France, Luxembourg back Arcelor
French leaders rallied behind Arcelor as growing signs emerged of a coordinated European political defence against Mittal's bid.Updated: Feb 01, 2006 15:55 IST
French leaders rallied behind embattled European steel maker Arcelor on Wednesday as growing signs emerged of a coordinated European political defence against a $23 billion bid by Mittal Steel amid job fears.
Luxembourg Prime Minister Jean-Claude Juncker said after meeting French counterpart Dominique de Villepin the two had agreed how best to respond to a bid that both regard as hostile.
"We discussed European matters, plus the Middle East, and we made sure we were in tune on the reactions required following Mittal's hostile operation against Arcelor," Juncker said.
"We were in agreement on all these points," he added.
Juncker was due to meet French President Jacques Chirac later on Wednesday before heading for more talks in Belgium.
Friday's sudden bid by steel magnate Lakshmi Mittal, who controls the world's largest steel firm, provoked a political storm in both France and Luxembourg where Arcelor has many of its roots and employs a combined workforce of over 35,000.
Villepin, who hopes to run as conservative candidate in 2007 presidential elections, stepped up a campaign of "economic patriotism" late on Tuesday, urging French and European firms to protect their interests. Dutch-based Mittal says it is European.
The takeover bid has raised fears of job losses in Europe where a total of 94,000 Arcelor jobs are at stake. It is the largest private employer in Luxembourg, having been created in 2002 from steel firms in France, Spain and Luxembourg.
The chief executive of Luxembourg-based Arcelor, Guy Dolle, accused Mittal of trying to get its hands on Arcelor's cash flow, of over 3 billion euros ($3.64 billion) a year, to rebuild old mills in east Europe and the United States.
A Mittal spokesman said in response that the company had "a very strong cashflow which has supported a strong investment programme over a number of years".
Dolle said he needed to convince an additional 35 per cent of Arcelor shareholders that the future of Arcelor as a standalone company was much better than with Mittal.
The state of Luxembourg, the Aristrain family, Belgium's Walloon region and Arcelor and its staff own a combined 19 per cent of the world's number two steel maker and an additional camp of 35 per cent would create a majority to block the bid.
A deal between Mittal Steel and Arcelor would bring together the world's top two steelmakers, giving them a global market share of about 10 percent.
Mittal has been on a whirlwind tour to try to overcome political opposition to his bid and was set to meet European Competition Commisioner Neelie Kroes and Internal Market Commissioner Charlie McCreevy in Brussels later on Wednesday.
On Tuesday, McCreevy urged EU member states not to succumb to protectionism in cross-border company mergers.
Villepin said however that companies needed to assure they had a stable shareholder structure and governments could help enterprises to create "European champions".
He urged French firms to arrange their capital so as to "resist attacks" and promised help to defend their interests.
First Published: Feb 01, 2006 15:55 IST