LONDON: Global steel major Mittal Steel Co NV made a hostile 18.6 billion euro takeover bid for French rival Arcelor SA. The company, owned by multi-billionaire steel magnate Lakshmi Mittal, said the merger would create the world's first 100 million tonne-a-year steel producer and a 'global champion' for the industry.
Lakshmi Mittal told newspersons in London he decided to make the offer public so that Arcelor's shareholders can derive benefit as chief executive of Arcelor Guy Dolle had rejected the proposal on 14 January and subsequent approaches had failed.
Mittal said he respected Arcelor's management and asked them to participate in 'friendly discussions' on the 28.21-euro per share offer.
Arcelor responded to the bid saying it "underlines the hostile character of this move that takes place without prior discussions or consultations between both companies". It said its board would meet shortly to decide its response.
According to the plan, Arcelor shareholders will receive four Mittal Steel shares and 35.25 euros in cash for every five Arcelor shares. In addition, they will have the right to receive a cash or stock mix in any proportion they elect, provided that 25 per cent of the aggregate consideration paid to Arcelor shareholders is paid in cash and 75 per cent in stock. The offer is conditional on Mittal Steel receiving more than 50 per cent of Arcelor's share capital and voting rights.
The Luxembourg government is the largest shareholder in Arcelor. It said the company's board of directors is to meet on Sunday to discuss the issue.
India-born Mittal is the world's third richest man after Bill Gates and Warren Buffett, according to the Forbes magazine. He is estimated to have a fortune of $25 billion.
Mittal Steel said the offer is 27 per cent premium over Arcelor's closing price Friday, which was an all-time high, and values Arcelor at 18.6 billion euros. The unified company will have a market cap of $40 billion.
Mittal said operations of Mittal Steel and Arcelor complement each other and a merger may not lead to closure of any plants or job cuts among the unified company's 320,000-strong workforce. He did not expect any regulatory hurdles and said his company will honour all commitments made by Arcelor in terms of employment, growth and investment.
The bid has come three days after Arcelor trumped Germany's Thyssenkrupp AG with a 4-billion-euro agreed offer for Canada's Dofasco Inc. Mittal said when the proposed merger happens, the unified company will sell Dofasco to ThyssenKrupp for C$68 per share. Mittal Steel is already well-placed in North America and does not need Dofasco's assets.
The enlarged company may move its headquarters to Luxembourg to tap opportunities in China.
Arcelor was formed out of a merger of France's Usinor, Luxembourg's Arbed and Spain's Aceralia in 2000. It has strong operational presence in western Europe and South America, particularly Brazil.
Neelie Kroes, EU's competition commissioner, indicated the merger would raise no concerns under EU law because of the relatively small geographical overlap.
Mittal Steel has made 20 acquisitions in the past five years. It had $6 billion in profits last year.
Posted
on : Sat, 28 Jan 2006 08:50 GMT | Business News
By : Mark Richardson
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