Arcelor lifts payout to fight off Mittal bid

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The Independent Online

Arcelor, the European steel company, unveiled a near-doubling in its dividend and presented strong financial results, as it continued to defend itself against a €19bn (£13bn) takeover offer from Mittal Steel.

The dividend increase, of 85 per cent, will mean a payout of €800m from Arcelor, which may make it a less attractive target, analysts said.

The company said fourth-quarter net profits rose 52 per cent to €1.25bn, while full-year profits jumped 66 per cent to €3.85bn. The figures compared with a sharp fall in annual profits reported the previous day by Mittal Steel, which is more dependent on the "spot" price of steel. Prices fell one-third last year, and Arcelor sells much more steel on longer-term contracts than its rival.

Arcelor's €1.20 dividend is equivalent to 20 per cent of the company's €3.85bn net profits. Last year, Arcelor had increased its annual dividend from 39 cents to 65 cents. The company claimed the latest rise was "normal", rather than a special payout to fend off a hostile bid. Guy Dollé, the chief executive, said the group was "committed to rewarding shareholders", and that the company had said its payout ratio could rise to 30 per cent at the time of the merger in 2002 that created Arcelor.

The Arcelor dividend gives its shares a yield of 4 per cent, compared with a dividend yield of less than 1 per cent at Mittal. M. Dollé said he would visit the company's shareholders next month, armed with the 2005 results. Earlier this week, Mittal claimed the Arcelor shareholders it had seen were "supportive" of its bid.

M. Dollé said: "I want to share with shareholders in the beginning of March that the future of Arcelor is bright and that it is in their interest to stay shareholders of Arcelor." He later added: "It will be a marathon and we are only at the first round."

M. Dollé reiterated the company's rejection of Mittal's mostly paper bid, made last month, but held out the possibility it would look more favourably at a sweeter offer. "If there's a new bid, we would look at it very carefully ... the only way of establishing the value of such an offer is if it were made in cash," he said.

He also drew back from the personal attacks on Mittal Steel's founder and chairman, Lakshmi Mittal, which many believe have characterised Arcelor's response to the bid. M. Dollé said: "I have a lot of respect for Mr Mittal."

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