Arcelor SA, the world's second-biggest steelmaker, plans to increase profit by at least 24 percent in the next three years, seeking to persuade investors to reject a hostile US$22.74 billion takeover bid by Mittal Steel Co.
Earnings before interest, taxes, depreciation and amortization will rise to 7 billion euros (US$8.3 billion) by 2008, from 5.64 billion euros last year, the company said in a statement yesterday. Shares of Arcelor rose 0.8 percent to 30.65 euros in Paris on Monday, about 94 cents above Mittal's offer.
"This would give Arcelor a share price target of 43 euros," Alberto Vigil, who manages 4 billion euros at Banco Santander in Spain, including Arcelor shares, said in an interview. "If Mittal is offering me 28 euros and Arcelor is worth 43, well I'll stick with the 43."
Arcelor managers start a two-week promotional tour in Europe and the US on Monday to convince investors not to tender their shares into Rotterdam-based Mittal's offer.
Arcelor chief executive Guy Dolle this month almost doubled the company's dividend, trying to persuade shareholders they're better off without Mittal.
"The group will pursue opportunities to strengthen its global leadership in key strategic markets such as the automotive industry," the company said in its statement.
Arcelor this month bought Canada's Dofasco Inc for C$5.5 billion (US$4.8 billion), giving it a 10 percent slice of the North American market supplying steel to carmakers including Ford Motor Co and Toyota Motor Corp. Annual cost savings at Dofasco will amount to 230 million euros by 2008, Arcelor said.
Arcelor said it may expand in Latin America and central and eastern Europe.
Arcelor also plans to sell about 200 million euros of ``minor'' assets by 2008. Any profit made on those sales will be returned to shareholders, the company said.
"We want to give back to the shareholders the value we are creating in Arcelor,'' Dolle told reporters on Monday in Brussels.
More "minor" acquisitions by Arcelor are possible this year after the company agreed last week to buy a 38 percent stake in China's Laiwu Steel Corp (
"We have signed in principle the agreement with China last week, so this kind of move could be done, but it will be minor," he said. "It will be just on the condition that the return on capital employed will be at least 15 percent."