A slap in the face

4 April 2006 By Edward Hadas Follow @edwardhadas

The European steelmaker has ripped up its promise to mount a valuebased defence in favour of blatant obstructionism. It s putting Dofasco, the recently acquired Canadian steelmaker, in trust. That s a blow to Mittal s hostile bid.

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Arcelor, a Luxembourglisted company, has placed its newly acquired shares in Dofasco, a Canadian steelmaker, in a newly formed Dutch foundation, the Strategic Steel Stichting. Neither Arcelor nor Dofasco have significant operations in the Netherlands.

The foundation's board of directors has no control over management, but can block the sale of Dofasco. The foundation dissolves in five years or at the discretion of the current Arcelor Board of Directors. Mittal Steel's offer to take over Arcelor is not conditional on the sale of Dofasco, but it has agrred to sell the Canadian company to ThyssenKrupp, which lost out to Arcelor in a 2005 takeover battle .

Arcelor also announced that it was increasing the dividend to be paid in 2006. It will now pay E1.85 per share. It had previously declared a dividend of E1.20 per share, up from E0.65 paid in 2005.

In addition, Arcelor announced its intention to return E5bn to shareholders sometime during the year after the withdrawal or failure of Mittal's offer.

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