Arcelor well prepared to fight Mittal bid: CEO
The bid by Mittal Steel would result in the biggest merger ever seen in the steel industry.india Updated: Jan 30, 2006 16:06 IST
The head of European steel maker Arcelor said on Monday that the company had been prepared for nearly a year to fight a hostile takeover bid which Mittal Steel sprang on Friday with an offer of 18.6 billion euros ($22.7 billion).
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 referring to the bid which would create by far the biggest steel producer in the world.
"We are ready," he said. "We have a plan that enables us to resist."
He added: "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."
Dolle said that the head of Mittal Steel, Lakshi Mittal, had told him on Friday that the two companies would make "a great champion", but that he had replied that most mergers failed "because of cultural differences".
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 bid by Mittal Steel would result in the biggest merger ever seen in the steel industry.
After a meeting of Arcelor board members on Sunday, the group issued a statement saying that the management "unanimously rejects the unsolicited bid from Mittal Steel which it considers to be hostile".
The approach by Mittal Steel has also touched off resoundingly negative reactions from politicians and union leaders in Belgium, France, Luxembourg and Spain, the main sites of Arcelor plants in Europe.
French Economy Minister Thierry Breton, who was meeting Lakshi Mittal early on Monday, told French radio on Sunday that he was "very shocked" at the way the bid had been made.
In opening deals on the Paris stock exchange on Monday, shares in Arcelor were showing a rise of 2.0 per cent to 29.15 euros in a broadly weaker market.
Both companies are to hold press conferences in Paris on Monday.
Lakshmi Mittal said that he would hold a press conference at 11:30 am (1030 GMT). Arcelor is due to hold its press conference at 1:00 pm (1200 GMT).
The position of Luxembourg's government was also expected to be a key factor in the response, as the state holds a 5.6-per cent 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".
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."
Arcelor said on Sunday that it considered that "Arcelor and Mittal Steel do not share the same strategic vision, nor the same development model nor the same values".
During a press conference in London on Friday, Mittal had said he was seeking friendly talks with Arcelor on his bid.
Some analysts argue that a Mittal-Arcelor merger would, from a purely business perspective, make sense. "There is an industrial logic in this operation because there is a strong complementarity between Mittal and Arcelor, both in product and geographically," said Vincent Lepine, an analyst at Exane BNP Paribas.
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.
Even before Mittal's offer, both companies had expanded aggressively through takeovers.