Arcelor increases its offer to $4.7 billion for Dofasco

0 Comments | Deseret News (Salt Lake City), Jan 17, 2006 | by Bloomberg News

Arcelor SA, the world's second-biggest steelmaker, raised its offer for Canada's Dofasco Inc. to C$5.5 billion ($4.7 billion) in cash, topping a rival bid from ThyssenKrupp AG.

Arcelor proposed paying C$71 a share, 13 percent more than its previous offer and 4.4 percent more than ThyssenKrupp's Jan. 14 bid of C$68. Dofasco shares rose as high as C$72.49 in Toronto, indicating some investors expect a higher offer.

ThyssenKrupp has until Jan. 23 to respond, Dofasco said in a statement Monday.

"We're approaching the critical level of what can be paid," said Salah Seddik, a fund manager in Paris at Richelieu Finance, which oversees the equivalent of $4.7 billion, including Arcelor shares. "Investors are losing patience and are afraid it will go too far."

Arcelor and ThyssenKrupp shares fell on concern the companies might be overpaying for Dofasco, which has 10 percent of North America's car-steel market and counts Ford Motor Co. among its customers. Dofasco also has mines in Quebec that produce iron ore, a steelmaking raw material that jumped 72 percent last year.

Arcelor's shares fell 64 cents, or 2.9 percent, to 21.27 euros in Paris. That was the biggest one-day drop in the stock since Oct. 19. ThyssenKrupp shares declined 20 cents, or 1.1 percent, to 18.84 euros in Frankfurt.

"This is like a heavyweight fight," said Jim Hall, who owns 266,000 Dofasco shares among the C$600 million he manages at Mawer Investment Management in Calgary. "They keep punching each other and you'd expect someone to go down."