Mittal Steel Co.'s surprise $22.5 billion offer for Arcelor SA drew scathing criticism from French officials Tuesday and an outright rejection from the Luxembourg government — Arcelor's largest shareholder.
European Union antitrust chief Neelie Kroes, meanwhile, said she was not in principle opposed to a large steel merger and would meet with steel magnate Lakshmi Mittal this week.
Luxembourg Prime Minister Jean-Claude Juncker said Tuesday that his government backed Arcelor's strategic plan and did not share Mittal's view that the combined company could form a European industrial champion.
"We say no to the public offer launched by Mittal for Arcelor," Juncker said.
He told the principality's parliament that the government, which holds a 5.6 percent stake in the steelmaker, would not sell its shares to Mittal — though he did concede that he recognized the bid offered "opportunities."
Juncker said he was worried about the impact a takeover could have on Arcelor and on Luxembourg where it is based and has 6,000 workers, making it the country's largest employer.
He is set to discuss the bid with French President Jacques Chirac on Wednesday, but said French and Belgian leaders shared his views.
France's Finance Minister Thierry Breton disparaged Mittal's offer, telling parliament Tuesday that he has never seen such a "badly prepared" takeover attempt.
"I have seem many operations like that in my life," said Breton, a former chief executive of France Telecom. "But I want to tell you that it is the first time that I have seen one that seems so badly prepared."
The takeover bid, announced Friday, would create a new behemoth with a nearly 10 percent share of global steel production and a market capitalization close to $40 billion.
Arcelor, created in 2002 from a merger of French, Luxembourg, Belgian and Spanish steel interests, has warned against its predator's "irregular" profitability, pledging to consider "all options" to foil the hostile bid.
In Paris on Monday, Mittal pledged to create a European champion, protect European jobs and respect European labor conditions. He said the combined entity would be based in Luxembourg, like Arcelor, with "ample room for Arcelor's management" in the new company. "For me this is really a merger of equals and we intend to treat it as such," he said.
The new company would have almost 350,000 employees at 61 plants in 27 countries — but few areas of overlap that could cause antitrust problems. Mittal Steel is the biggest U.S. supplier of high-grade, high-margin auto steel; Arcelor occupies the same position in Europe.
The EU's Executive Commission said it had not received a formal request by either company to clear the merger, and Kroes said she would look at it carefully in line with EU competition rules.
"We have not received all the facts and figures. ... We will do the job properly, not with emotion," she said.
Kroes, who will meet with Mittal chairman and CEO Lakshmi Mittal on Wednesday, said she had no objections to a large steel merger.
"I am not shocked by big, little or small mergers," she told the European Parliament's economic and monetary affairs committee.
Companies need EU approval for mergers if all those involved have a joint global turnover of more than $6 billion or if at least two of them have each more than 250 million euros $302 million turnover in Europe.
Mittal also will be meeting with Belgian federal officials Wednesday.