Mittal Steel launches bid for Arcelor $ 22.7-b offer aimed at creating `European consolidation'

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Jayanta Mallick

Kolkata, Jan. 27

THE Kolkata-born global steel baron Mr L.N. Mittal has launched a Euro 18.6-billion ($22.7 billion) takeover bid for Arcelor, the world's second largest steel producer.

NYSE and Euronext Amsterdam listed Mittal Steel NV, the largest steel producer of the world, on Friday offered a price of euro 28.21 a share of France's Arcelor. The shareholders of Arcelor have been offered a premium of 27 per cent over the stock's closing price on the (Euronext) Paris Stock Exchange on Thursday.

At a teleconference in London, joined by

Business Line

, Mr Lakshmi N Mittal, Chairman and CEO of Mittal Steel, said that it was not a "hostile" bid for takeover, but aimed at creating a "European consolidation" in the steel industry to create a 100-million tonne-plus manufacturer.

Anti-trust issue:

Mr Aditya Mittal, President & CFO of Mittal Steel, said, "We don't envisage any anti-trust issue" in this effort to create a "global champion, resident in Europe". He also said Mittal Steel would soon get in touch with EU Commission in relation to the offer.

The transaction will be reviewed by anti-trust authorities in the EU, the US and possibly other jurisdictions around the world. But the Mittals categorically stated that the offer is not conditional in terms of anti-trust issue.

The senior Mittal also said, "We have confidence in Arcelor management for a greater consolidation for which they had already spoken about". "We are open for discussion with Arcelor management and other stakeholders," he said.

Mr Mittal said that on January 14, he first opened the dialogue with Arcelor management with a merger offer. However, the dialogue did not apparently proceed further despite attempts from the Mittal group. No immediate official response was available from Arcelor.

Responding to a question, Mr L.N. Mittal said that Arcelor was known to be keen to enter India, where Mittal steel has already moved in with a greenfield project proposal; the present offer may give Arcelor an opportunity to step into the country.

Terms of the offer:

Mittal Steel's offer is to acquire all of the outstanding Arcelor shares and convertible bonds through three offers:

A primary mixed cash and exchange offer for Arcelor shares consisting of 4 new Mittal Steel shares and £35.25 in cash for every five Arcelor shares;

A secondary exchange offer consisting of 16 new Mittal Steel shares for 15 Arcelor shares.

Convertible bonds at the following exchange ratio: 4 new Mittal Steel shares and £40 in cash for every five Arcelor convertible bonds.

Arcelor shareholders may tender their shares in either the primary offer or either or both of the secondary offers, but the two secondary offers will, in the aggregate, comprise 75 per cent in Mittal Steel shares and 25 per cent in cash.

The offer is conditioned on the tendering of more than 50 per cent of Arcelor's share capital and voting rights on a fully diluted basis, the extraordinary shareholders' meeting of Mittal Steel having approved the issuance of new Mittal Steel shares to Arcelor shareholders (the Mittal family having undertaken to vote in favour of the issuance of such new Mittal Steel shares) and the absence of events or actions that would alter Arcelor's substance.

The draft offer document will be filed with the Luxembourg Commission de Surveillance du Secteur Financier. In order to coordinate the process in the various jurisdictions in which Arcelor securities are listed, the offer will also be filed with the competent authorities in other countries, including in Spain and Belgium. A draft share offering prospectus will be filed with the Dutch and with the French authorities. A registration statement will also be filed with the SEC.

Related Stories:
Arcelor sets sights on India
Mittal Steel signs MoU with Jharkhand for Rs 40,000-cr plant
Laxmi Mittal likely to dilute stake in Group as profits decline

(This article was published in the Business Line print edition dated January 28, 2006)
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