Mittal tries to ease misgivings about offer for Arcelor

PARIS (AP) _ Steel magnate Lakshmi Mittal launched a diplomatic offensive Monday to answer misgivings about his company's 18.6 billion euro ($22.5 billion) bid for rival steelmaker Arcelor SA, but

Monday, January 30th 2006, 9:50 am

By: News On 6

PARIS (AP) _ Steel magnate Lakshmi Mittal launched a diplomatic offensive Monday to answer misgivings about his company's 18.6 billion euro ($22.5 billion) bid for rival steelmaker Arcelor SA, but the head of the smaller company vowed to fight the hostile offer all the way.

The chairman and CEO of Mittal Steel Co., the world's largest steelmaker, met with French Finance Minister Thierry Breton before holding a news conference in Paris at which he sought to allay fears about the impact of the proposed tie-up on jobs and labor conditions.

``Mittal is committed to the social policies and commitments that Arcelor has implemented,'' Lakshmi Mittal said. ``Regarding employment, this merger is not about job reductions.''

Breton reiterated government concerns about the deal _ also brought up by Luxembourg and the Belgian region of Wallonia _ and said after the meeting that Mittal had ``no industrial plan on the table'' to explain how the merger would work.

But the French minister also said Mittal was free to act as he wanted _ a strong indication that the government does not plan to stand in the way of a deal.

Luxembourg-based Arcelor, created from a 2002 merger of French, Spanish, Luxembourg and Belgian steel interests, employs almost 30,000 workers in France.

Guy Dolle, Arcelor's chief executive, said Monday the company was well prepared to fend off the hostile bid.

``We are solid, we are in it for the long haul, and we've been preparing for this attack since last spring,'' Dolle said in an interview with Europe-1 radio.

Dolle said Arcelor had last year hired banks and public relations advisers to fight the anticipated bid.

Arcelor's board unanimously rejected Mittal's hostile takeover bid on Sunday, saying it would hurt the group, its shareholders, employees and customers.

Lakshmi Mittal dismissed talk of an improvement on the 28.21 euros per share that Rotterdam-based Mittal Steel is offering for Arcelor, a premium of 27 percent on Arcelor's closing price Thursday _ an ``all-time high,'' as Mittal pointed out Monday.

``We are not prepared to change our offer,'' he added.

Arcelor shares were changing hands at 29.66 euros ($36.10) in early afternoon Paris trading, as investors bet on a higher offer from Mittal or another bidder.

In an olive branch to its smaller rival, Mittal also said he was open for discussion about the proposed takeover, which he said he preferred to see as a ``merger of equals.''

The new entity could be based in Luxembourg, he said, adding: ``There's ample room for Arcelor's management in this project.''

But the Indian-born steel baron sidestepped questions about whether the deal could go ahead against opposition from the French government.

``I do not see the reason why the government will not accept this,'' he said.

Mittal is scheduled to meet Tuesday with the prime minister of Luxembourg, where Arcelor employs 6,000 workers. Luxembourg is also the largest shareholder in Arcelor, with a 5.6 percent stake.

He will also meet Belgian authorities and the EU Competition Commissioner Neelie Kroes later in the week, he said _ although he stressed that he does not anticipate antitrust difficulties for the deal on either side of the Atlantic.

The takeover bid, announced Friday, would create the world's first 100 million ton-plus steel producer, with a market capitalization of $40 billion (32.7 billion euros).