Mittal Steel makes a hostile takeover bid for Arcelor; France resists

[axi]

This thread brought to my mind reading Julius Verne's # 1878 : Les Cinq Cents Millions de la Bégum, as a kid. All that Franco-German antagonism of the late 19th century, featuring lots of steel and even more chauvinism....

[Zopperoni]

I thought this thread was going to be about heavy metal.


Seriously, I wonder if there's a governing organ for the metals (and mining) industry. If Mittal acquires Arcelor, it will be nearly four times bigger than the current #3 player in the market. We're talking about 120 metric tons versus 30 tons of crude steel here with a total market for about 500 tons.

Considering the fact that most steel procurers use four to five suppliers, it will give Mittal a huge leverage position in deal negotiations. In a market where consolidation has been a major issue, such an event could seriously disrupt the market dynamics.
Mittal would be able to produce so much more than its competitors. Such a leap in production capacity gives it a major advantage in capitalizing the market, particularly in the BRIC-countries.

I don't really give a sh*t about what the local governments think, but I'm more concerned about general industry governance here.

[axi]

Remember that the EU was formed out of a multinational agreement ona free market for Carbon and Steel, back in 1957.

Steel is the heart of heavy industry, it's no joke.

[Zopperoni]

In the eighties, the steel industry was still best described as a cartel. It wasn't until the consolidations started that the market opened up more.

[Colonâ„¢]

The biggest customer of the steel industry is the autombiles industry. I wouldn't worry too much about their leveraging power since it's just as concentrated as the steel industry, if not more.

There are serious financial reasons not to find the Mittal offer very attractive : 4 Mittal shares and 35 Euros against 5 Arcelor shares.
1. The Mittal shares do not have a full vote right
2. The market liquidity of the Mittal shares has not yet been demonstrated since only 13% were on the market with 2% vote rights.
It is not unreasonnable for the Arcelor shareholders to ask for more informations and for more cash.

A lot of Asian tycoons use opaque ownership structures like that. It's been quite standard in European (industrial) holdings as well. It was more surprising to me to find that Arcelor's ownership structure is actually rather transparant.

[Maniac]

Originally posted by axi
Remember that the EU was formed out of a multinational agreement ona free market for Carbon and Steel, back in 1957.

Steel is the heart of heavy industry, it's no joke.

1951

[Q Classic]

Aren't Mittal and Arcelor the two largest steelmakers in the world? And a combined company... wouldn't that dwarf the third and fourth by at least twice?

[Colonâ„¢]

Yeah, it'll hold some 10% of the world steel market.