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Mittal plans steel domination with 18.6-billion-euro bid for Arcelor
LONDON (AFP) - Mittal Steel, the world's biggest steel producer, has launched a takeover bid worth 18.6 billion euros (22.7 billion dollars) for European group Arcelor in an ambitious attempt to create a dominant global giant.
The steel sector, once in the doldrums amid restructuring, is benefiting from a price boom driven by global economic growth, and notably by expansion in India and China.
Mittal Steel, of Indian origins and now the leading world steel group by production volume,
Arcelor was based on an offer of 28.21 euros per share.
Analysts said that Mittal's approach, which also affects Dofasco of Canada and ThyssenKrupp of Germany, could spark a bidding war for Arcelor and put other steel groups under the takeover spotlight. One analyst said the bid faced a number of hurdles, including examination by competition authorities.
Arcelor made no comment but the price of its shares shot up by 33.5 percent. Mittal Steel said the terms represented a 27-percent premium over Arcelor's closing share price on Thursday.
The combined group would form a business producing about 115.0 million metric tonnes of steel per year, accounting for about 10.0 percent of the global steel market, Mittal Steel said.
Trade data based on 2004 figures put Mittal Steel and Arcelor steel production combined at about 109.0 million tonnes, more than three times the production of the next-biggest company Nippon Steel of Japan.
The Mittal/Arcelor figure is nearly as big as the combined production of the four-next-biggest producers: Nippon Steel, JFE Holdings of Japan, Posco of South Korea and Shanghai Baosteel of China.
Steel tycoon Lakshmi Mittal, who was born in India and is group chairman and chief executive, called on Arcelor shareholders to accept the cash and shares offer and "play a part in the future of the world's only global steel company".
A stock market analyst with Barclays Stockbrokers in London, Hilary Cook, said that there was no guarantee that the bid would succeed.
"This is an unsolicited bid from Mittal and there is probably some bargaining still to go with the chance of others entering the fray," she said.
"Other people in the industry will be looking at this. They are not going to let Mittal have Arcelor on the cheap. But whatever happens with Arcelor, this will not be the end of consolidation."
Competition authorities were highly likely to investigate the offer, she added.
Arcelor groups steel interests in Luxembourg, France and Spain. The state of Luxembourg owns 5.6 percent of the company, and 85.7 percent is in the hands of diversified shareholders.
French Economy and Finance Minister Thierry Breton said that the government was "concerned" and was following developments "with the greatest attention" because of the "implications for European and French industry and for employment".
Mittal Steel said the combined group would have total sales of more than 69 billion dollars (56.7 billion euros) and a global workforce of 320,000 people.
Mittal Steel said that there was little overlap between the two companies, as its own leading positions in Eastern and Central Europe, Asia and Africa were complemented by Arcelor's strong presence in Western Europe.
Mittal Steel, which has risen from modest beginnings in India 30 years ago, said it had also agreed to sell leading Canadian steel-maker Dofasco, in the process of being acquired by Arcelor, to ThyssenKrupp if it succeeded in acquiring Arcelor.
Lakshi Mittal said in his statement: "The last 10 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."
Mittal Steel said it had agreed to sell Dofasco to ThyssenKrupp at a price of 68.0 Canadian dollars per share. Arcelor has agreed to make a friendly bid for Dofasco at 71.0 Canadian dollars per share, valuing it at 3.95 billion euros (4.84 billion US dollars).
The announcement by Mittal Steel came only three days after Arcelor had agreed to buy Dofasco and four days after ThyssenKrupp had withdrawn its attempts to buy the Canadian company.
In Frankfurt, the price of shares in ThyssenKrupp surged by 6.70 percent to 21.67 euros, while in London shares in British steel group Corus soared 9.96 percent to 69 pence.
LONDON (AFP) - Mittal Steel, the world's biggest steel producer, has launched a takeover bid worth 18.6 billion euros (22.7 billion dollars) for European group Arcelor in an ambitious attempt to create a dominant global giant.
