Chicago: The boss of European steel company Arcelor said a hostile takeover bid by global giant Mittal Steel is doomed to failure because most Arcelor shareholders are against it.
Guy Dolle said his soundings from a flurry of meetings with Arcelor stakeholders left him confident of beating off the controversial $23 billion raid launched in January by Mittal.
The hostile bid launched by Indian born billionaire Lakshmi Mittal has provoked political anger, particularly in France, whose President Jacques Chirac has railed against the potential impact on jobs at Arcelor.
"I'm convinced that the huge majority of shareholders whom we have met, given the current terms of the offer, will not offer up their shares," he said yesterday.
"In the current conditions, the offer will not succeed," Dolle insisted. Arcelor directors began a world tour of meetings with major shareholders last week that has taken them to Milan, Amsterdam, London and Paris, and now to Chicago.
Dolle said he had met with investors representing 80 to 90 percent of shareholders in Europe.
Institutional investors in France and the US control 20 percent each of Arcelor's stock. Those in Britain hold about 15 percent and another 15 percent is controlled by funds in the rest of Europe.
After his week in the US, Dolle will report back to an extraordinary meeting of the Arcelor board on Friday.
Arcelor, which comprises former national steel interests in France, Luxembourg and Spain, can also count on state support as it battles to fend off the takeover bid by the world's biggest steel maker.
The Spanish government said last week that it had received details of the takeover plan from Mittal Steel but judged the information to be "insufficient" to alleviate doubts about the operation.
Dolle said the Arcelor board would be obliged to review matters if Mittal Steel raises its offer of 33.87 dollars a share, a step that the company has ruled out taking.
"But for now, there is neither a sufficient offer nor an industrial plan," the Arcelor boss said.
Dolle said Arcelor would be a "cash machine" over the next three years with strategic plans to generate 13.2 billion euros in free cash flow with any excess cash being returned to shareholders.
The company is also targeting underlying earnings of 7.0 billion euros per year for the 2006-2008 period, up from 5.6 billion euros in 2005, the chief executive noted.
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