The phony war is over and now the real battle for control of the world’s second largest steel maker Arcelor has begun. The takeover bid by billionaire Lakshmi Mittal’s company has been formally launched, after stock market regulators cleared it.
Arcelor shareholders can now exchange their shares for those of Mittal – plus cash – on the Belgian, French, Luxembourg and Spanish stock exchanges.
Mittal’s offer is approximately 75% in the company’s shares and up to 25% in cash. The offer is open until the end of June and regulators have said that the result will be announced on 13th July.
The shares of both Mittal and Arcelor have fallen in value coming up to the formal bid launch. Pierre Nothomb of Deminor, a Belgium consultant to small shareholders, explained the process. He said: “For Mittal to win it has to take control from Arcelor. If it gets more than 50% of the shares it will have gained control and if it has less than 50% it’s not in control. But the situation is more complex than that. Mittal could get less than 50% of the shares, but be happy with that level and so would not sell them.”
Since Mittal first proposed a takeover in late January, Arcelor has done everything possible to block that. The biggest single shareholder – the state of Luxembourg – is also opposed, but 86.5% of the shares are out in the market. If the takeover goes through, combining the world’s two biggest steel groups, it would control around ten per cent of the market and would then probably try to further consolidate the highly fragmented steel industry.