Arcelor shareholders may favour Mittal
The issue at the moment is will Lakshmi Mittal's euro 25.8-bn takeover bid get stakeholders' support or not?
By Manika Gupta, INDIATIMES NEWS NETWORK |
A month back, Arcelor was of the firm belief that it will beat Mittal back--of all reasons it felt that shareholders will reject the bid because it is hostile. A month later, increasingly the battle is shifting to the shareholders, but the tide has turned in favour of Mittal with shareholders accusing the company board of selling out to Russian Steel magnate Alexei Mordachov only to keep at bay India-origin industrialist Lakshmi Mittal.
The issue at the moment is will Lakshmi Mittal's Euro 25.8-billion takeover bid get stakeholders' support or not?
Notwithstanding the arguements given by the directors of Arcelor that the greatest weakness for Mittal remains the corporate governance structure, the shareholders have realised that Arcelor is desperate to escape from Mittal at whatever cost. The question stakeholders are asking is why is Arcelor preferring a creeping takeover by Severstal to the open bid made by Mittal. Mittal has worked very hard to bring about a turnaround in this stance by the shareholders.
The issue at the moment is will Lakshmi Mittal's Euro 25.8-billion takeover bid get stakeholders' support or not?
Notwithstanding the arguements given by the directors of Arcelor that the greatest weakness for Mittal remains the corporate governance structure, the shareholders have realised that Arcelor is desperate to escape from Mittal at whatever cost. The question stakeholders are asking is why is Arcelor preferring a creeping takeover by Severstal to the open bid made by Mittal. Mittal has worked very hard to bring about a turnaround in this stance by the shareholders.
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When the bid was announced, Mittal had offered four of his company's shares for five of Arcelor's shares and euro 35.25 in cash. Given that Mittal Steel and Areclor shares rose since then, it meant that the value of Mittal was offfering rose as also what he was asking for. At that point, markets hoped that Mittal make his offer more attractive. He revised the bid upwards and allyed fears about corporate governance by announcing some changes in the holding pattern and other governance practices. There was a demand for vote share. To which Mittal was hesitant, as he was convinced about the efficacy of their model of entrepreneurship as opposed to their company being board managed.
While the first offer was to test the waters, the revised offers were made to woo the shareholders. Arcelor directors remained unfazed, convinced that Mittal's offer undervalues the company. The shareholders on the other hand said that,"the bid makes good sense for Mittal Steel, but does it make sense for Us, the stakeholders."
The question has suddenly shifted to, "Arcelor must explain in what way is Severstal more complementary, and just how is the management of a company run by oligarchic billionaire better than Mittla Steel?
Even though the winds of change are visibly moving in favour of mittal as far as sharholders are concerned, it is a long way to go. The funds may be disclosing their decision. Even if he gets a majority, he may then need to take managment control of Arcelor. According to Luxembourg law, Mittal Steel must request Arcelor to convene a shareholder's meetingwith an agenda to remove and re-elect the directors. If the board takes longer than one month to do so, the matter would have to be taken to the courts.
However, there is another scenario that Mittal will not have a majority stake, but may take a minority stake. In that scenario, even if some feel it is good for the stakeholders as Mittal's one foot in the company may spur Arcelor to outdo its performance, the stakeholders feel differently.
According to the voice of the sharholders, "Mittal could in the end find himself a minority shareholder in Arcelor, alongside Mordachov". They claim that this would amount to a "fiasco for the Arcelor Board of Directors", as it could result in the company "being controlled by two rival groups."
| TIMELINE |
| 23 November 2005 Arcelor offers to acquire Dofasco Inc. for CAD 56.00 per share. 28 November 2005 But Dofasco and ThyssenKrupp announce a friendly deal for ThyssenKrupp to offer CAD 61.50 per share for Dofasco. 23 December 2005 Arcelor increases its offer to acquire Dofasco Inc. to CAD 63 a share. 3 January 2006 ThyssenKrupp matches Arcelor's offer for Dofasco of CAD 63.00 per share. ADVERTISEMENT 6 January 2006 Dofasco defers activation of shareholders rights plan in respect of Arcelor's offer announced 23 December 2005 and recommends acceptance of ThyssenKrupp's revised offer of 3 January 2006. 14 January 2006 ThyssenKrupp raises its bid for Dofasco to CAD 68 per share. 16 January 2006 ADVERTISEMENT Arcelor raises its bid for Dofasco to CAD 71 per share.23 January 2006 ThyssenKrupp quits the race: it waives its "right to match" Arcelor's offer of CAD 71.00 per share. ADVERTISEMENT 24 January 2006 Dofasco and Arcelor agree takeover at a price of CAD 71.00 per share. Dofasco resolves to recommend acceptance of Arcelor's offer. ThyssenKrupp announces it may buy other assets in North America to expand outside Europe. 