Mittal boosts Arcelor bid

34% increase gains investor support

May 20, 2006|By BLOOMBERG NEWS

Mittal Steel Co. increased a hostile bid for Arcelor SA by 34 percent to 25.8 billion euros ($32.9 billion), gaining investor support for the steel industry's biggest takeover.

"We are definitely seduced by this new offer," said Francois de Rambuteau, who manages $2.3 billion at Cholet-Dupont Gestion SA in Paris, including Arcelor shares. "It was clear to everybody that the earlier offer was insufficient. All depends now on the performance of Mittal shares."

Mittal, based in Rotterdam, Netherlands, and owner of the plant at Sparrows Point in Baltimore County, raised the cash-and-stock proposal to 37.74 euros for each Arcelor share, 18 percent higher than Arcelor's closing price yesterday, according to an e-mailed statement.

Mittal will pay a maximum of 7.6 billion euros in cash and issue no more than 684.5 million shares.

The proposal may bring an end to almost four months of antagonism between Mittal and Arcelor. After winning over investors, Mittal still will have to gain support from the governments of Luxembourg, France, Spain and Belgium, which have stood behind Arcelor.

Christopher Barzal, a spokesman for Belgium's Walloon government, said the region hasn't decided whether to sell its 2.4 percent stake in Arcelor.

"We're following developments attentively," he said.

Guy Schuller, a spokesman for the Luxembourg government, which holds 5.6 percent, couldn't immediately be reached for comment.

By buying Arcelor, chief executive Lakshmi N. Mittal would control about 10 percent of the global steel industry, more than three times as much as his closest rival.

The billionaire, who built his company through three of the world's 10 largest steel takeovers since 1990, wants to buy competitors partly to bolster bargaining power with suppliers and customers after an increase in raw material costs.

Arcelor, the world's second-biggest steelmaker, has resisted the takeover through offering a share buyback and raising its dividend. The new offer is 70 percent above Arcelor's closing price as of Jan. 26, the day before Mittal first announced its unsolicited bid.

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