's shares at the same price of 42euros per share, a 30 percent premium over the April 17 closeand a 24 percent premium over its three-month average price.
The offer values Direct Energie at about 12.5 times 2018core earnings, Total said.
Total - which first entered the French retail power marketin 2016 with the Lampiris acquisition - has 1.5 million Frenchelectricity clients and will add 2.6 million more with the deal.
It is targeting over 6 million customers in France and morethan 1 million in Belgium by 2022.
Total is one of several newcomers in French power retailing,which was opened to competition a decade ago, but EDF stilldominates with a market share of about 85.5 percent.
Gas and power utility Engie had 3.8 millionelectricity clients in France at the end of December.
Direct Energie CEO Xavier Caïtucoli told Reuters thatPouyanne had asked him to remain as head of Direct Energie as itis integrated into Total. No decision had been taken on whetherto keep the Direct Energie name or to switch to the Total brand.
The deal will add Direct Energie's 1.35 gigawatts (GW) ofinstalled generation capacity to Total's 900 megawatts (MW).Direct Energie also has a development pipeline of 2.4 GW ofmainly renewable energy capacity.
Total revised it aims to have a global capacity of 5 GW ofinstalled capacity within five years to 10 GW after the deal.
Direct Energie shares surged 30.5 percent to 42.08 euros,while Total shares were up 1 percent.($1 = 0.8080 euros)(Additional Reporting by Ron BoussoWriting by Geert De ClercqEditing by Sudip Kar-Gupta/Jason Neely/David Evans)
