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'Hostile' bid in trouble

Indians' claim that the reason the Europeans are stalling is simple racism remains to be debated.

india Updated: May 01, 2006 17:58 IST

Laxmi Mittal’s 'hostile' bid for French steel giant Arcelor has run into serious difficulty and both sides are crying foul.

However, Indians' claim that the reason the Europeans are stalling is simple racism remains to be debated.

THE GENESIS

Mittal Steel is the world’s largest manufacturer of Steel. The company just recently unveiled their bid to acquire the second largest producer of steel in the world with the aims of consolidating the market.

However, the company has received a setback as the board members of the Arcelor unanimously rejected the $23 billion (13 billion pound) 'hostile takeover bid'.

The board members talked about their concerns related to possible job losses and differences of opinion over strategy.

Issuing an statement, the company rejected the bid from Laxmi Mittal, the richest Indian in the world.

The Arcelor board also recommended their shareholders not to sell away their shares to the Mittal Steel Company to protect the interests of the company.

The bid was very lucrative at a price of 28.21 euros a share, which is around 27 per cent above the current price of the share of Arcelor in the stock market before the bid was made.

The company’s decision to reject the bid is supported by the Luxembourg’s government who holds a 5.62 per cent stake in the company.

THE 'XENOPHOBIA'

France and Luxembourg peppered their criticisms of Mittal’s plans with a nationalistic fervour, likening Mittal Steel to cheap cologne and Arcelor to perfume.

Later, shocking cartoon on TV from a French newspaper followed lampooning the bid.

THE PROTEST

The opposition to Mittal’s bid was raised by Industries Minister Kamal Nath with Peter Mandelson, the EU trade commissioner.

Later, India Inc joined the chorus, airing grievances against "the European bias".

Nath cautioned the European governments against 'racist reactions'.

Meanwhile, Luxebourg’s Grand Duchy rushed through a bill on takeovers, which could protect Arcelor. Later, the bill was dropped, it was learnt.

When French Prez Jacques Chirac came calling in the first half of 2006, all eyes were rivetted on him, expectations running high of a joint statement from Prime Minister Manmohan Singh and Chirac to the effect. While the takeover crisis loomed large.