Fate of Canadian steelmaker to be decided soon

November 02, 2006|By Bloomberg News

Mittal Steel Co., the world's largest steel producer, said the trust holding Canadian steelmaker Dofasco Inc. will likely make a decision by the end of this month on whether to sell the business to ThyssenKrupp AG.

The Netherlands trust, created by Arcelor SA in April to try to thwart Mittal's hostile takeover bid, will likely decide whether to allow the sale by Nov. 28 to comply with an antitrust agreement with the U.S. Justice Department, Carlos Hernandez, Mittal's U.S. legal counsel, said Oct. 30.

Mittal must sell either Dofasco or one of two tin mills in Weirton, W.Va., or Sparrows Point, after the Justice Department said in May the merger between Mittal and Arcelor would lead to less competition in tin mill products in the Eastern United States. Mittal is required by the department to use its "best efforts" to try to sell Dofasco.

"We think we've done everything possible to make the sale of Dofasco," Hernandez said. "We are now awaiting on the trustees to say what they are going to do. We are fairly confident it will be before the 28th."

Luxembourg-based Arcelor agreed to buy Dofasco for $4.95 billion in January, giving it 10 percent of the North American automotive steel market. Rotterdam-based Mittal in January agreed to sell Dofasco to ThyssenKrupp if its takeover of Arcelor was successful.

The trustees are Allan Tuttle, a lawyer at Washington-based Patton Boggs LLP, former Arcelor board member Robert Hudry and Frederic van Bladel, who headed legal affairs at Arcelor.

"It still looks very difficult for them to sell Dofasco," Credit Suisse analyst Michael Shillaker wrote in an Oct. 18 note. "The ultimate legal decision is that of the Dutch stichting [trust], and why will the stichting agree as a value proposition to sell Dofasco at a lower price than Arcelor paid for it?"

No legal impediment prevents Arcelor Mittal from selling Dofasco to ThyssenKrupp if the directors of the trust agree, Hernandez said. ThyssenKrupp AG, Germany's largest steelmaker, expects to acquire Canadian steelmaker Dofasco from Arcelor Mittal "soon," Karl-Ulrich Koehler, the president of ThyssenKrupp's steel unit, said on Sept. 29.

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