26 January 2006 Mittal Steel makes an unsolicited bid for Arcelor for EUR 28.21 per share. 27 January 2006 Arcelor calls Mittal's bid hostile. Dofasco says that Arcelor is committed to pursuing its acquisition of Dofasco at a price of CAD 71 per share. Mittal offers ThyssenKrupp the opportunity to acquire Dofasco in the event of a takeover of Arcelor. 29 January 2006 Arcelor rejects Mittal's bid, saying that the two companies do not share the same strategic vision, business model and values. 30 January 2006 Arcelor notifies the Dofasco shareholders that it has raised its offer to CAD 71 per share. 1 February 2006 Negative response from France on Mittal Steel bid Nippon’s talks with Dollé begin Luxembourg PM to discuss steel bid Arcelor may seek Asian alliance 2 February 2006 USW express support to Mittal Steel Indian government lends support to Mittal Steel 3 February 2006 Spain against bid for Arcelor Belgium government taking neutral stance on Mittal Steel’s bid UK lends support to Mittal Steel 6 February 2006 Arcelor close to unveiling China project Mittal to resume Europe tour to push Arcelor offer 7 February 2006 Belgian regulator gets Mittal's draft Arcelor bid 8 February 2006 Mr LN Mittal to meet EU parliament head on Arcelor bid Nippon Steel backs Arcelor in hostile bid Mittal hopes to close Arcelor buy in Q2 10 February 2006 Arcelor SA extends deadline for Dofasco takeover bid Department of Justice to probe Mittal Bid Mittal garners German support for Arcelor bid 11 February 2006 Arcelor could buy Eramet to block Mittal Spanish minister concerned over Mittal`s Arcelor bid India chides Europe on view of Mittal bid 12 February 2006 Nippon Steel could prevent Arcelor takeover 14 February 2006 Nippon declines to comment on Change of Control clause in tie up with Arcelor Indian PM may raise Mittal Steel/Arcelor issue with French president 15 February 2006 EU to decide on Mittal Steel - Arcelor issue 16 February 2006 Arcelor receives final approvals to acquire Dofasco shares Mittal Steel announces new steps in the offer procedure Arcelor sweetens dividend as it fights bid 20 February 2006 French bank to back Mittal Steel for bid financing 21 February 2006 Arcelor acquires 88.38% of Dofasco's shares 27 February 2006 Arcelor CEO gives no chance to Mittal Steel bid 27 February Takeover opposition softens – Mittal Steel CFO 28 Feb 2006 Mittal Steel to furnish a detailed industrial document 1 Mar 2006, Wednesday Mittal CEO rules out higher price for Arcelor 1 March 2006 Mittal Steel to hunt for acquisitions 6 March 2006 Arcelor to discuss with Mittal only after detailed plans 7 March 2006 Arcelor's employee shareholders urge against sale 8 March 2006 Belgium to decide on Mittal Steel’s bid by April Arcelor deposits 98.5% of Dofasco's shares 9 March 2006 Arcelor CEO believes that he can fend off Mittal 14 March 2006 Arcelor executives oppose Mittal takeover bid 15 March 2006 Amendment to M&A law proposed 16 March 2006 Mittal presents Arcelor plan to Luxembourg government 16 March 2006 Mittal claims majority support from Arcelor investors 20 March 2006 Mittal not to raise bid for Arcelor 22 March 2006 Luxembourg to vote on takeover law 23 March 2006 Lawmakers back takeover law changes 24 March 2006 Mixed signals on takeover law changes 25 March 2006 Luxembourg not to sell Arcelor’s shares 26 March 2006 Mittal calls for peaceful solution 30 March 2006 Sixty percent of Arcelor stock traded 5 April 2006 Mittal to go ahead with bid 7 April 2006 Luxembourg drops takeover law change 11 April 2006 EU sets target date for Mittal’s bid ruling 12 April 2006 NLMK Chairman interested in a stake in Arcelor 19 April 2006 Mittal sets date of Arcelor offer 20 April 2006 NLMK no longer interested in Arcelor 21 April 2006 Mittal to keep Arcelor stainless for 18 months 23 April 2006 Arcelor says it still has options 24 April 2006 Mittal may have to improve bid 26 April 2006 Arcelor secures EUR 4 billion loan 28 April 2006 Luxembourg scraps takeover law amendment 29 April 2006 Arcelor and Schmolz consolidate 1 May 2006 Arcelor will reconsider Mittal offer 3 May 2006 Mittal calls for action against AAA 3 May 2006 Arcelor’s worth at EUR 33.7 to 40.7 billion 6 May 2006 Mittal offer for Arcelor expected in mid May 8 May 2006 Mittal ready to work out bid 10 May 2006 Mittal willing to revise offer for Arcelor 10 May 2006 EC to extend review of Mittal’s bid 11 May 2006 Arcelor files patent lawsuit against Mittal 11 May 2006 US Antitrust clearance for Arcelor bid 13 May 2006 Mittal granted conditional go ahead for Arcelor 13 May 2006 Information document approved 18 May 2006 Mittal launches bid for Arcelor 19 May 2006 Mittal offer for Arcelor opens 19 May 2006 Mittal improves offer for Arcelor 21 May 2006 Schulz stands firm on Dofasco contract with Mittal 21 May 2006 Mittal says offer period may be extended 27 May 2006 Lucchini supports Arcelor-Severstal merger 27 May 2006 Arcelor-Severstal merger stops Dofasco going to ThyssenKrupp 28 May 2006 Mittal to press ahead with bid for Arcelor 29 May 2006 Mr Ross confirms that Mittal will not raise offer (source: Stainless steel World.net) |
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