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Mittal Plans Global Steel Domination

Mittal Steel seeks to consolidate its dominant position as the world's biggest steel producer by launching a hostile 18.6-billion-euro takeover bid for European group Arcelor.

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Privately-owned Dutch steelmaker Mittal has launched a bidding war

Mittal Steel, of Indian origins and now the leading steel group by production volume, announced on Friday it was planning to launch an 18.6-billion-euro (22.8-billion-dollar) takeover bid in a move that would create the world's largest steel company. If Mittal succeeds in swallowing European group Arcelor, it would have with an annual production of 100 million tons, dwarfing number two Nippon Steel Corp of Japan, which produces about 33 million tons each year.

Mittal chief executive Lakshmi Mittal said he did not expect the proposed deal to face any regulatory hurdles and that the group would begin "friendly discussions" with Arcelor and with European regulators soon. But the Luxembourg-based steelmaker dismissed such gestures and said it considered the takeover bid as hostile.

Arcelor's board is scheduled to convene Sunday to discuss the move, which has shocked many in the Grand Duchy. The steelmaker is the country's largest employer with some 6,000 jobs in four locations and the state is a stake-holder.

"The government is going to wait for the board of directors to take a position before setting out its position," Luxembourg Economy Minister Jeannot Krecke told a news conference. "We have a strategy and several options remain open," he said without going into detail.

Prime Minister Jean-Claude Juncker will meet with the Indian tycoon on Tuesday.

A European concern

Meanwhile, French Economy and Finance Minister Thierry Breton said his government was "concerned" and was following developments "with the greatest attention" because of "its implications for European and French industry and employment."

Stahlarbeiter

Arcelor is a major European employer

Arcelor is the world's second-largest steelmaker behind Mittal, and a large part of its production base is in France. The group was formed four years ago when three European steelmakers agreed to merge: Luxembourg's Arbed, Spain's Aceralia and France's Usinor.

EU examines bid

EU Competition Commissioner Neelie Kroes said that a hostile bid would be thoroughly examined for a potential dominant market position, which would violate the bloc's position on free market competition.

"It's interesting, and it will certainly get a lot of attention" from the competition commission, Kroes told reporters on the sidelines of the World Economic Forum in Davos.

A spokesman for automaker Peugeot said Saturday that it would follow the bidding closely, given the fact "that we already have concerns about the state of competition in the steel sector." The concerns are understandable, considering it takes nearly a ton of steel to produce a single car.

ThyssenKrupp could profit

Mittal's bid, which also affects Dofasco of Canada and ThyssenKrupp of Germany, could spark a sector-wide bidding war for Arcelor and put other steel groups in the spotlight for takeovers.

The Netherlands-based giant, which rose from modest beginnings in India 30 years ago, said it had agreed to sell leading Canadian steel-maker Dofasco, which is currently in the process of being acquired by Arcelor, to ThyssenKrupp.

Thyssen Krupp Stahlwerk

ThyssenKrupp's steel plant in Duisburg

Mittal, which has steel-making facilities in 14 countries around the world and employs 175,000 people, said it would sell Dofasco to ThyssenKrupp at a price of 68.0 Canadian dollars per share. Only three days ago, Arcelor had offered to make a friendly bid for Dofasco at 71.0 Canadian dollars per share, forcing ThyssenKrupp to withdraw its bids to acquire the Canadian company.

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