India is unhappy with the French reaction
As stated, I'm closely following the Mittal-Arcelor deal. Don't ask me why since I've never work in steel and probably never will!
The political reactions:
As expected, the governments of France, Luxembourg and Spain have rejected the offer. Although the French and the Spanish governments are not shareholders of Arcelor, they justified their position by arguing they are stakeholders in the deal (with Arcelor's 30,000 employees in France and 15,000 in Spain, this is probably true). Luxembourg is the largest shareholder with roughly 5% of the equity and is not going to tender its share to the bid.
The EU did not state a position and basically is not going to block the merger. There is indeed little overlap in the two companies and no fears of anti-competition issues. Belgium, which is also a shareholder of Arcelor did not criticize the deal.
However, after India voiced its concerns about the French reaction, the French government lowered its tone and announced that it was going to limit its role in the defence of Arcelor, which is probably the right thing to do given that they are not shareholders of Arcelor.
The bid
Mittal did not raise its offer and does not plan to do so. This is now in the hand of the shareholders who will have to decide to tender or not. The main defence followed by Arcelor is to attack the corporate governance of Mittal. It's true that there are some issues here. The largest steel company in the world would basically be run as a familly business with dad as the CEO and the 29 years old son as the CFO and the daughter on the board. The Mittal familly, with its use of preferred shares, would control 75% of the votes with only 51% of the capital and in today's world of transparency, this may prove a stumbling block for shareholders.
Next steps
It's now in the hand of the shareholders and I'm guessing that in the abscence of a white knight, there is not much Arcelor can do to resist Mittal. But we'll see.
The political reactions:
As expected, the governments of France, Luxembourg and Spain have rejected the offer. Although the French and the Spanish governments are not shareholders of Arcelor, they justified their position by arguing they are stakeholders in the deal (with Arcelor's 30,000 employees in France and 15,000 in Spain, this is probably true). Luxembourg is the largest shareholder with roughly 5% of the equity and is not going to tender its share to the bid.
The EU did not state a position and basically is not going to block the merger. There is indeed little overlap in the two companies and no fears of anti-competition issues. Belgium, which is also a shareholder of Arcelor did not criticize the deal.
However, after India voiced its concerns about the French reaction, the French government lowered its tone and announced that it was going to limit its role in the defence of Arcelor, which is probably the right thing to do given that they are not shareholders of Arcelor.
The bid
Mittal did not raise its offer and does not plan to do so. This is now in the hand of the shareholders who will have to decide to tender or not. The main defence followed by Arcelor is to attack the corporate governance of Mittal. It's true that there are some issues here. The largest steel company in the world would basically be run as a familly business with dad as the CEO and the 29 years old son as the CFO and the daughter on the board. The Mittal familly, with its use of preferred shares, would control 75% of the votes with only 51% of the capital and in today's world of transparency, this may prove a stumbling block for shareholders.
Next steps
It's now in the hand of the shareholders and I'm guessing that in the abscence of a white knight, there is not much Arcelor can do to resist Mittal. But we'll see.
posted by k at 3:54 PM
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