Trust blocking sale of Dofasco, says Arcelor Mittal
14 November 2006
Mumbai: The Dutch foundation to which the Arcelor management, while resisting the takeover by Mittal Steel, had transferred a controlling stake of its Canadian unit Dofasco, has decided not to relinquish it's hold over the company. This could stall the sale of Dofasco to the combined Arcelor Mittal.
"The boards of both Mittal Steel Company and Arcelor had previously requested the directors of the foundation to dissolve the foundation in order to allow the sale of Dofasco," Arcelor Mittal, the world's biggest steel company, said in a statement, adding, "Arcelor Mittal is reviewing the situation and will be in contact with the US department of justice."
Arcelor said a plan to sell its Dofasco Inc unit was blocked, increasing the likelihood the steel maker of the having to sell some US operations to satisfy American antitrust rules.
The Strategic Steel Stichting, a Netherlands trust to which Arcelor SA gave ownership of Dofasco to try to thwart a takeover by Mittal Steel Co, rejected a request by Arcelor Mittal to sell the Canadian steel unit, the Luxembourg-based steelmaker said. Mittal had pledged to sell Dofasco to Germany's ThyssenKrupp AG if it's bid for Arcelor succeeded.
``Arcelor Mittal didn't have any influence on the Stichting, and it was really a gamble asking them to approve a sale to ThyssenKrupp,' said Richard Brakenhoff, an analyst at Rabo Securities in Amsterdam who recommends investors buy shares of Mittal. ``Mittal has plans in place to sell other plants and this doesn't change the investment picture for the company.'
Mittal must either sell Dofasco or one of two tin mills in Weirton, West Virginia, or Sparrows Point, Maryland, after the justice department said in May the Arcelor-Mittal merger would hurt competition in tin-mill products in the eastern US. Buying Dofasco would give ThyssenKrupp access to North American customers and allow the building of a plant in Brazil that will supply its mills with low-cost, semi-finished steel.
ThyssenKrupp said it would "exhaust every possibility' to complete the purchase. It repeated that it would build a new steel mill in the US if it could not buy Dofasco.