Mittal Steel launched a hostile takeover offer for rival Arcelor today, giving Arcelor's shareholders the chance to determine its future after a months-long war of words between the steelmakers.
Mittal, the world's largest steel group by volume of production, is offering almost €19 billion of cash and its own shares for Arcelor, the world's biggest by sales revenue, after receiving regulatory clearance for the bid from watchdogs in Belgium, France and Luxembourg this week.
The offer is open until June 29th. Regulators have said the result would be announced on July 13th.
Mittal has said it might be willing to raise its bid marginally, although today's news release made no mention of improved terms. The current offer is about 8 per cent below the price of Arcelor's shares in the market.
"The offer will not make it in its current form," said an analyst who declined to be named, adding that Arcelor stock was being supported by the company's planned share buyback.
If successful, Rotterdam-based Mittal, controlled by billionaire Chief Executive Lakshmi Mittal, will create a global giant worth around $40 billion, employing 320,000 people and producing around 10 percent of the world's steel.
Arcelor has urged shareholders to preserve the company's independence and has already promised an increased 2005 dividend and a €5 billion share buyback at a price above the market level, in a bid to win their support.
Arcelor has also ring-fenced its Canadian unit Dofasco, which it bought earlier this year, inside a Dutch foundation. The move would prevent any predator from selling it.
Mittal had a deal to sell the unit to Thyssenkrupp, which lost a stock market battle for the unit last year to Arcelor.
Mittal has spearheaded the drive to consolidate the global steel industry, where the top 10 players have a combined global market share of only about 30 per cent.
Arcelor was created from the 2002 merger of Luxembourg, French and Spanish steel groups.
Governments of those countries originally rejected Mittal's plan when it was announced in January, although have since softened their opposition.