MITTAL STEEL’S audacious $23 billion (£13 billion) bid for Arcelor, its nearest rival, set off a political storm yesterday as the French and Luxembourg Governments expressed concern about the future of a major industrial employer.
Thierry Breton, the French Finance Minister, said he was concerned about the “implications for European and French industry and for employment” if Mittal’s attempt to create the world’s first 100 million tonne-plus steelmaker succeeded.
The Luxembourg Government, which holds a 5.6 per cent stake in Arcelor, described the steel group as a “strategic interest”.
Arcelor’s board will meet tomorrow to consider Mittal’s unsolicited approach, which is 75 per cent paper and 25 per cent cash, but the Luxembourg-based group has already expressed concern at the hostile nature of the bid.
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Mittal has offered €28.21 per Arcelor share, which represents a 27 per cent premium to Thursday’s closing price, a record high for the European steel group.
Lakshmi Mittal, the billionaire owner of Mittal Steel, did not rule out a higher offer yesterday.
The proposed $23 billion transaction includes a side deal that would see Dofasco, the Canadian steelmaker bought by Arcelor in the past few days, sold to ThyssenKrupp of Germany. Arcelor outbid ThyssenKrupp in a fierce battle for the Canadian group this week.
ThyssenKrupp will pay C$68 per share for Dofasco, the level of its last recommended bid. However, Arcelor had offered to pay C$71 a share, meaning that Mittal would immediately lose money on the sale.
The proposed merger of Mittal Steel and Arcelor would create a dominating force in the global steel market, with production of 115 million tonnes. The combined company would be three times the size of Japan’s Nippon Steel, currently the third-largest producer with about 32 million tonnes.
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It would have a market capitalistion of about $40 billion and Mr Mittal has agreed to increase the company’s free float from 12 per cent of the shares to about 50 per cent to counter corporate governance fears. However, the Mittal family, which has three members on the board, would still own 64 per cent of the voting rights of the shares.
Mr Mittal said that the merger would represent an important step forward in the consolidation of the steel industry. “The last ten years have seen a major shift towards consolidation of the steel industry.
“Both Mittal Steel and Arcelor have been at the forefront of this consolidation and share a similar vision for the future of our industry,” Mr Mittal said.