Arcelor ups dividends, pays cash to shareholders

BRUSSELS, Apr 4 (Reuters) Arcelor beefed up its defences against bigger rival Mittal Steel's takeover bid by further boosting payouts to shareholders and ringfencing assets that Mittal had planned to sell.

Arcelor, the world's second largest steelmaker, will increase its 2005 dividend to 1.85 euros per share from the 1.20 euros it previously announced and additionally offer shareholders 5 billlion euros (.0 billion) in cash.

Arcelor shares, which soared after Mittal unveiled its offer, were trading down 1.8 percent at 32.20 euros in a slightly weaker overall stock market. Mittal shares were off 2.0 percent at 31.63 euros.

Arcelor said the cash payment would take place between April 28 and the year following a withdrawal or failure of Mittal's hostile offer.

''Such payment, which does not include the dividend payment of 1.85 euros, and which terms shall be decided later by the board of directors, could take the form of a share buyback, an extraordinary dividend payment or a self tender offer,'' Arcelor said in a statement.

Arcelor will also transfer the shares it holds in Dofasco and the rights to Dofasco's technology to a Dutch foundation, a move designed to hinder a sale of the Canadian peer.

The foundation would have independent control over any decision to sell Dofasco.

Mittal has said that, if it succeeded in acquiring Arcelor in a deal valued at around 20 billion euros, it would sell Dofasco to ThyssenKrupp, the German company that Arcelor outbid.

Arcelor has consistently opposed the advances from Mittal, the global sector leader, and Chief Executive Guy Dolle has toured European capitals to meet investors and try to convince them that Arcelor should remain independent.

The parliament of Luxembourg, where Arcelor is based, has also tabled a potential hurdle in the form of a new takeover law that would force companies to wait 12 months before resubmitting a bid.

The Grand Duchy's highest administrative court, the Conseil d'Etat (state council), is due to give its opinion on Tuesday on this planned law that parliament is hoping to adopt on April 27.

Luxembourg's government has previously said it opposed the bid as a shareholder but would not try to block the offer.

Luxembourg owns 5.6 percent of Arcelor.

REUTERS CS RS1736