Luxembourg-based steelmaker Arcelor SA's board of directors rejected a hostile takeover bid from Mittal Steel Co, saying it would hurt the group, its shareholders, employees and customers.
"After a thorough review and analysis of the elements at its disposal, the board has swiftly concluded that Arcelor and Mittal Steel do not share the same strategic vision, business model and values," Arcelor said on Sunday in a statement issued after an extraordinary board meeting in Luxembourg.
"The board of directors has resolved that it unanimously rejects Mittal Steel's unsolicited proposal which it considers hostile," the statement said.
Arcelor asked shareholders not to tender their shares in the offer, which values them at 28.21 euros (US$24.50) each. Mittal, the world's No. 1 steel company, launched a hostile takeover bid for its closest rival on Friday.
Mittal said the deal would create the world's first steel producer with an output exceeding of 100 million tonnes, with a market capitalization of US$40 billion. It anticipated annual synergies of US$1 billion.
The Arcelor board said that it believed its current strategy offered the best guarantee of value creation for its shareholders.
The Mittal bid was launched shortly after Arcelor offered a significant premium to win Canadian steelmaker Dofasco Inc in a bidding war with Germany's ThyssenKrupp AG.
The Luxembourg government, the largest shareholder in Arcelor SA, voiced concerns Sunday about the bid, citing Mittal's failure to consult with Luxembourg or Arcelor's management.
Luxembourg Budget Minister Luc Frieden and Economy Minister Jeannot Krecke said in a joint statement that they were concerned about "the apparent hostile nature of the bid" and the lack of guarantees over employment and investment in the principality.
The statement said that they "pointed to the lack of precise details in the bid on the future role of the Luxembourg state in the company."
Luxembourg holds 5.6 percent of Arcelor's shares. Arcelor is the principality's largest employer with 6,000 workers.
Mittal CEO Lakshmi Mittal is due to meet Luxembourg's Prime Minister Jean-Claude Juncker today.
The regional government in southern Belgium on Saturday called on the two companies to respect existing labor agreements with trade unions.
The government said that it would seek more commitments before it agreed to any sale of its 2.4 percent stake in Arcelor.
The company employs 15,000 people in the French-speaking region of Wallonia, which has been hard hit by steel job losses in recent years.
French Finance Minister Thierry Breton, who was to meet with Mittal yesterday, told France's LCI television that he "wants to know more" about the takeover bid, but said it did not favor Arcelor.
With revenue of 30 billion euros last year, Arcelor is the world's second-biggest steel company by sales but is facing tougher conditions in its core European markets.
Rival Mittal Steel Co overtook Arcelor as the world's largest steelmaker by buying US-based International Steel Group, and trumped Arcelor to acquire Ukraine's state-owned Kryvorizhstal in a public auction last year.
Arcelor was created in 2002 through the merger of Usinor SA of France, Arbed SA of Luxembourg and Aceralia Corp Siderurgica SA of Spain.
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