Mittal rules out improved offer for Arcelor
Lakshmi Mittal had earlier on Tuesday appeared ready to raise the bid.india Updated: May 10, 2006 00:23 IST
Steel giant Mittal Steel said on Tuesday it would not improve its bid for Arcelor but would reduce the Mittal family's control of the company if Arcelor's board dropped its opposition to the deal.
"We have no intention to raise our offer," chief executive Lakshmi Mittal told a press conference here on the sidelines of a Mittal shareholders' meeting.
A deal between Mittal, which has Indian origins and is the biggest steel producer in the world by volume, and number two Arcelor would create the world's biggest steel producer by far with 12 per cent of the world market based on 2005 figures.
Lakshmi Mittal had earlier on Tuesday appeared ready to raise the bid, saying in a statement that "in the event of a recommended deal, we would be willing to revise our offer and make significant changes to our corporate governance."
He offered to reduce his family's control of the company but said its share of the capital would not drop below 50.4 per cent.
Arcelor's board has repeatedly rejected Mittal's bid in its current form of 75 per cent shares and 25 per cent cash, while Mittal had previously insisted that its offer, valued at 18.6 billion euro ($23 billion) when launched in January, would not be improved.
A source close to Luxembourg-based Arcelor, whose shares have climbed steadily since the launch of the hostile bid, threw cold water on Mittal's latest proposals.
"Once the Mittal smoke has cleared, there is nothing to the proposals," he said. "It's two steps forward and three steps back."
Mittal told reporters on Tuesday in London that his company would make a formal offer to Arcelor shareholders in the "middle of next week except if there are more roadblocks by Arcelor."
He also offered assurances on the management of the merged group.
If the Arcelor board were prepared to back its offer, Mittal said it would propose the enlargement of the board of directors to 14 members, six from Mittal, six from Arcelor, and appoint two independent directors to be mutually agreed upon.
He also said he wanted to bring onto the board of the merged group the French businessman Francois Pinault.
Pinault is one of France's richest men and is close to French President Jacques Chirac. His appointment might soften French resistance to the proposed deal, which sparked fierce opposition and much talk of "economic patriotism" when Mittal launched its bid.
Mittal in addition offered to reduce his ability to control the strategic direction of the merged group by cutting back his voting rights.
He proposed a system of "one share one vote," instead of the current voting method that gives his family about 90 percent of the voting rights attached to Mittal shares.
But he said Tuesday at a shareholders' meeting in Rotterdam that regarding the company's capital, "the family will not go below 50.4 per cent."
Mittal had previously said it would launch a public offer for Arcelor by the end of April, only to put back the date.
Arcelor management has continually rejected the bid, saying it would only consider a takeover if it were priced solely in cash.
Arcelor has also taken measures designed to fend off off the unwelcome approach, including efforts to scupper Mittal plans to sell off Arcelor's recently acquired Canadian unit Dofasco in the event of a successful bid.
The proposed takeover of Arcelor, a combination of Spanish, Belgian, French and Luxembourg steel interests, has also faced criticism from European politicians and any offer would have to clear a myriad of regulatory hurdles.
Arcelor added 2.17 per cent on Tuesday to reach 35.76 euros at the end of trading while Mittal gained 1.57 per cent to 33.01 euros.