Arcelor deal to be finalised by June: Aditya Mittal

Mittal Steel, owned by NRI steel tycoon Lakshmi Mittal, has said that opposition to its controversial takeover bid of Luxembourg-based Arcelor is softening and the whole deal could be finalised by the end of June after approval from European regulators and the shareholders of the company.

"There has been a reduction in terms of the negative reaction to this offer as governments have begun to realise the strategic rationale, the industrial rationale (and) what Mittal Steel is about, what Mittal Steel wants to do with Arcelor," President of Mittal Steel Aditya Mittal said in Chicago.

"The reaction is turning more in our favour," he said. Several countries in Europe are apprehensive of the $ 22 billion merger, worried that this could lead to job cuts.

According to Mittal, also the chief financial officer of the company, it will start sharing post-merger plans with the countries involved this week, and stressed that the Arcelor acquisition will be good for companies and their shareholders as this will result in more growth opportunities for the industry.

"We expect as we share with them the industrial plan and the strategic plan, they will become more and more understanding of what we're trying to propose and realise that it's actually a great thing for Arcelor and a great thing for the steel industry," Mittal said.

China: New turf for Mittal, Arcelor

China, the world's largest steel consumer, appears to be the latest turf for the bitter rivalry between global steel majors, Mittal Steel and Arcelor with the latter now agreeing to drop its insistence on controlling shares of Chinese firms.

"Arcelor started negotiations with Chinese steel firms in early 2004, but all of them failed due to its insistence on controlling shares," the official Xinhua news agency noted while reporting on the European steel giant's recent acquisition of shares of Laiwu Steel of China.

Chinese analysts also regard the timing of Arcelor's deal as a factor in trying to thwart a hostile takeover bid from Mittal Steel Company, China Daily reported on Monday.

Amid Mittal's unsolicited bid on Arcelor, the Luxembourg-based steel giant announced last week that it will acquire 38.41 per cent stake in Laiwu Steel Corporation, a listed subsidiary of Laiwu Steel Group, Ltd. for $ 260.75 million .

According to Chinese media reports, Mittal Steel Co, which acquired a stake in Hunan Valin Steel Tube & Wire Company Limited, is also scouting for more acquisitions in China.

Mittal is reportedly in merger talks with other Chinese steel mills, such as Baotou Iron and Steel Co Ltd in the Inner Mongolia Autonomous Region and Kunming Iron and Steel Co Ltd in Yunnan Province.

Already, Chinese experts have predicted that the dwindling profits in the Chinese steel sector could spark mergers and acquisitions bids from foreign companies in the fragmented industry starting from 2007.

Mittal Steel Company last month announced that its shareholding in Hunan Valin Steel Tube & Wire Company Limited has been diluted to 29.49 per cent.

Mittal Steel completed the acquisition of a 36.67 per cent stake in Hunan Valin on September 28, 2005, for $338 million.

As a result of publicly held outstanding convertible bonds being converted into shares the shareholding of both Mittal Steel and Valin Group have been diluted to 29.49 per cent and 30.29 per cent respectively. The remaining shares are traded on the Shenzhen Stock Exchange.

Meanwhile, an industry analyst predicted that the Chinese steel sector's 2006 profits would plunge by 60 per cent this year compared to 2005 due to the glut.

He also said that steel prices will remain at low levels this year as a result of over production capacity, as well as slowing demand because of the central government's measures to prevent the economy overheating.

China's crude steel output jumped to 349.36 million tonnes in 2005, up 25 per cent year on year, according to statistics from the China Iron and Steel Industrial Association.

China, the world's largest crude steel producer, also produced 330.4 million tonnes of pig iron and 371.17 million tonnes of steel products, up 28.19 per cent and 24.13 per cent, respectively, over the previous year.

China's annual steel output is equivalent to those of the United States, Russia and Japan put together.

According to a recent survey, China has 1,499 steel companies. Only 15 of them have an annual production capacity of over five million tonnes each and 40 others, one million to five million tonnes.