Arcelor takes spurned suitor Mittal to court

No. 1 steel firm is sued over metal technology

May 12, 2006|By BLOOMBERG NEWS

WILMINGTON, Del. -- Arcelor SA, the target of a 22.8 billion-euro ($29 billion) hostile bid from Mittal Steel Co., is suing its larger rival in the U.S. over technology used to strengthen steel for cars.

Arcelor accused Mittal's Chicago subsidiary of infringing on a 2001 patent. The lawsuit was filed Tuesday in federal District Court in Wilmington and seeks unspecified damages and an order to stop Mittal from using the technology.

Mittal, the world's largest steel company, is involved in a hostile takeover of Arcelor, Europe's largest steelmaker.

"This way of defending our patent rights is not related to the Mittal bid," said Luc Scheer, an Arcelor spokesman at company headquarters in Luxembourg.

Mittal officials were unavailable for comment. The Arcelor patent covers its Usibor technology, which uses boron, a soft nonmetallic element that strengthens steel in cars to help them withstand crashes.

The two companies are vying for leadership of the car-steel market. Mittal is the No. 1 supplier in the United States, with customers such as General Motors Corp., while Arcelor supplies the steel for half of the cars made in Europe.

Arcelor bought Canada's Dofasco Inc. for C$5.5 billion ($5 billion) in March to gain a 10 percent foothold in the North American car-steel market and supply contracts with Toyota Motor Corp., the world's second-largest carmaker.

Arcelor said last month that it would transfer Dofasco into a Dutch trust to stop Mittal from selling it to Germany's ThyssenKrupp AG should the Mittal takeover succeed. ThyssenKrupp also had bid for Dofasco but lost out to Arcelor.

Mittal said Tuesday that its lawyers are working on a way to unlock Dofasco from Arcelor if management doesn't agree to merger talks.

Even so, Lakshmi N. Mittal, the company's billionaire chairman and chief executive, said Tuesday that he wants friendly talks with Arcelor.

Buying Arcelor would make Rotterdam-based Mittal - owner of the Sparrows Point mill in Baltimore County - three times the size of its nearest competitor. The purchase also would boost Mittal's negotiating power with customers and suppliers.

"It's all getting rather messy," said Imtiaz Ali, a steel analyst at Metal Bulletin Research in London. "Maybe they are going to drag their heels so much that Mittal just walks away."

Shares of Arcelor rose 7 cents, to 35.45 euros in Paris. Mittal's European shares fell 57 cents to 32.08 euros in Amsterdam. Mittal fell $2.24, or 5.4 percent, to $39.25 in New York Stock Exchange trading.

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