• search

Arcelor says to fight off Mittal, cling to Dofasco

Written by: Staff

Toronto, Feb 25: European steelmaker Arcelor will succeed in fighting off Mittal Steel's -billion hostile takeover bid and will be able to hold on to its recent acquisition of Canada's Dofasco Inc., Arcelor's deputy chief executive has said.

If Mittal's play for Arcelor is successful, Mittal would flip Dofasco, Canada's No. 2 steelmaker, to Germany's ThyssenKrupp for a discounted price. Arcelor and ThyssenKrupp had waged a pricey bidding war for Dofasco that Luxembourg-based Arcelor finally won in January with a C.6 billion (.6 billion) offer.

Arcelor is now pulling out all the stops to thwart the Mittal offer and recently sent shareholders a letter to urge them not to cave into a bid it says underestimates the value of the company.

"As the proposal is today, Mittal Steel in our opinion has no chance to succeed," Michael Wurth, Arcelor's deputy CEO, told Reuters in an interview yesterday (Feb 24, 2006). "There is very little trading volume presently and the feeling we have from our shareholders is that they do not want to sell their shares." Remarking that it is not fair to play with a company like a football, Wurth said Arcelor wants to keep Dofasco because of the 10 percent share of the North American auto steel market that Dofasco has built through contracts with the top five automakers.

Adding to the lure of Dofasco is that it owns an iron mine, Quebec Cartier Mining, at a time of rising iron prices.

Arcelor completed its takeover of Dofasco earlier this week after trumping ThyssenKrupp's C a share offer with a C-a-share bid.

Shortly after ThyssenKrupp exited the bidding, Mittal, the world's biggest steelmaker, unveiled its offer for Arcelor, which includes a side deal to sell Dofasco to ThyssenKrupp for a share.

Relying on Dofasco, Wurth said Arcelor could make further acquisitions in other parts of the world, on Friday it said it would buy a 38 percent stake in China's Laiwu Steel Corp. for 8 million, but that it will rely on Hamilton, Ontario-based Dofasco for growth in the North American steel market.

"We primarily want to grow strong with Dofasco," he said.

"We thought that Dofasco was by far the best company because of its high quality assets, strong growth prospects and the highest quality products. According to both companies, there may be some fine-tuning of certain aspects of the business, but there are no plans to sell any parts of Dofasco."

"This is an acquisition ultimately where there is no overlap and Arcelor very clearly indicated that they're looking at Dofasco as their platform platform for growth," Don Pether, Dofasco's chief executive told Reuters.

"There's a tremendous amount of areas that we're looking at that ultimately see growth potential and the opportunity for cost reductions."

Coming on to the auto sector fine, in the midst of countless headlines referring to problems in the automotive industry and foreign automakers eating away at market share, Dofasco does not expect to have to make any adjustments to keep its sales to automakers strong.

"The auto sector in North America is the largest in the world and if you take a look the number of vehicles being sold are at extremely good levels and we see that continuing," Pether said.

Arcelor has acquired about 88 percent of Dofasco's shares and has given remaining Dofasco shareholders until March 7 to tender their shares.

Once that is complete, Dofasco's shares will eventually be removed from the Toronto Stock Exchange S&P/TSX composite index, where they have jumped 61 percent to C.91 since the bidding war started in November.


For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more