France to allow warrant issues to resist takeovers

Poison pills are methods used by a target company to make its takeover more difficult to achieve, which could include granting shareholders the right to buy more shares at a discount in case of an unwanted takeover.

The government has already introduced a number of measures to help French companies fend off hostile foreign takeovers.

The government, however, denied that the step was in response to L.N. Mittal’s hostile bid to buy Arcelor. In an interview to India Today, French President Jacques Chirac said that it was not in the best interest of Arcelor to accept L.N. Mittal’s $23 billion bid and that the issue had nothing to do with Mittal’s Indian origin.

‘‘The French government is a stakeholder, not a shareholder. Given the circumstances of the case, it would appear that it was not in the best interest of the company,’’ Chirac said

To a question that Mittal’s company is owned by and operated by a person of Indian origin, Chirac said, ‘‘Certainly, but the problem has nothing to do with L.N. Mittal. It is a Dutch company and Arcelor is a Luxembourg company’’.

French authorities are concerned about the shareholders and the company. ‘‘Again there is a room for debate on questions like differences in corporate cultures between Arcelor and Mittal, or the conditions of the bid,’’ he said.

‘‘It was upto the two companies involved to agree on the terms. It has got nothing to so with India. The main shareholder is Indian, but he could be of any other citizenship and that is the way we see the problem’’, Chirac said.

Earlier in the day in Luxembourg, Arcelor Steel company posted heavy profits in the fourth quarter and beefed up its dividend by 85 per cent.

Backed by the governments of France, Luxembourg and Spain, Arcelor said it would woo its shareholders, who are being courted by Mittal in one of Europe’s biggest takeover battles.

‘‘I want to share with shareholders in the beginning of March that the future of Arcelor is bright and that it is in their interest to stay shareholders of Arcelor,’’ Chief Executive Guy Dolle said.

Dolle said he was sceptical about Mittal’s claim that shareholders’ response to his bid was favourable and added that he wanted to see a cash-only offer. Arcelor said it would launch the ‘‘next phase of its value plan to its shareholders’’ on February 28.

‘‘It will be a marathon and we are only at the first round,’’Dolle said about the takeover battle.

Arcelor said its 2005 core profit rose to 5.64 billion euros from 4.34 billion euros in 2004.

Dolle said that the payout of 1.2 euros per share was not a one-off and denied the increase was linked to Mittal’s bid.

‘‘The dividend is linked to our performance and our confidence, it is not at all linked to the project of Mittal Steel,’’ he said, saying the prospects for Arcelor in 2006 were very good.

France kept up its public support for Arcelor with French finance minister Thierry Breton praising the results as well as having a dig at Mittal, saying its governance practices were inferior to those of Arcelor.

Lamy notes ‘foreign’ aspect of Mittal bid

PARIS: Concern raised over the takeover bid by Mittal steel for Arcelor stem from foreign aspects of the former, World Trade Organisation head Pascal Lamy said in comments today in the French daily La Croix.

‘‘There is a ‘foreign’ side to Mittal. As in the word foreigner,’’ Lamy said, adding that ‘‘its governance and its capital are family-based, which is not the case of arcelor’’.

‘‘In public opinion, the Mittal bid for Arcelor is also a materialisation of emerging economies such as India’s. The question of economic models is thus also a factor, Mittal is seen by the public as an Indian company eventhough this company is run from Europe. Fears that Mittal would apply Indian social rules are unfounded,’’ the WTO chief said. — Reuters