The Telegraph
Since 1st March, 1999
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Mittal bid suffers setback

Luxembourg, March 22 (Agencies): A committee in Luxembourg's Parliament approved on Wednesday an amendment to the country's takeover laws that could hurt Mittal Steel's '12.67-billion bid to buy steelmaker Arcelor.

The finance committee backed a change to the laws, which would prevent a company from re-submitting a takeover bid for a listed company in Luxembourg for a period of 12 months, Laurent Mosar, the head of the committee, told reporters.

Earlier, a source close to the deal said the amendment could threaten Mittal Steel’s bid if, for example, Luxembourg-based Arcelor issued more shares, a move that would require Mittal Steel to re-submit its bid.

Mittal Steel chief executive and founder Lakshmi Mittal had previously said he was concerned that Arcelor and its supporters in Luxembourg might block his unsolicited bid to merge the world's two biggest steelmakers.

The Luxembourg government, the biggest stakeholder in Arcelor with 5.6 per cent, has stated its opposition to the bid and France and Spain, which are also home to Arcelor plants, are against it too.

The amendments approved by the Luxembourg parliamentary committee must now be sent to the country's highest administrative court and then to the floor of Parliament.

Mosar said he expected the changes would clear Parliament in the first week of April.

He said the law could come into force in May and any takeover bids running at that time would have to comply with it.

Another source close to the deal said he expected Luxembourg's financial regulators to clear the bid in the third week of April.

Shares of Arcelor were down 0.4 per cent at 31.60 euros in afternoon trade, narrowing some of their earlier losses. Mittal Steel shares were down 2.7 per cent at 29.22 euros.

Both shares have risen strongly since Mittal announced the surprise bid in January.

Last Sunday in a radio interview, Mittal had argued the case for consolidation of the steel industry and for the merger of Mittal Steel ' in which he and his family control 88 per cent of the shares ' and Arcelor.

The merger, if agreed, would create a global powerhouse with a market value of '22.4 billion, revenues of almost '40 billion and a workforce of 3,20,000 people.

It would be the world’s first steel giant capable of producing more than 100 million tonnes a year, although Mittal said he had set his sights on a production of 200 to 250 million tonnes a year.

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