Lakshmi Mittal, the Indian steel magnate, dramatically raised the stakes in the battle for control of the rival steel maker Arcelor yesterday by lifting his bid to €26bn (£18bn), increasing the cash element and offering to relinquish control over the merged company.
Arcelor, which has so far refused even to sit down and talk with Mittal Steel during the four months the takeover tussle has lasted, did not respond. The Luxembourg-based company will hold a board meeting tomorrow to consider the increased offer.
The new bid is worth €37.74 a share and represents a 34 per cent increase on Mittal's first offer in January and an 18 per cent premium to Arcelor's closing share price on Thursday.
At a hastily convened press conference in central London, Mr Mittal described the fresh offer as "compelling" but refused to rule out making a still higher offer.
The Arcelor camp was remaining tight-lipped before tomorrow's board meeting. One theory was that the company would reject the offer but at least agree to sit down and talk with Mittal.
The initial offer was financed three-quarters in Mittal shares and one-quarter in cash but the revised bid has a bigger cash element worth €7.6bn, or 29 per cent of the proposed offer price.
Mr Mittal has also agreed to surrender control over the merged company, by agreeing to the principle of "one share, one vote", a move which will reduce his family's stake to 45 per cent.
There will also be a majority of independent directors on the 14-strong board of the combined business.
Mr Mittal denied the decision to increase the bid was an act of "desperation", arguing the growth potential of the combined group and the re-rating the steel industry had undergone since the start of the year justified a higher price.
The combined company would become by far the world's biggest steel maker, with 10 per cent of the global market and production of 115 million tonnes a year.
Mr Mittal said he had telephoned his opposite number at Arcelor, Joseph Kinsch, yesterday morning to inform him of the increased offer and was listened to "very patiently", although the response was non-committal. "I encouraged him to start a dialogue with us. The sooner we start, the better it is," said Mr Mittal, adding that shareholders had reacted to the increased offer positively.
Jutta Rosenbaum, an analyst at Commerzbank, said Arcelor should accept the increased offer, as it took into consideration the concerns raised by the company, some of its shareholders and the Luxembourg government. "It will therefore be difficult for the Arcelor management to continue to reject talks and the offer altogether."
Arcelor has fought the bid tooth and nail since January, enlisting the support of governments across Europe.
It has adopted a "poison pill" defence involving the ring-fencing of its North American assets which Mittal plans to sell off. Arcelor is also proceeding with a €5bn return of cash to shareholders.Reuse content