'Takeover looms' on Japanese firms

After Mittal took on Arcelor, Japanese steelmakers fear they may come next.

The global behemoth to be created by Arcelor and Mittal is sending jitters down Japan's steel industry, which will need to focus on high-end products to compete, said analysts.

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Japanese steelmakers are wondering if they could be the next target of Mittal Steel, which has grown to be the world's largest steelmaker through aggressive buyouts and has just won a bitterly fought merger with second-ranked Arcelor.

"From now on, Japanese companies will have to make due preparations knowing that there will be a rampant global realignment in the industry," Japanese Economy, Trade and Industry Minister Toshihiro Nikai said.

Hajime Bada, president of Japan's second-largest steelmaker JFE Steel, was alarmed by Mittal and said, "There is no preventive measure we could take if they come to buy us all in cash," as quoted by Jiji Press.

Analysts shared a similar view. Yoshinori Namioka, a steel analyst of Japan Credit Rating Agency said, "I can't completely deny the possibility that Mittal will move to buy a Japanese steelmaker."

"Japanese firms may seek to deepen cooperation through business tie-ups and cross-share holdings," Namioka said.

Three Japanese steelmakers - Nippon Steel, which becomes the world's second largest after Arcelor-Mittal, Sumitomo Metal Industries and Kobe Steel - already in March set up cross shareholdings to prevent a possible hostile buyout.

Arcelor agreed on Sunday to a sweetened deal with Mittal valued at 25.4 billion Euros (US $31.8 billion) after a five-month standoff.

Arcelor's European executives had at first ridiculed the offer by Mittal's Indian-born founder Lakshmi Mittal, saying that his company offered inferior products, bringing accusations of racism by Indian officials.