European steel maker Arcelor came out fighting and determined to win on Jan. 30 in the face of a hostile takeover bid by Mittal Steel as France voiced deep concern about the fate of the European steel industry. Mittal Steel's attack on Arcelor, launched Jan. 27 in London, moved to Paris where the parties held dueling press conferences and the French government said it feared there was no hard evidence the two groups could be successfully combined.
The head of Mittal Steel, Lakshmi Mittal, met here with French Finance Minister Thierry Breton and sought to allay fears that his 18.6-billion-euro (US$22.7 billion) bid for Luxembourg-based Arcelor would mean job cuts. Mittal told a press conference his company was not in the habit of acquiring steel-making plants in order to close them and pledged that no employment reductions were planned. He stressed that Mittal Steel was a European company and that if European jobs had to be protected in future, it (the bid) is a good way of doing so.
Mittal said that a takeover would generate annual economies of scale of $1 billion dollars, with 60% of this arising in the first year, and the company's finance director Aditya Mittal said that a merged group would have annual net profit of $7.2 billion.
Mittal's arguments apparently failed to convince Breton, who said after his meeting there was no "information ... that the cultures of the two groups could function and live together" and no "analysis to know if the group that could result from the operation would have compatible governance systems." As a result, he said, " The French government, as are many other European governments, is concerned by this takeover bid" because "Arcelor, as a European group, has a large part of its business in Europe, and notably in France, where, with nearly 30,000 employees steel, it is a very important for France and Europe."
Earlier today, Arcelor chief executive Guy Dolle, speaking on French radio station Europe 1, said: "We have known for a year that it (Mittal) was interested in us." Arcelor had been "prepared for this attack since last spring", he said. "We are ready. We have a plan that enables us to resist. The fight has begun, and we are going to win it. It will be long." Arcelor did not need Mittal Steel, Dolle argued. "We think that the future of Arcelor is much better for its shareholders and employees if it remains alone rather than being allied to Mittal." Asked whether or not Arcelor had asked for help from governments in Europe, Dolle replied: "We are asking for nothing unless it is moral support."
The approach by Mittal Steel has also touched off resoundingly negative reactions from politicians and union leaders in Belgium, Luxembourg and Spain, the main sites of Arcelor plants in Europe.
The position of Luxembourg's government was expected to be a key factor in the response, as the state holds a 5.6% stake in Arcelor and has a seat on the board. In a joint statement on Jan. 29, economy and treasury ministers Jeannot Krecke and Luc Frieden expressed "deep concern". They said: "In the absence of prior consultation the current proposal lacks precise commitments concerning the role of the Luxembourg state, the maintenance of the group's workforce in Luxembourg, as well as respect for commitments made by Arcelor in the area of employment and investments."
The bid by Mittal Steel would result in the biggest merger ever seen in the steel industry.
Copyright Agence France-Presse, 2006