Mittal Steel bids for Arcelor

Our Corporate Bureau
27 January 2006

L N Mittal has sent shockwaves in the international steel industry by making an unsolicited bid to acquire his main rival, Arcelor SA of France.

Mittal Steel, the world's biggest steel maker, has made an unsolicited bid to buy Arcelor SA of France, the world's second biggest steel group, for €18.6 billion ($22.7 billion). Mittal is offering €28.21 a share for Arcelor.

If the move succeeds, the Indian-born billionaire Lakshmi Mittal's group will control a tenth of the global steel industry, over three times as much as his closest rival. The combined group would have a workforce of around 320,000.

The steel industry, which is in the midst of a revival, may well be ripe for such consolidation. Mittal and Arcelor are complementary in terms of products and markets, and both companies could gain from a merger. However, Mittal may still have to cross the anti-trust hurdle in Europe.

EU competition commissioner Neelie Kroes said at Davos that she would take a close look at the Mittal bid. However, she also said that it was too soon to come to determine the impact of the deal on the steel business in the EU's 25 member states.

Biggest ever in steel
The acquisition, if it happens, would be the biggest ever in the steel industry, making Mittal's own $15.8-billion purchase of LNM Holdings NV in 2004 look small. The Mittal move comes close on the heels of Arcelor's acquisition of Dofasco, Canada's biggest flat steel producer earlier this week.