Mittal takes Arcelor bid campaign to Luxembourg
The Indian-born billionaire whose Mittal Steel is targeting Arcelor is to present his case to Luxembourg PM Jean-Claude Juncker.india Updated: Jan 31, 2006 14:31 IST
Steel magnate Lakshmi Mittal goes to Luxembourg on Tuesday to drum up support for his $23 billion bid for rival Arcelor amid fears it could lead to job cuts and the loss of one of Europe's top multinationals.
The Indian-born billionaire whose Mittal Steel is targeting Arcelor is to present his case to Luxembourg Prime Minister Jean-Claude Juncker at 0800 GMT after failing to ease French concerns on Monday.
Arcelor, based in Luxembourg, is the third-largest employer in the Grand Duchy.
The state of Luxembourg is Arcelor's single largest shareholder, with 5.62 per cent, and the government has voiced concern about a potential takeover, which Arcelor calls hostile.
"The Government is understandably determined to ensure that the industrial, social and financial interests of the Grand-Duchy ... are maintained," it said in a statement last weekend.
Mittal is scheduled to hold a news conference at 1000 GMT to talk about his meeting with Juncker, while the Luxembourg prime minister is to address parliament at 1400 GMT.
Later this week, Juncker is to meet French President Jacques Chirac, Prime Minister Dominique de Villepin, and Finance Minister Thierry Breton in Paris to discuss Mittal's bid for Arcelor, although his office said the meetings had been pre-arranged.
Mittal entered a political and media storm on the first stop of his charm offensive in Paris on Monday.
After meeting Mittal, Breton complained about the lack of advance warning for the bid and stated his "profound concern", given Arcelor's workforce of 28,500 in France.
In Madrid, Spanish Economy Minister Pedro Solbes said he also wanted to know what the bid meant for workers in Spain.
Mittal told reporters he was open to talks with Arcelor and offered reassurances about jobs and plants in France. "We are not at war here, we are creating value for the shareholders."
But Arcelor Chief Executive Guy Dolle told a news conference that the two companies were incompatible.
Arcelor pushed ahead with its acquisition of Canadian peer Dofasco, extending the deadline for its C$5.6 billion offer to Feb 9 to give shareholders time to meet regulatory rules.
Mittal has promised to sell Dofasco to Germany's ThyssenKrupp if it wins control of Arcelor.
Arcelor beat ThyssenKrupp in a bidding war for Dofasco.
Shares in Arcelor and Mittal have risen, and analysts say Arcelor would have to succumb if Mittal improved its hostile bid from a level Dolle called "light years away" from an acceptable price.
The markets are betting on Mittal winning Arcelor's support by lifting its cash and paper offer, which Mittal said was worth 28.21 euros a share when launched, but represented 30.8 euros at Monday's close.
The mostly paper bid has come to be worth 19.7 billion euros, or 4.2 times the group's expected 2006 core earnings.
Arcelor shares closed 4.24 per cent up at 29.56 euros in Paris, while Mittal Steel shares in Amsterdam were up 7.46 per cent at 29.69 euros.
Moody's Investors Service said it might cut its ratings on Mittal if its bid is successful, estimating that it would lead to a potential cash outflow for Mittal of 4.7 billion euros.
Mittal plans to see European Union Competition Commissioner Neelie Kroes later this week.