Steelmaker Mittal Bids for Rival Arcelor

Mittal Steel Co., already the world’s largest steelmaker, announced a hostile $22.8-billion offer for rival Arcelor on Friday, a deal that would create a global powerhouse far outstripping its nearest competitors.

The cash and stock bid, which offers Arcelor shareholders a 27% premium to the stock’s closing price Thursday, is the largest in the history of steelmaking. It would give the combined company the ability to produce more than 100 million tons a year -- about 10% of the world’s output and more than three times the capacity of its closest rival, Japan’s Nippon Steel Corp.

Netherlands-based Mittal’s plans would knock out Arcelor’s agreement to buy Dofasco Inc., a Canadian producer of steel used by Detroit automakers, for $4.85 billion. Mittal said it would sell the Canadian company to Germany’s ThyssenKrupp -- a rival bidder for Dofasco -- if it takes control of Arcelor.

“This is not about creating a giant,” Mittal Chief Executive and Chairman Lakshmi Mittal said. “It’s about creating the sustainability of the steel industry.”

Despite Mittal’s assertions that Arcelor shared his vision for more industry consolidation -- and that there would be a place for Arcelor executives in the combined company -- the Luxembourg steelmaker did not express enthusiasm with the bid.

“Arcelor underlines the hostile character of this move that takes place without prior discussions or consultations between both companies,” the company said.

Arcelor’s shares surged 28% to 28.54 euros ($34.96) -- pushing past the 28.21 euro ($24.50) value of Mittal’s offer. Mittal’s shares rose 6% to 27.63 euros ($33.84).