Toronto, Feb 25 (Reuters): European steelmaker Arcelor will succeed in fighting off Mittal Steel’s $23-billion hostile takeover bid and will be able to hold on to its recent acquisition of Canada’s Dofasco Inc, Arcelor’s deputy chief executive said on Friday.
If Mittal’s play for Arcelor is successful, it would flip Dofasco, Canada’s No. 2 steelmaker, to Germany’s ThyssenKrupp for a discounted price.
Arcelor and ThyssenKrupp had waged a pricey bidding war for Dofasco that the Luxembourg-based Arcelor finally won in January with a C$5.6 billion ($4.6 billion) offer.
Arcelor is now pulling out all the stops to thwart the Mittal offer and recently sent shareholders a letter to urge them not to cave into a bid, which, it says underestimates the value of the company.
“As the proposal is today, Mittal Steel, in our opinion, has no chance to succeed,” Michael Wurth, Arcelor’s deputy CEO, told Reuters. “There is very little trading volume presently, and the feeling we have from our shareholders is that they do not want to sell their shares.”
Remarking that it is not fair to “play with a company like a football,” Wurth said Arcelor wants to keep Dofasco because of the 10 per cent share of the North American auto steel market that Dofasco has built through contracts with the top five automakers. Adding to the lure of Dofasco, it owns an iron mine, Quebec Cartier Mining, at a time of rising iron prices.
Arcelor completed its takeover of Dofasco earlier this week after trumping ThyssenKrupp’s C$67 a share offer with a C$71-a-share bid. Shortly after ThyssenKrupp exited the bidding, Mittal, the world’s biggest steelmaker, unveiled its offer for Arcelor, which includes a side deal to sell Dofasco to ThyssenKrupp for $68 a share.
Wurth said Arcelor could make further acquisitions in other parts of the world ? on Friday it said it would buy a 38 per cent stake in China’s Laiwu Steel for $248 million ? but that it will rely on Hamilton and Ontario-based Dofasco for growth in the North American steel market.
“We want to grow strong with Dofasco,” he said. “Dofasco was by far the best company because of its high quality assets, strong growth prospects and highest quality products.”
