France, Luxembourg back Arcelor
France and Luxembourg have pledged to defend steel maker Arcelor against a $24bn bid by Mittal Steel, but the billionaire behind the deal vowed he would not be intimidated.
“This hostile bid by Mittal Steel calls for a reaction that is at least as hostile,” Jean-Claude Juncker, Luxembourg’s prime minister, said after meeting Jacques Chirac, the French president, on Wednesday.
Politicians in both countries have voiced concerns that a takeover could threaten tens of thousands of European jobs.
Indian-born magnate Lakshmi Mittal refused to be cowed.
“I’m not really scared about politicians’ reactions. I’m sad about it,” he said in Brussels, part of a tour of Europe to drum up support for his plan to create a steel-making colossus.
Mittal, who controls what is already the world’s biggest steel maker, said institutional investors backed the deal.
Shareholders happy
“Shareholders whom we have met generally are very, very satisfied, very positive about the whole deal and at the end of the day shareholders will decide … we are confident we will
succeed,” Mittal said.
Juncker was also in Brussels in a bid to persuade Guy Verhofstadt, the Dutch prime minister, to join the opposition camp.
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Villepin has urged industrialists |
But Verhofstadt was reluctant to be drawn. “We have agreed
to name investment bankers to help us assess the deal,” he said after the meeting.
The French-speaking Walloon region in Belgium, the fourth biggest owner of shares in Arcelor with a stake of 2.3%, has also held off from joining the opposition.
The rhetoric in Europe’s five-day-old steel war has risen to
a new pitch as two of the three European nations that gave birth to Arcelor four years ago – France, Luxembourg and Spain – struggled to find concrete ways of blocking the bid.
Political and financial analysts say the French government has little leeway beyond the power to create significant political nuisance for Mittal, whose company is Dutch.
Common response
Juncker said he and Villepin had a common response to Mittal
without saying what it was. He meets Jose Manuel Barroso, the European Commission president, on Thursday when Mittal is due in Spain where the government has been cautious on the deal.
Arcelor CEO Guy Dolle accused Mittal of trying to get its hands on Arcelor’s cash flow of more than three billion euros a year
to rebuild old mills in East Europe and the US.
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Arcelor is Europe’s biggest |
A Mittal spokesman immediately responded that the company
had “a very strong cash flow which has supported a strong
investment programme over a number of years.
Mittal also met Neelie Kroes, the European Competition commissioner, on Wednesday.
A deal between Mittal Steel and Arcelor would give them a global market share of about 10%.
The takeover bid, announced on Friday, would create a new company with almost 350,000 employees at 61 plants in 27 countries, but with few areas of overlap that could cause anti-trust problems.
Mittal Steel is the biggest US supplier of high-grade, high-margin auto steel; Arcelor occupies the same position in Europe.