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Arcelor-Mittal chokes on its own 'poison pill'
H S Rao in London | November 14, 2006 18:15 IST
The sale of Dofasco was a precondition for the approval of the Arcelor-Mittal merger by the department of justice in the United States.
Arcelor-Mittal in a release on Tuesday said, "Arcelor-Mittal has been informed that the directors of the Strategic Steel Stichting, the Dutch foundation that holds the shares of Dofasco Inc., decided on November 10 not to dissolve the foundation, which would have permitted the sale of Dofasco.
"The boards of both Mittal Steel Company NV and Arcelor SA had previously requested the directors of the foundation to dissolve the foundation in order to allow the sale of Dofasco. Arcelor-Mittal is reviewing the situation and will be in contact with the US Department of Justice."
ThyssenKrupp, Germany's biggest steel maker is offering to pay 68 Canadian dollars per Dofasco share, the final price that it offered for Dofasco in a bidding war for the Canadian company this year but $3 less than Arcelor's winning bid of 71 Canadian dollars per share.
The creation of Stichting in April by Arcelor provoked an outcry from Mittal during the politically charged takeover battle between the companies.
Talks are under way between Arcelor-Mittal and the department to establish what alternative asset sale would satisfy American competition authorities, The Times reported.
The directors of Strategic Steel Stichting are refusing to dissolve the foundation created to hold shares in Dofasco. Without the unanimous approval of Stichting's three directors, Dofasco cannot be sold.
The foundation is refusing to wind itself up, despite requests for it to do so from the boards of both Arcelor and Mittal. According to the report, the Stichting directors have objected to the sale on the grounds that Dofasco owns technology important to Arcelor and the price offered by ThyssenKrupp is too low.
The directors are also insisting on carrying out their original responsibility of taking an independent view of any sale of Dofasco.