Ruling blocks bid for Dofasco

Dutch court denies ThyssenKrupp effort

January 24, 2007|By Allison Connolly | Allison Connolly,Sun reporter

A Dutch court yesterday tossed out a bid by ThyssenKrupp AG to force Arcelor Mittal to honor a pledge to sell Canadian steelmaker Dofasco, but it's not clear whether Mittal will sell either its steel plant in Sparrows Point or Weirton, W.Va.

The Justice Department gave Mittal until Jan. 28 to sell Dofasco Inc. to ensure it would not have a monopoly on tin production in the United States after its $33 billion merger with Luxembourg-based Arcelor SA.

If Mittal is unable to sell Dofasco, a manufacturer of high-grade sheet metal for the North American auto industry, the Justice Department has said Mittal must sell either its Sparrows Point or Weirton facility.

Arcelor placed the profitable Dofasco in a Dutch trust early last year in an effort to fend off Mittal's hostile takeover bid. While Arcelor finally agreed to merge with Mittal, creating the world's largest steelmaker with annual production topping 110 million tons, it has no control over the trust.

The three trustees have already rejected a proposal by Mittal to sell Dofasco to Germany's ThyssenKrupp for $4.6 billion, less than the $4.86 billion that Arcelor paid for it.

Mittal said this month that it would not sue the trust to release Dofasco.

Rotterdam Court Judge F. van den Emster said yesterday that Mittal couldn't be "asked to do more than it has done so far" to complete the sale of Dofasco.

Shortly after yesterday's decision, ThyssenKrupp said in a statement that its chances of getting Dofasco were "very remote," and that it would "swiftly pursue" plans to build a steel mill in the United States. The company said previously that if it is unable to buy Dofasco, it would build a plant in Alabama, Arkansas or Louisiana at a cost of nearly $3 billion.

In response to yesterday's ruling, Mittal said that it "cannot be expected to do more than it has already done in order to seek dissolution of the [trust]."

It appears Mittal has given up trying to sell Dofasco. Last week, Mittal confirmed it was in negotiations with a Chicago-based steel distributor, Esmark Inc., to sell all or parts of Weirton, a large producer of tin plate. The two parties have signed a nonbinding memorandum of understanding, but any sale hinges on approval from the Justice Department. Late last year, Esmark gained control over nearby Wheeling-Pittsburgh Steel Corp. and promised cash for Weirton if Mittal put it up for sale.

However, Justice has the final say about which plant is sold and to whom.

Gina Talamona, a spokeswoman for the Justice Department, said yesterday in an e-mail response that "the matter is still pending."

Mittal stock closed up $1.48 yesterday at $43.59 a share.

allison.connolly@baltsun.com

Bloomberg News contributed to this article.

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