Arcelor beefed up defences against a planned $25 billion takeover bid by bigger rival Mittal Steel today by boosting payouts to shareholders and ring-fencing assets Mittal planned to sell.
But its chief financial officer said the moves would not stop Mittal's bid, and he indicated that a special lock put on key Canadian assets could be released again in case the Arcelor board recommended an improved Mittal offer.
Arcelor, the world's second largest steelmaker, said today it would raise its 2005 dividend to €1.85 per share from the €1.20 it previously announced and additionally offer shareholders €5 billion in cash.
Arcelor said the cash payment would take place between April 28th and the year following a withdrawal or failure of the hostile offer by Mittal, the global sector leader.
Arcelor will also transfer the shares it holds in Dofasco and the rights to Dofasco's technology to a Dutch foundation, a move designed to hinder a sale of the Canadian company.
The foundation would have independent control over any decision to sell Dofasco. Mittal has said that, if it succeeded in acquiring Arcelor, it would sell the Canadian steel maker to ThyssenKrupp, the German company that Arcelor outbid in a takeover battle for Dofasco.
Arcelor shares, which soared after Mittal unveiled its offer at the end of January, were trading down 1.49 per cent at €32.30 in a slightly weaker overall stock market. Mittal shares were off 4.4 per cent at €30.84.
Luxembourg's top administrative court today voiced its opposition to a key amendment to the nation's takeover law that could hinder Mittal planned takeover of Arcelor.
Luxembourg lawmakers have proposed an amendment that would prevent companies resubmitting acquisition bids for the 12 months after the failure or withdrawal of a previous bid.
Mittal must now make the next move in the game of takeover poker - either trump Arcelor or call it quits. Mittal criticised Arcelor's plans and insisted it would press ahead with its acquisition plans.
"This is an unprecedented assault by Arcelor on the interests of its own shareholders and an attempt to deprive them of the right to decide on the merit of the offer," a spokesperson for Mittal said.