Arcelor, the European steelmaker, recently launched its defence against Mittal Steel’s hostile â,¬18,6-billion takeover bid with a savage attack on its predator’s track record. It claims Mittal had destroyed shareholder value and jobs and has a shoddy record on corporate governance and safety.
Taking the gloves off in what executives promised would be a six-month battle, Guy Dollé, Arcelor chief executive, virtually ruled out any deal with Mittal now or in the future.
“It is too late. It cannot be done after an offer of this kind,” he said, criticising Lakshmi Mittal, the group’s chairperson and his family for failing to enter prior talks about a friendly merger of the world’s two biggest steelmakers.
“There was no discussion, there was no offer. There was a discussion of four minutes at the end of an aperitif,” he told reporters, referring to a dinner on January 13 this year at Mittal’s £35-million mansion in London.
He added: “A company worth up to â,¬40-billion in revenues deserves more than a four-minute conversation.” A friendly discussion, however, could have justified a merger on strategic and synergistic grounds.
Dollé reluctantly conceded that Luxembourg-based Arcelor’s supervisory board would have to consider an improved offer, but made plain he thought the â,¬28,21 a share on the table was “light years” from his group’s value.
Arcelor shares rose close to â,¬30 as analysts estimated Mittal could win with a bid of â,¬35 a share. He and his advisers refused to be drawn into a slanging match with Dollé, but highlighted the Arcelor chief’s admission that his group had prepared its defences well in advance.
Although he ruled out a “white knight” merger to fend off Mittal, Dollé inadvertently brought Japan’s Nippon Steel, the world’s third-largest steelmaker, into play. He is to hold “routine” talks with Nippon’s chairperson in Paris on Thursday but insisted no deal was in the offing.
Arcelor executives gave little or no indication of how they intended to persuade all shareholders, including the 81% in free float, to maintain the group’s independence. Meanwhile, sources ruled out a merger with Germany’s ThyssenKrupp or Anglo-Dutch company Corus under European Union competition rules.
Dollé repeatedly underlined that the bid battle was a clash between two business cultures. Pitching Arcelor as the embodiment of the European social model — in a country where Mittal Steel is pejoratively described as “the Indians” — he lauded it as “the Airbus of the steel industry”. At a crowded press conference, he disparagingly referred to Mittal as a crude maker of “commodity steels”, compared with Arcelor’s output, which was the equivalent of eau de cologne.
Dollé’s comments came hours after Mittal had launched his own charm offensive among European politicians, trying to persuade an unimpressed Thierry Breton, French Minister of Finance, that his group was truly European.
The multibillionaire, whose family owns 88% of the eponymous steel group, presented the merger as the creation of a European global champion and insisted he had no plans to axe Arcelor jobs or plants. Though he refused to raise his offer, he repeated his promise to keep the headquarters of the merged group in Luxembourg and honour social commitments. Breton has underlined that Arcelor is not on the list of protected strategic industries enshrined in a recent French decree, but stressed his fears about job prospects. Arcelor employs about 30 000 people in France.
Dollé, arguing that Mittal had failed to carry out necessary restructuring at low-cost producers he had bought, suggested that it would have to cut 40 000 jobs globally. “Why should employees have to suffer the consequences?” he asked. He claimed that while Arcelor had cut accidents by 75% in the past four years, those at Mittal’s one French plant were 10 times higher.