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Last Updated: Monday, 30 January 2006, 14:44 GMT
Mittal makes French jobs pledge
Lakshmi Mittal, chief executive and chairman of Mittal Steel
Lakshmi Mittal has tried to reassure French ministers
Mittal Steel has insisted that its proposed takeover of rival steelmaker Arcelor will not result in wholesale job losses in France.

The firm was responding to the concerns of French ministers about the impact of the planned 18.6bn euros (12.7bn) bid on Arcelor's 28,500 French staff.

Its boss Lakshmi Mittal met French finance minister Thierry Breton on Monday to reassure him about the deal.

Arcelor has rejected the bid, pledging to fight to retain its independence.

'Hostile claims'

The proposed deal would create an industry giant, accounting for about 10% of the world's total steel output.

However, Arcelor has strongly criticised Mittal's "hostile" approach, claiming the two firms' businesses and cultural values are incompatible.

Although Arcelor is not a French company - it is based in Luxembourg - its shares are listed in Paris and it has a large French workforce.

HQ in Rotterdam/London
175,000 employees
Shipped 42m tons in 2004
Revenues of $22bn

In the past, Paris has sought to protect businesses in sensitive areas of the economy, such as defence, from falling into foreign hands.

According to Mr Breton, the government has the "greatest reservations" about a Mittal-Arcelor tie-up and its likely impact on jobs.

Mittal Steel said it had a "good exchange of views" with Mr Breton and has tried to explain the logic of the deal.

HQ in Luxembourg
94,000 employees
Shipped 44m tons in 2004
Revenues of 30bn euros

"Arcelor has existing plans in force and we completely endorse them," Aditya Mittal, its chief financial officer, said.

"We are not going to have more job reductions than what they have currently planned."

To assuage concerns about the deal, Mittal Steel has said it would move its headquarters from Rotterdam to Luxembourg.

But Luxembourg - which owns a near 6% stake in Arcelor - has expressed reservations about the tie-up and its likely impact on the country's largest private employer.

'Different values'

Arcelor's chief executive, Guy Dolle, has said he is adamantly opposed to the deal, which he has described as a "bit ridiculous".

Guy Dolle, Arcelor's chief executive
We will have to demonstrate that our model works well
Guy Dolle, Arcelor's chief executive

"In a merger what determines success is culture and values," he said.

"We will have to demonstrate that our model works well, is balanced and brings a lot of value."

However, Mr Dolle admitted that it would be Arcelor's shareholders which would, eventually, decide the attractiveness of the bid.

The bid comes at a time when a sharp fall in steel prices has led to increased consolidation in the industry.

Prices dropped about 30% in the second half of 2005 as demand from China - which drove prices upwards in 2003 and 2004 - eased slightly.

Industry experts said neither company would want to give an inch in the ensuing battle.

"You are seeing two of the stallions of the industry fighting it out," Patrick Flockhart, managing director of Steel Business Briefing, said.

Although the two firms would represent a good geographic fit, Mr Flockhart said he believed Mittal Steel would have to raise its offer to stand any chance of overcoming opposition to the bid.

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