Paris: European steel group Arcelor on Tuesday announced a sharp increase in its proposed 2005 shareholder dividend in a move that dealers said could help shield it against a hostile takeover bid by Mittal Steel.
Luxembourg-based Arcelor raised the proposed 2005 dividend payout to 1.85 euros per share from the 1.20 euros announced in February and promised to return a further five billion euros to shareholders over the coming months in the form of share buybacks or exceptional dividends.
Arcelor said it had also incorporated Dofasco, its recently acquired Canadian steel producer that Mittal plans to sell if its bid for Arcelor succeeds, into a separate entity.
Dealers said the transaction would make it very difficult for Mittal to divest the company, which Arcelor acquired in late January for 3.95 billion euros.
Mittal has that once in control of Arcelor it will sell Dofasco to Germany's leading steel-maker, ThyssenKrupp.
Dealers predicted that the actions announced by Arcelor could force Mittal, which has Indian origins but is based in The Netherlands, to improve the terms of its 18.6-billion-euro ($22.6-billion) cash and share offer for Arcelor, a step Mittal has so far refused to take.
The receding chances of a successful Mittal acquisition prompted the selling of Arcelor shares on the Paris stock exchange.
Arcelor shares were down 2.20 per cent at 32.07 euros in mid-morning trade on the CAC 40 index, which was showing a loss of 0.58 per cent.
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