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Luxembourg to decide on Mittal?s bid

Mittal's Arcelor bid faces a key day on Wednesday when the Luxembourg decides whether to introduce new rules which could obstruct the offer.

india Updated: Apr 20, 2006 19:26 IST

Mittal Steel's 19-billion-euro ($23-billion) bid for Luxembourg-based rival Arcelor faces a key day on Wednesday when the country's parliament decides whether to introduce new rules which could obstruct the offer.

Two months after the unsolicited bid was launched, to the dismay of Luxembourg's government and Arcelor, Mittal's founder and Chief Executive Lakshmi Mittal said last week he was "really worried" by what could be a move to block the bid.

Indian-born Mittal heads a multinational company which is headquartered in London, registered in the Netherlands and listed in Amsterdam and the bid is seen as another test of Europe's laws for a single internal market at a time when Spain, France and Poland are also opposing takeovers of key national companies by firms from other European countries.

Members of the Luxembourg parliament's finance committee are keeping their cards close to their chests.

"Everything is possible, you will just have to wait until Wednesday," said John Castagnero, a member of parliament and Arcelor board member, but not on the committee.

Already one proposed alteration to the takeover laws put forward by Luxembourg's Chamber of Commerce -- which is led by an Arcelor executive -- has caused controversy.

It would have required a bidding company to have at least 25 percent of its shares traded publicly on the market in order to use its stock to buy another listed company.

Because the Mittal family owns 88per cent of the capital of Mittal Steel the company would have been obliged to launch a cash only offer or at least a cash alternative for Arcelor shareholders. Under Mittal's offer Arcelor shareholders would get four Mittal Steel shares and 35.25 euros cash for every five shares held in Arcelor.

Analysts said that while Mittal has the means to increase the cash component of its offer it was unclear whether it would go forward with a higher cash requirement.

Laurent Mosar, head of the finance committee, said on Monday that he would not adopt that proposal but did not rule out other changes which might impact the offer. He said he would propose "amendments on liquidity," but declined to provide more details.

Luxembourg, the largest Arcelor shareholder with 5.6 % stake, says the bid is not in the company's interest. France and Spain are also against it. Mittal has said Arcelor's shareholders should be the ones to decide if the bid succeeds or not.

Anne Marechal, a Paris-based partner at law firm DLA Piper Rudnick, said imposing liquidity rules would go against the European Union's takeover directive, probably triggering a legal row with the EU's executive Commission.

First Published: Mar 22, 2006 00:00 IST