POSCO denies report Arcelor Mittal eyeing bid

SEOUL, Mar 16 (Reuters) POSCO Co. Ltd. , the world's third-largest steel maker, denied a newspaper report on Friday that a senior Arcelor Mittal executive expressed interest in POSCO's M&A strategy when he visited South Korea last month.

The Korea Economic Daily said Arcelor Mittal , the world's biggest steel maker, could be interested in making a hostile takeover of South Korean steel maker POSCO Co. Ltd.

Roland Junck, a member of Arcelor Mittal's management board, met POSCO Chief Executive Lee Ku-taek last month, but M&A issues were not discussed, the South Korean firm said at the time.

''The Arcelor Mittal executive and POSCO CEO talked about the consolidation in the global steel industry at that time but the executive did not mention POSCO's M&A strategy,'' a POSCO official told Reuters by telephone.

POSCO has a fragmented, foreign-dominated share ownership and is seen by some as a prime target for a takeover in the wave of global consolidation that began last year when Mittal bought European steelmeaker Arcelor to create Arcelor Mittal.

Citing an unnamed POSCO executive, the local paper reported that Arcelor Mittal's interest in POSCO's M&A strategy means the firm has put POSCO on its M&A target list.

''The top management is pondering how to react to a potential hostile takeover bid,'' the paper quoted the source as saying.

The official also said the company was seeking to increase the number of investors supportive to POSCO's existing strategy to ensure stable management.

POSCO has been focusing on alliances with Asian steel makers through cross-shareholding to head off potential hostile takeover bids.

Nippon Steel has recently finished increasing its holdings in POSCO by two percentage points to five percent.

Analysts still say Arcelor Mittal may be interested in POSCO as a prime target for a takeover.

''In terms of output, cashflow, size of debt, cheaper share prices, POSCO may be very attractive to Mittal,'' said Park Sang-kyu, analyst at Hyundai Securities.

Shares in POSCO fell 2.32 percent to 379,500 won by 0256 GMT, underperforming a 0.44 percent fall in the broader market <.ks11>.

Traders said investors were taking money off the table after the shares' surge to a fresh record high on Thursday fuelled by a series of steel price hikes this year.

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