Mittal Steel Co. increased a hostile bid for Arcelor SA by 34% to $32.9 billion, gaining investor support for the steel industry's biggest takeover, as reported by Bloomberg.com today.
``We are definitely seduced by this new offer,'' said Francois de Rambuteau, who manages $2.3 billion at Cholet-Dupont Gestion SA in Paris, including Arcelor shares. ``It was clear to everybody that the earlier offer was insufficient. All depends now on the performance of Mittal shares.''
By buying Arcelor, Mittal would control about 10% of the global steel industry, more than three times as much as his closest rival. Billionaire Chairman Lakshmi Mittal, who built his company through three of the world's 10 largest steel takeovers since 1990, wants to buy competitors partly to bolster bargaining power with suppliers such as Cia. Vale do Rio Doce following an increase in raw material costs.
Arcelor, the world's second-biggest steelmaker, has resisted the takeover through offering a share buyback and raising its dividend. The new offer is 70% above Arcelor's closing price as of Jan. 26, the day before Mittal first announced its unsolicited bid.
"The share-price pattern has forced Mittal's hand and he has caved in over voting rights," said Stephen Pope, head of equity research at Cantor Fitzgerald LP in London. "This is not a signal of a well-planned bid.''
Investors are responding "positively'' to the improved offer, Mittal said at a press conference in London today, adding that he wants a dialog with Arcelor's management. Arcelor's board will meet on May 21 to discuss the offer, he added. Arcelor said it will evaluate today's offer "in the coming days."'