London, Feb 22 (UNI) French Finance Minister Thierry Breton has introduced what is being called a new "poison pill" in the Senate, which he said, was aimed at raising the cost of hostile bids.
The Bill, moved while French President Jacques Chirac was in India, comes in the background of the Mittal Steel bid to take-over Luxembourg-based Arcelor, ranked second among steel firms after India-born L N Mittal's firm.
legal experts accused the French Government of resorting to an "atomic weapon" to foreign take-overs. They fear that France "was retreating into a protectionist fortress".
The European Commission in Brussels also charged France and Luxembourg with driving away vitally needed investment, and said both countries were caught in a time warp. But Finance Minister Breton has insisted that his proposal "consists of authorising companies under attack to issue stock purchase warrants specifically to defend themselves".
He insisted that what he proposed was a known and applied practice in countries like the United States "which nobody can accuse of hampering free enterprise".
Mr Breton iterated, "I certainly do not want to turn French companies into fortresses that never have to answer questions about their strategy." But there were not many takers for the Minister's justifications.
While Fabrice Remon from the leading Paris law firm Deminor described the proposal as a "veritable atomic weapon", Charlie McCreevy, the EU's single market commissioner, reacted to the moves as "being contrary to the spirit of the movement of capital." But he said it was too early to say whether France and Luxembourg were in breach of legal requirements to treat all EU bidders on equal footing.
Luxembourg has already rushed through a version of the EU takeover directive last month that appeared to enable Arcelor board to fend off Mittal Steel bid without approval of shareholders.
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