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Strategies & Market Trends : Speculating in Takeover Targets
CTG 7.260-0.4%Dec 2 4:30 PM EST

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To: richardred who wrote (1039)2/12/2006 11:25:32 PM
From: richardred   of 6521
Nippon Steel Mum on Arcelor Clause
Sunday February 12, 10:24 pm ET
Nippon Steel Mum on Tech-Sharing Clause That Could Block Arcelor Takeover Bid

TOKYO (AP) -- Nippon Steel refused to comment Monday on a report that a clause in its technology sharing agreement with Arcelor SA could help the European steelmaker block a hostile takeover attempt.

Japan's Yomiuri newspaper reported on Saturday that Nippon Steel's partnership contract with Luxembourg-based Arcelor contains a "change of control" clause that could be used to defend Arcelor against an unsolicited takeover bid by Mittal Steel Co., the world's largest steelmaker.

Nippon Steel spokesman Masato Suzuki declined to comment on the report or the company's agreement with Arcelor.

The clause gives Nippon Steel -- the world's third-largest steelmaker -- the right to refuse use of any technologies provided to Arcelor, the second-largest steel producer, if Arcelor is acquired by another company, the Yomiuri said.

The clause could make Arcelor a less attractive takeover target and in effect could be used to prevent such a bid, the newspaper said.

"Nippon Steel and Arcelor signed a partnership agreement in January 2001 that includes sharing technology related to manufacturing high-quality steel plates for automobiles," the Yomiuri said. "If Mittal acquired Arcelor, Nippon Steel could invoke the 'change of control' clause to prevent Mittal from using the technology," it said.

"Japanese auto makers rely on thin, durable steel plates made with some of the shared technology for their low fuel consumption vehicles manufactured in Europe," the report said. "The makers could turn to other suppliers if a Mittal-owned Arcelor could no longer supply the plate."

Arcelor has rejected as hostile Mittal's takeover bid, announced on Jan. 27. The bid would create a giant company with a nearly 10 percent share of global steel production and a market capitalization close to US$40 billion (euro34 billion).

Arcelor and Nippon Steel have a partnership agreement but do not own stakes in each other.
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