Arcelor, Mittal to meet for substantive talks
Warring steel giants Arcelor and Mittal Steel are to meet for substantive talks soon.
By PTI |
LONDON: Four months after NRI tycoon Lakshmi Mittal made a hostile bid for Luxembourg-based Arcelor, managements of the two steel giants have held negotiations and will meet again soon for substantive talks despite Mittal Steel's insistence that it would not raise its 25 billion euro bid offer.
The breakthrough for the talks comes after Arcelor's supervisory board instructed its management board to negotiate with Mittal on Tuesday.
"We have moved from a very negative involvement to a positive involvement today. We hope that this kind of dialogue can lead to a satisfactory conclusion for the shareholders of Arcelor as well as Mittal Steel," Lakshmi Mittal said. Mittal said he had already made a compelling offer to Arcelor's shareholders and had no plans to offer more.
However, advisers said that there could be some room for further unspecified improvements to corporate governance, which could persuade Arcelor.
News of an early meeting came as Mittal released details of the company's business plan, which contains a very aggressive earnings target, 70 per cent higher than that achieved in 2005. Mittal expects underlying profits of $9.9 billion within two years and predicts steel prices to rise by $30 to $60 a tonne within six months.
Reacting to the Mittal's projections, Arcelor said the outlook was unreasonably bullish. Under the same assumptions, Arcelor said that its forecast for its own profits in 2009 would rise from 7 billion euros to 8.9 billion euros.
The European consortium said its combination with Russian steel group Severstal would yield earnings of 13.1 billion euros by 2008 or 2.8 billion euros more than set out in its document to investors.
"Arcelor is convinced that it is one of the most resilient global steel producers. However, in order to deliver on its commitment to the market, it has purposely applied reasonable and conservative assumptions in its value plan," the company said in a release on Wednesday.
Mittal said he would make himself available for the talks if Arcelor's chairman, Joseph Kinsch, and its chief executive Guy Dolle, attended the talks. Mittal and Dolle have yet to discuss the offer. But there are now just three weeks left before the bid deadline.
The breakthrough for the talks comes after Arcelor's supervisory board instructed its management board to negotiate with Mittal on Tuesday.
"We have moved from a very negative involvement to a positive involvement today. We hope that this kind of dialogue can lead to a satisfactory conclusion for the shareholders of Arcelor as well as Mittal Steel," Lakshmi Mittal said. Mittal said he had already made a compelling offer to Arcelor's shareholders and had no plans to offer more.
However, advisers said that there could be some room for further unspecified improvements to corporate governance, which could persuade Arcelor.
News of an early meeting came as Mittal released details of the company's business plan, which contains a very aggressive earnings target, 70 per cent higher than that achieved in 2005. Mittal expects underlying profits of $9.9 billion within two years and predicts steel prices to rise by $30 to $60 a tonne within six months.
Reacting to the Mittal's projections, Arcelor said the outlook was unreasonably bullish. Under the same assumptions, Arcelor said that its forecast for its own profits in 2009 would rise from 7 billion euros to 8.9 billion euros.
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The European consortium said its combination with Russian steel group Severstal would yield earnings of 13.1 billion euros by 2008 or 2.8 billion euros more than set out in its document to investors.
"Arcelor is convinced that it is one of the most resilient global steel producers. However, in order to deliver on its commitment to the market, it has purposely applied reasonable and conservative assumptions in its value plan," the company said in a release on Wednesday.
Mittal said he would make himself available for the talks if Arcelor's chairman, Joseph Kinsch, and its chief executive Guy Dolle, attended the talks. Mittal and Dolle have yet to discuss the offer. But there are now just three weeks left before the bid deadline.
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