The board of Arcelor, the Luxembourg-based steel producer, unanimously rejected the hostile €18.6bn (£12.8bn) bid from the Indian-born steel magnate Lakshmi Mittal last night, setting the scene for a bitter struggle for control of the company.
After an emergency board meeting in Luxembourg, Arcelor, the world's second biggest steel maker, came out with a defiant statement, attacking the offer from Mittal Steel, the world's biggest producer, on price, industrial logic and deliverability.
A statement from the company said the board had "swiftly concluded that Arcelor and Mittal Steel do not share the same strategic vision, business model and values". It went on voice concern about the "severe consequences" that Mittal's proposals could have on the group, its shareholders, employees and customers.
Ahead of the meeting, Arcelor board said there was no doubt that the takeover bid would be resisted while the Luxembourg government, the biggest single shareholder in Arcelor with a 5.6 per cent stake, also voiced its opposition.
An Arcelor spokesman questioned the ability of Mittal Steel to achieve the $1bn (£565m) in cost savings it claims the merger will produce unless there were plant closures and job losses, which Mr Mittal has insisted will not be the case.
The corporate governance arrangements of the combined company, should Mittal Steel's shares and cash offer be successful, were also questioned. The Mittal family will control 64 per cent of the voting rights in the enlarged group.
"Mittal needs Arcelor but Arcelor doesn't need Mittal," said a spokesman for the Luxembourg company. He argued that whereas Arcelor had spent the last four years diversifying into the value added end of the steel market, Mittal was a commodity steel maker, producing in countries where there was a high degree of political and economic risk such as Romania, Ukraine and Khazakstan.
About 80 per cent of Arcelor's operations and 90,000-strong workforce are within the European Union. France accounts for about a third of its activities within the UK.
There were conflicting reports as to whether the French political establishment would rally against the Mittal bid. But in Luxembourg there were no doubts. After a meeting of the Luxembourg cabinet, a spokesman said: "Ministers expressed concern over the apparent hostile nature of the Mittal bid ... they also pointed to the lack of precise details in the bid on the future role of the Luxembourg state in the company and the maintenance of the strong guarantees given by Arcelor in terms of employment and investment in Luxembourg."Reuse content