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More moves to sabotage Mittal bid

The proposals would require the option of full cash payment for hostile takeovers unless a quarter of the bidder's shares are liquid, with equal voting rights.

india Updated: Mar 16, 2006 19:38 IST
Vijay Dutt

In yet another move to sabotage Mittal Steel's bid for Arcelor, Luxembourg's Chamber of Commerce has joined others in Europe in creating stronger protectionism.

The proposals would require the option of full cash payment for hostile takeovers unless a quarter of the bidder's shares are liquid, with equal voting rights.

The chamber's President Michel Wurth is a top executive in Arcelor but he said that although he wore two hats, he was acting in the interests of the nation. The finance committee of the Luxembourg Parliament will vote on the proposed changes on Friday at a closed session. This will be followed by a plenary vote in May.

Under these proposals Mittal Steel would be immediately disqualified. It is family-owned business with a free-float of just 12 per cent, and 98 per cent of the votes. A spokesman of the firm was quoted, "We believe these proposals were exclusively intended to thwart the Mittal Steel offer."

According to a report it is unclear whether the Luxembourg premier has had any role to play but the Grand Duchy, which owns 5.8 per cent of Arcelor's stock, has already modified its takeover law to include a "poison pill" clause which allows top management to issue new stock without consulting shareholders.

Brussels, reacting to the moves, said it was watching the case closely and would not hesitate to take action against discriminatory measures. But t is said it has limited powers. In any case a report mentioned that the 350 top-tier executives of Arcelor have been aggressively opposed to the bid. They were quoted saying that they would not let the Arcelor way be diluted by other values and business models. They added they unanimously rejected the hostile bid from Mittal Steel.