Mittal charm offensive fails to halt flak over £13bn bid for Arcelor

The steel magnate Lakshmi Mittal was battling yesterday to overcome growing political opposition in Europe to his bid for Arcelor as the board of the Luxembourg-based steelmaker launched a ferocious counter-attack against the hostile £13bn offer.

Mr Mittal, who stunned the steel industry last week with his unsolicited bid for the world's second biggest steel producer, had what insiders described as a "full and frank" meeting in Paris with Thierry Breton, the French Finance minister.

His whirlwind tour of Europe will take him to Luxembourg today for a meeting with the Prime Minister Jean-Claude Junker, followed by talks on Wednesday with Belgium's Prime Minister, Guy Verhofstadt, and the European competition commissioner Nellie Kroes. On Thursday he is due to meet Spain's Prime Minister, Jose Luis Rodriguez Zapatero, whose Economy minister echoed French concerns about the proposed takeover.

M. Breton said he had complained to Mr Mittal during the one-hour meeting about the lack of advance warning of the bid and spoke of his "profound concern" at its potential effect on Arcelor's 30,000 employees in France, which accounts for one-third of the group's EU operations.

Mr Mittal later told journalists in Paris the $40bn (£23bn) merger of Arcelor and his family-controlled Mittal Steel, the world's biggest producer, would not mean any job losses or plant closures. He also sought to emphasis Mittal Steel's European credentials and the fact that Arcelor shared its view that the worldwide steel industry needed to consolidate.

But Arcelor brushed this aside, describing the two companies as "diametrically opposed" and pouring scorn on Mittal's safety record, productivity, investment levels, employment policies and standards of corporate governance. During a presentation of what amounted to a full-blown defence document, Guy Dollé, Arcelor's chief executive, described the Mittal bid as "hostile, opaque, opportunistic, high-risk, destructive, prejudicial, threatening and unbalanced". M. Dollé claimed that Arcelor was 30 per cent more profitable than Mittal Steel.

He also claimed that, whereas Arcelor's accident rate had fallen by 75 per cent in the past four years, the rate at a former Arcelor plant in France now owned by Mittal had soared 10-fold.

Mittal and its advisers, Goldman Sachs and HSBC, said they were not going to get into a point-by-point rebuttal. But a spokeswoman said: "It is odd for Arcelor to claim the bid came without warning and then come out with a fully fledged defence document, which it said it had been working on for eight months."

When Mittal Steel's cash and shares offer was launched on Friday, it valued Arcelor at €28.21 a share (£19.30). The offer last night stood at €30.80, making it worth €19.7bn. Analysts doubt Mittal will succeed at the current offer price, even if it overcomes political hostility, and will need to raise the bid to €35.

Should the bid succeed, the group would have 10 per cent of the world steel market, €69bn in annual sales and 320,000 employees. The Mittal family would reduce their share of voting rights from 97 to 64 per cent and would retain just over 50 per cent of the economic interest.