The steel sector, once in the doldrums amid restructuring, is benefiting from a price boom driven by global economic growth, and notably by expansion in India and China.
Mittal Steel, of Indian origins and now the leading world steel group by production volume,
Arcelor was based on an offer of 28.21 euros per share.
Analysts said that Mittal's approach, which also affects Dofasco of Canada and ThyssenKrupp of Germany, could spark a bidding war for Arcelor and put other steel groups under the takeover spotlight. One analyst said the bid faced a number of hurdles, including examination by competition authorities.
Arcelor made no comment but the price of its shares shot up by 33.5 percent. Mittal Steel said the terms represented a 27-percent premium over Arcelor's closing share price on Thursday.
The combined group would form a business producing about 115.0 million metric tonnes of steel per year, accounting for about 10.0 percent of the global steel market, Mittal Steel said.
Trade data based on 2004 figures put Mittal Steel and Arcelor steel production combined at about 109.0 million tonnes, more than three times the production of the next-biggest company Nippon Steel of Japan.
The Mittal/Arcelor figure is nearly as big as the combined production of the four-next-biggest producers: Nippon Steel, JFE Holdings of Japan, Posco of South Korea and Shanghai Baosteel of China.
Steel tycoon Lakshmi Mittal, who was born in India and is group chairman and chief executive, called on Arcelor shareholders to accept the cash and shares offer and "play a part in the future of the world's only global steel company".
A stock market analyst with Barclays Stockbrokers in London, Hilary Cook, said that there was no guarantee that the bid would succeed.
"This is an unsolicited bid from Mittal and there is probably some bargaining still to go with the chance of others entering the fray," she said.
"Other people in the industry will be looking at this. They are not going to let Mittal have Arcelor on the cheap. But whatever happens with Arcelor, this will not be the end of consolidation."
Competition authorities were highly likely to investigate the offer, she added.
Arcelor groups steel interests in Luxembourg, France and Spain. The state of Luxembourg owns 5.6 percent of the company, and 85.7 percent is in the hands of diversified shareholders.
French Economy and Finance Minister Thierry Breton said that the government was "concerned" and was following developments "with the greatest attention" because of the "implications for European and French industry and for employment".
Mittal Steel said the combined group would have total sales of more than 69 billion dollars (56.7 billion euros) and a global workforce of 320,000 people.
Mittal Steel said that there was little overlap between the two companies, as its own leading positions in Eastern and Central Europe, Asia and Africa were complemented by Arcelor's strong presence in Western Europe.
Mittal Steel, which has risen from modest beginnings in India 30 years ago, said it had also agreed to sell leading Canadian steel-maker Dofasco, in the process of being acquired by Arcelor, to ThyssenKrupp if it succeeded in acquiring Arcelor.
Lakshi Mittal said in his statement: "The last 10 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."
Mittal Steel said it had agreed to sell Dofasco to ThyssenKrupp at a price of 68.0 Canadian dollars per share. Arcelor has agreed to make a friendly bid for Dofasco at 71.0 Canadian dollars per share, valuing it at 3.95 billion euros (4.84 billion US dollars).
The announcement by Mittal Steel came only three days after Arcelor had agreed to buy Dofasco and four days after ThyssenKrupp had withdrawn its attempts to buy the Canadian company.
In Frankfurt, the price of shares in ThyssenKrupp surged by 6.70 percent to 21.67 euros, while in London shares in British steel group Corus soared 9.96 percent to 69 pence.
Arcelor hangs tough :
Arcelor says board unanimously rejects Mittal Steel offer
With plenty of help from Fortress Europe :
France, Luxembourg back Arcelor in steel battle
Solbes tells Mittal Spain is against Arcelor bid
For taking on Governments, Mittal is certainly showing he is a man of Mettal (sic).
Having said that, I doubt he is going to prevail in this brawl given that he is taking on a number of European Governments.
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