French Minister Concerned Over Mittal's Arcelor Bid

France today signaled its readiness to allow a €18.6bn (£13bn) hostile bid for the European steelmaker Arcelor from Lakshmi Mittal to go ahead.

However, the French finance minister, Thierry Breton, voiced concern over Mittal Steel’s approach, saying he wished there had been an attempt at friendly preliminary talks.

Following a meeting with Mr Mittal, Mr Breton said the British-based billionaire magnate had "no industrial plan on the table" and no detailed vision about where the Luxembourg-based company should go after a takeover.

France is taking a close interest in the takeover because almost 30,000 of the Arcelor workforce are French.

"In the 21st century, if you want such a transaction to be crowned with success you need to start with preliminary discussions between the companies involved on a friendly basis," Mr Breton said.

However, the minister also stressed that the executive was "free to do what he wants" - giving a strong hint that France would not intervene on Arcelor’s behalf.

The government of Luxembourg spoke out against the deal yesterday, voicing anxiety about how it would affect the state’s 5.6% stake in Arcelor, one of the country’s most valuable economic assets.

For its part, Arcelor was digging in its heels against a takeover that would unite the world’s two largest steel companies. The chief executive, Guy Dolle, told France’s Europe 1 radio station that a bid would be bad for all aspects of the company.

"It would be bad for shareholders and bad for employees," he said. "It is going to be a long battle, but we are solid.

"The battle has begun, and we ought to win. Arcelor does not need Mittal, and we believe that the future of Arcelor is much better, for its shareholders and its employees, by being independent than by linking with Mittal."

At a board meeting in Luxembourg over the weekend, the company rejected Mr Mittal’s offer.

He is mounting a charm offensive in an attempt to allay European concerns. As well as meeting Mr Breton, he told Les Echos newspaper he would honor Arcelor’s social commitments.

He is scheduled to travel to Luxembourg tomorrow to meet politicians before moving to Belgium for possible talks with the European competition commissioner, Neelie Kroes, on Wednesday.

Arcelor was created by the merger of France’s Usinor, Aceralia, of Spain, and Luxembourg’s Arbed in 2002. Its French workforce of 28,500 makes up 30% of its staff.

Mittal Steel overtook Arcelor as the world’s largest steelmaker by buying the US-based International Steel, and trumped Arcelor to acquire Ukraine’s state-owned Kryvorizhstal in a public auction last year.

The company is 88% owned by Mr Mittal, the world’s third richest man, and his family. The proposed deal would create the world’s first 100m ton-plus steel producer, with a market value of £22.4bn, revenues of £38.6bn and a workforce of 320,000 people.

Mr Mittal said the proposed merger was necessary to create a sustainable and less volatile operating environment for the steel industry.

He believes there is little overlap between the two companies because Mittal’s leading positions in Asia, Africa and eastern and central Europe are complemented by Arcelor’s strong presence in Western Europe.