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. Last Updated: 07/27/2016

Mittal Seeks Support for Hostile Arcelor Bid

PARIS -- Steel tycoon Lakshmi Mittal fought on Monday to contain a French political storm over his company's $23 billion bid for rival Arcelor as the Luxembourg-based steel firm dug in for a long takeover battle.

Three days after the world's top steel firm stunned the industry with a bid for No. 2 Arcelor, the Indian-born billionaire apparently failed to win over France's finance minister at talks in Paris.

Breton said he had complained to Mittal during an hourlong meeting about the lack of advance warning of the bid to create a global steel giant and expressed the government's "profound concern" about the fate of almost 30,000 French jobs at Arcelor.

At a news conference, Mittal said he was open to talks with Arcelor and issued reassurances about jobs and the future of the company's plants in France.

"We are not at war here; we are creating value for the shareholders," Mittal said.

He said he was open to discussion about management posts or the board of directors but would not change his bid.

Arcelor rejected Mittal's offer over the weekend and called it hostile. Chief executive Guy Dolle said at a news conference on Monday that the two companies were "diametrically opposed."

"Arcelor will not share its future with Mittal Steel because the two companies are completely different," Dolle said.

Arcelor called Mittal's steel empire "an opportunistic construction," made up of highly diverse units that still needed to undergo restructuring. Mittal said his group was the "best in [its] class" and had a strong entrepreneurial spirit.

"In our industry today, only a strong company with a global reach can ensure long-term employment and provide acceptable returns for shareholders," Mittal told reporters.

Arcelor was created in 2002 by the merger of France's Usinor, Spain's Aceralia and Luxembourg's Arbed. Its French work force of 28,500 makes up 30 percent of its staff.

Analysts say there is little the French government can do in practice to prevent Mittal from taking over Arcelor, but Breton's statement was a clear signal of political turbulence awaiting a hostile bidder.

Breton has previously said he is not opposed to hostile takeovers while drawing up a list of protected sectors that excludes steel. Starting over the weekend, he hardened this position by saying a hostile bidder should seek agreement first.

Mittal said he had wanted to talk directly to Arcelor chief executive Guy Dolle but was forced to accelerate the timetable for his bid because he feared it would leak into the press.

Bitter exchanges over the bid had started in the morning's newspapers and radio shows, with Dolle complaining about "Monopoly money" tactics and vowing to defend the company in a battle that he expected to drag on for four to six months.

"We ask staff to keep their guard up against this kind of competition and ensure working hours and salary benefits are kept," said Jacques Laplanche, head of Arcelor's European works council and a member of the Communist-backed CGT trade union.

The media circus surrounding Mittal, one of the world's richest men and best known in France for his daughter Vanisha's multimillion-dollar wedding at the Vaux-le-Vicomte chateau in 2004, was intense as he posed for dozens of photographers.

Despite the stalemate, financial markets were betting on Mittal winning Arcelor's support by lifting its cash and paper offer, which was originally worth 28.21 euros ($34.22) per share but had reached 31.03 euros by midafternoon.

An alternate bidder seemed unlikely, analysts said.

Analysts at ABN Amro said Mittal had the scope to raise his offer as high as 35 euros per Arcelor share, if it had to.

"To hit 35 euros, a level some market participants we have spoken to are hoping for, a meaningful counterproposal [a tie-up with a third party] would be a necessity," ABN Amro said.

Dolle said he would hold regular talks on joint activities with Nippon Steel president Akio Mimura in Paris on Thursday but was not in talks with the world's third-largest steel firm over mounting a white-knight defense against Mittal.

Arcelor rose 3.5 percent to 29.56 euros, while Mittal Steel shares in Amsterdam were up more than 8 percent.

Exane BNP Paribas raised its price target on Arcelor to 34 euros from 24 euros and said Mittal was most likely to succeed by offering Dolle the job of CEO in the merged company.

The impact of the bid has been felt across the world's steel industry, with shares of major steelmakers rising sharply as investors bet a bidding war could lift values across the sector.