Takeover bid for Arcelor worries French steel

30th January 2006, Comments 0 comments

PARIS, Jan 31, 2006 (AFP) - Europe's position on the hostile takeover bid by Mittal Steel, the world's leading producer, for European steelmaker Arcelor will be made known "loud and clear," France's finance minister said Tuesday.

PARIS, Jan 31, 2006 (AFP) - Europe's position on the hostile takeover bid by Mittal Steel, the world's leading producer, for European steelmaker Arcelor will be made known "loud and clear," France's finance minister said Tuesday.

"We will make known the positions of (European) governments loud and clear," Thierry Breton told the French parliament.

The 18.6-billion-euro (US $22.7 billion) bid, which has been rejected by Arcelor's management board, has sparked concern among politicians and union leaders in Belgium, Luxembourg, Spain and France, the main sites of Arcelor plants in Europe.

The battle lines were drawn in Paris where the parties held duelling press conferences Monday and the French government said it feared there was no hard evidence the two groups could be successfully combined under the bid, launched in London on Friday.

The head of Mittal Steel, Lakshmi Mittal, met here with French Finance Minister Thierry Breton and sought to allay fears that his bid for Luxembourg-based Arcelor would mean job cuts.

Meanwhile, Arcelor chief executive Guy Dolle warned in a newspaper interview that the plan would have "dramatic consequences for shareholders and especially for workers".

In Brussels, a European Commission spokesman, Gregor Kreuzhuber, said in an indirect allusion to the controversy that Europe now had a "modern industrial strategy" and that it would be inappropriate to revive protectionist or state-aid polices of the past.

The bid by Mittal Steel would result in the biggest merger ever seen in the steel industry and by far the biggest steel producer in the world.

Mittal told a press conference that his company was not in the habit of acquiring steel-making plants in order to close them and said that no job cuts were planned.

His bid did not raise big anti-trust issues in Europe or North America, and 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".

He had no plans to modify his offer despite Sunday's rejection by the Arcelor board.

Mittal said that a takeover would generate annual economies of scale of one billion dollars, with 60 percent 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 dollars.

But Breton 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, "we could only reiterate the deep concern of the French government ... The French government, as are many other European governments, is concerned by this takeover bid".

This was because "Arcelor, as an European group, has a large part of its business in Europe, and notably in France, where, with nearly steel 30,000 employees, it is a very important for France and Europe."

Breton said that although Mittal Steel was free to pursue its bid, at some stage it would have to "discuss concrete projects which today are not in the hands of the parties concerned".

Earlier Dolle had told French radio: "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  ... 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 Arcelor sought 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 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-percent stake in Arcelor and has a seat on the board.

In a joint statement on Sunday, economy and treasury ministers Jeannot Krecke and Luc Frieden expressed "deep concern" over employment and investment.

However, some analysts of the steel sector have argued that a Mittal-Arcelor merger would, from a purely business perspective, make sense because they complemented each other in terms of products and geographic spread.

The Mittal Group, which has risen from modest origins in India, now produces mainly in eastern Europe and North America. Arcelor, by contrast, is concentrated mainly in Europe and has some interests in South America, especially Brazil.

Copyright AFP

Subject: French news

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