The Telegraph
Since 1st March, 1999
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Defence drill to thwart Mittal

Feb. 16 (Agencies): Arcelor ramped up its defence against a $22-billion takeover bid by global leader Mittal Steel on Thursday, nearly doubling its dividend after a rise in 2005 profit and promising investors more to come.

At the same time, French finance minister Thierry Breton re-opened the political front against the unsolicited bid and dubbed Rotterdam-based Mittal Steel’s corporate governance system “inferior” to that of Arcelor.

Lending his support to opponents of the takeover bid, French President Jacques Chirac has said it was not in the best interest of the company and that the issue had nothing to do with France and India.

France also proposed legislation to beef up anti-takeover defences by the issue of share warrants.

The Luxembourg government is also mulling a legal move to frustrate or even thwart Lakshmi Mittal’s hostile bid for Arcelor. Key ministers and lawyers combed through clauses in the EU takeover directive that could be used to force Mittal Steel to offer cash instead of stock to Arcelor shareholders.

Announcing the results, Arcelor chief executive Guy Dolle pledged he would see shareholders in March with “figures in hand” showing why they should remain with Arcelor.

“I want to share with shareholders in the beginning of March that the future of Arcelor is bright and that it is in their interest to stay shareholders of Arcelor,” Dolle said.

“It will be a marathon and we are only at the first round,” he later told reporters about the takeover battle.

Dolle said the current Mittal bid “strongly undervalued” Arcelor and the offer should be made in cash only.

Arcelor’s 2005 core profit, which is its consolidated gross operating result, rose to 5.64 billion euros ($6.72 billion), in line with analyst forecasts, from 4.34 billion euros in 2004.

Mittal Steel, however, played down Arcelor’s figures. “There is nothing in these results that causes us to alter our strategic rational nor the financial terms of our offer,” a spokesman said, adding Mittal was committed to paying out more in dividends than Arcelor.

Arcelor raised its dividend to 1.20 euros per share, from 65 cents, for a payout ratio of 20 per cent.

Dolle said the future annual payout ratio would be 25-30 per cent on an average, which held a promise of further dividend increases.

The Arcelor stock was up 0.2 per cent at 29.84 euros on Luxembourg stock exchange.

Mittal’s offer values Arcelor at about 18.6 billion euros or 29.1 euros per share. Analysts say the stock’s higher price on the market reflects investors’ hopes that the bid may be raised.

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