Arcelor, Mittal to start new round in bid battle

SHANGHAI/CHARLEROI, Belgium, Feb 23 (Reuters) Arcelor, the world's second-biggest steelmaker, said on Thursday it will present a strategic plan to investors next week expected to shore up its defence against Mittal's billion hostile bid.

Guy Dolle, chief executive at Luxembourg-based Arcelor, said he would present a 2006-2010 strategic plan to investors as part of a campaign to persuade them to reject an unsolicited offer from bigger rival Mittal.

Meanwhile, Lakshmi Mittal, the Indian-born billionaire and founder of Mittal Steel, is to meet French Finance Minister Thierry Breton on Monday to try to convince one of his most vocal critics of the merits of his 18.6-billion-euro (.25 billion) bid.

''We will start meeting our shareholders next week and we will present our plan for 2006-2010,'' Dolle told reporters at the opening ceremony of a meltshop in the southern Belgian city of Charleroi.

Dolle did not disclose the plan's details not did he say whether they would include any defensive measures that he has spoken of using to try to fend off Mittal Steel's advances.

He expressed confidence in one shareholder, French power giant Electricite de France, which owns about 1.5 percent of Arcelor.

''I have no doubt that we will manage to convince (EDF) that it is in their interest to stay as shareholders of Arcelor,'' he said.

Arcelor was trading up 0.39 percent at 30.50 euros in Paris, while Mittal was 0.33 percent lower at 27.60 euros in Amsterdam.

CHINA AND TURKEY In a sign of Arcelor's determination to expand despite the threat of being taken over, it expressed an interest in growing in China and possibly pursuing a partnership in Turkey.

In an interview with Reuters in Shanghai, Arcelor's senior executive vice-president Roland Junck said the company wanted to develop more projects in China after a deal to take a minority stake in Laiwu Steel, to be signed on Friday.

In Charleroi, Dolle expressed interest in pursuing a possible partnership with Turkish peer Erdemir.

Arcelor wanted to buy Erdemir jointly with the Oyak Group, but the pension fund of the Turkish army went ahead and bought a stake for itself to avoid procedural delays.

Mittal will step up its charm offensive next week by elaborating on its plans to buy Arcelor and turn the two companies into a European steel giant controlling 10 percent of the world market.

CALMING DOWN Despite assurances from Mittal that an acquisition would not lead to job losses, politicians in France and Luxembourg have raised the spectre of potential job cuts in voicing their opposition to the bid.

With 26,600 employees in France, Arcelor is an important company for the country and the government is conscious of the votes of steel workers ahead of the 2007 presidential elections.

In Luxembourg, it is the largest private employer.

However, unlike Luxembourg, France no longer has a stake in Arcelor after it was formed in 2002 out of the merger of France's Usinor, Luxembourg's Arbed and Spain's Aceralia.

Arcelor's Dolle said governments should tone down their public statements regarding the bid.

''It is time that governments calm down,'' he said.

In Tokyo, Nippon Steel President Akio Mimura said it was too soon to decide whether to terminate a technology deal with Arcelor in case of a change of ownership.

''We'll decide whether and how we execute the clause after carefully studying the benefits to our company,'' he told a news conference.

Nippon, the world's third biggest, has provided Arcelor with technology for high-grade sheet steel used in automobiles.

Arcelor sells the sheet steel to Japanese car makers in Europe.

The market is interested in Nippon Steel's eventual decision because Arcelor's high-margin car-steel business is one of its great attractions for Mittal.

''I'm not sure if Mittal would walk away if Nippon Steel executes the clause, but it's less likely Mittal will sweeten the offer price for Arcelor (if that happens),'' said a London institutional investor.

Mittal is offering four new shares and 35.25 euros for every five Arcelor shares, valuing the stock at 29.19 euros per share, below the share price.

REUTERS MP HS2148