POSCO Readies Takeover Defenses Amid Reports Of Mittal Approach

Will acquire more shareholders deemed friendly to management

South Korea's POSCO, the world's third largest steelmaker, said March 26 it is stepping up its defenses to thwart any hostile takeover attempt amid reports Arcelor Mittal is looking at the company.

"The company will acquire more friendly shares for stable management," a POSCO official said, adding that shareholders counted as friendly to the management now controlled 40% of the company. "This will help POSCO thwart a possible takeover bid by foreign firms."

In January, shareholders approved POSCO's proposal to ease rules on selling new shares to strategic partners following talks here between chairman Lee Ku-Taek and Arcelor Mittal senior executive Roland Junck.

Arcelor Mittal and POSCO are jostling for dominance in the rapidly growing Asian markets led by China and India.

POSCO forged an alliance with Japan's Nippon Steel, the world's second largest steeelmaker after Arcelor Mittal, in 2000 to better position itself for a global realignment in the industry. In October last year, they agreed to increase stakes in each other after Mittal Steel acquired rival Arcelor of Luxembourg to create the world's largest steel group. Nippon Steel now holds a 5% stake in POSCO.

POSCO's 2006 sales were 20.04 trillion won (US$21.3 billion), down 7.6%, as operating profit tumbled 34.2% to 3.89 trillion won, hurt by a fall in steel prices and higher raw material prices.

Copyright Agence France-Presse, 2007

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