ThyssenKrupp Matches Bid for Dofasco

FRANKFURT, Germany (AP) _ German steel maker ThyssenKrupp AG said Tuesday it raised its bid for Canada's Dofasco Inc., matching the offer made by Arcelor SA as the two compete to acquire the steel

Tuesday, December 27th 2005, 10:39 am

By: News On 6

FRANKFURT, Germany (AP) _ German steel maker ThyssenKrupp AG said Tuesday it raised its bid for Canada's Dofasco Inc., matching the offer made by Arcelor SA as the two compete to acquire the steel firm.

The offer values the Canadian company at 4.88 billion Canadian dollars (euro3.5 billion; US$4.2 billion).

On Monday, Arcelor SA, the world's second largest steelmaker by output behind Netherlands and New York-listed Mittal Steel Co., formally offered to pay 63 Canadian dollars (euro45.8; US$54.4) a share after the bid of 56 dollars it made last year was trumped by ThyssenKrupp's offer of 61.50 dollars.

``ThyssenKrupp's decision to increase its offer reflects the quality and strategic value of Dofasco,'' said ThyssenKrupp Chief Executive Ekkehard Schulz. ``We will continue to pursue the acquisition of Dofasco, recognizing the significant growth opportunities for our combined North American steel operations.''

Shares of ThyssenKrupp were up 2.8 percent to euro18.44 (US$21.85) in Frankfurt trading on the news.

``Thyssen is showing Arcelor its teeth and makes clear it won't give up on Dofasco that easily,'' Landesbank Rheinland-Pfalz analyst Thomas Hofmann said. ``However, whether this strategy to move in small steps is the most clever strategy remains to be seen,'' he added.

Though the offer is at parity with Arcelor, analysts said the German company appeared to have the upper hand because the Canadian company is recommending that its shareholders endorse ThyssenKrupp and not Arcelor _ a position repeated Tuesday.

``The special committee of Dofasco's board of directors is continuing to support the ThyssenKrupp offer in its recommendation to Dofasco shareholders primarily on the basis that it is less conditional than the Arcelor offer, while offering the same cash price to shareholders,'' said Dofasco Chairman Brian MacNeill.

Arcelor had no immediate comment.

Luxembourg-based Arcelor, which has suffered several setbacks in its expansion attempts in 2005, has said it sees Dofasco as the basis for further expansion in North America. It made the hostile offer after failing to reach terms with Dofasco's management in several friendly approaches this year.

Acquiring Dofasco would give Arcelor its first major foothold in North America, and the takeover would boost its global market share from 14-15 percent to between 17 and 18 percent, he said.

Almost two-thirds of Arcelor's sales are to high-end European automotive and packaging companies. Until now, the company has missed out on the key North American market, which sells one-third of the world's cars.

Hamilton, Ontario-based Dofasco has facilities in Canada, the U.S. and Mexico. It makes various steel products, but mainly sells to U.S. automakers, producing around 5.5 million tons a year of flat steel usually used for cars. However, U.S. automakers Ford Motor Co. and General Motors Corp. posted huge third-quarter losses and are scaling back production.

With revenue of euro30 billion last year, Arcelor is the world's second biggest steel company by sales but is facing tougher conditions in its core European markets.