Steelmaker Arcelor has unveiled a series of measures to try and block a hostile bid by Mittal Steel. Arcelor’s Chief Executive Guy Dolle has vehemently resisted the idea and said he plans to reorganise the business to make Mittal’s takeover more expensive. The moves include raising the annual dividend to 1.85 euro from the 1.20 euro previously announced.
Shareholders have been promised up to five billion euros if Mittal drops its bid. And Dofasco, the Canadian plant Mittal plans to sell, is being put under the control of a Dutch foundation to prevent that. Mittal denounced the plans and said they go against the interests of Arcelor’s own shareholders being an attempt to deprive them of the right to decide on the merits of the offer.
Mittal now has to make the next move. Either increasing its bid or giving up. Some institutional shareholders have indicated that they would welcome a higher bid from Mittal, but the state of Luxembourg which owns 5.6 % of the stock has proposed changing the country’s law to block the bid. As well as Luxembourg, Mittal’s offer is opposed by the governments of France and Spain. Shares of Arcelor dropped after the announcement. The stock has risen over 50% so far this year. Mittal’s shares also fell.