Mittal Steel Co on Friday sought to consolidate its dominant position as the world's biggest steel producer by launching a hostile 18.6-billion-euro (US$22.7 billion) takeover bid for European group Arcelor SA.
The steel sector, long in the doldrums amid restructuring, is currently benefiting from a price boom driven by global economic growth and by expansion in India and China.
Mittal Steel, of Indian origins and now the leading steel group by production volume, said its cash-and-shares bid for Arcelor, the second-biggest global steel producer, was based on an offer of 28.21 euros per share.
Mittal boss Lakshmi Mittal said he would like to hold "friendly discussions" with Arcelor, but the Luxembourg-based steelmaker quickly replied that it saw the takeover bid as hostile.
The Arcelor board is to meet in Luxembourg today to discuss the move by Mittal, which stunned the Grand Duchy where Arcelor is the largest employer and the state a stakeholder.
"The government is going to wait for the board of directors to take a position on Sunday afternoon before setting out its position," Luxembourg Economy Minister Jeannot Krecke told a news conference.
"We have a strategy and several options remain open," he said, without elaborating.
The minister said that he had stressed that Arcelor was a "strategic interest" for Luxembourg during "positive" telephone conversations Friday with Lakshmi Mittal, who is to meet Prime Minister Jean-Claude Juncker in Luxembourg on Tuesday morning.
Analysts said Mittal's approach, which also affects Dofasco of Canada and ThyssenKrupp of Germany, could spark a bidding war for Arcelor and put other steel groups under the takeover spotlight.
One analyst said the bid faced a number of hurdles, including scrutiny by competition authorities.
Mittal has steel-making facilities in 14 countries and employs 175,000 people around the world.
It said the combined group would form a business producing about 115.0 million tonnes of steel per year, accounting for 10 percent of the global steel market, and would have total sales of more than US$69 billion.
Its global workforce would come to 320,000 people.
The company's Web site said Mittal had shipments of 42.1 million tonnes of steel and had revenues of over US$22 billion in 2004.
EU Competition Commissioner Neelie Kroes said that the bid would be thoroughly studied for a potential dominant market position by the bloc's authorities.
"It's interesting, and it will certainly get a lot of attention" from the competition commission, Kroes told reporters on the sidelines of the World Economic Forum in Davos, Switzerland.
Arcelor groups steel interests in Luxembourg, France and Spain. The state of Luxembourg owns 5.6 percent of the company, and 85.7 percent is in the hands of diversified shareholders.
French Economy and Finance Minister Thierry Breton nonetheless said his government was "concerned" and was following developments "with the greatest attention" because of its "implications for European and French industry and for employment."
Mittal Steel, which has risen from modest beginnings in India 30 years ago, said it had also agreed to sell leading Canadian steel-maker Dofasco, in the process of being acquired by Arcelor, to German producer ThyssenKrupp if it succeeded in acquiring Arcelor.
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