``Privileged relations will continue because the firm needs our support''
Unfriendly offer became a friendly one, and therefore acceptable: Chirac German Economy Minister "relieved that lengthy battle between steel giants" is over French trade unions unhappy with deal, predict redundancies
Paris: Except in Luxembourg, where the Government pledged its support to the new steel giant Arcelor-Mittal, reaction in Europe to the news of the merger was lukewarm.
Luxembourg's Economy Minister Jeannot Krecke, who had opposed the mega merger, said: "We have always supported Arcelor's development in the past and we will continue to give them [our support] in the future. Privileged relations will continue because the firm needs the Government to support and represent it."
In France, President Jaques Chirac attempted to put a brave face on what many analysts are describing as a humiliating climb-down. In a televised interview President Chirac said Mittal's offer had been "unfriendly" at first, but "became friendly and therefore acceptable." He suggested that the pressure put on Mr. Mittal by the governments of France and Luxemburg had induced the Indian industrialist to substantially improve his offer. "The unfriendly offer became a friendly one and therefore acceptable thanks to the reaction of the French and Luxembourg governments," he said, adding that the decision taken by Arcelor share-holders "is based on guarantees concerning employment and the maintenance of research centres."
The Grand Duchy of Luxemburg holds a 5.6 per cent of Arcelor shares and is more directly interested in the fate of the company than the governments of Spain or France who describe themselves as "stakeholders".
Backtracking on earlier statements, Minister Krecke said: "The Arcelor and Mittal of tomorrow will need the government's political support to accomplish their grand strategic designs. I am satisfied because the headquarters and the decision-making centre of the biggest steel group in the world will be in Luxembourg and also because the interests of the Luxembourg industrial site will be protected."
In the new entity the Luxembourg Government's shareholding is likely to be diluted, a fact the Minister acknowledged, saying their 5.6 per cent in Arcelor had more symbolic and political than real value.
A spokesman for France's governing UMP on Monday welcomed the merger, saying it was a "sensible marriage," while Germany's Economy Minister Michael Glos said he was relieved that the lengthy battle between the steel giants was over. However, not a beep was heard from France's Finance Minister Thierry Breton who accused Mr. Mittal of not respecting the "grammar of international business."
Former Socialist Minister Jean-Pierre Chevenement lamented on Monday that the decision by European steel group Arcelor to accept a tie-up with Mittal Steel amounted to a victory for "the dictatorship of money" and to disdain "for the interests of France."
His sentiments were echoed by two major French trade unions who said that despite guarantees to the contrary, Arcelor-Mittal would end up restructuring and creating redundancies over the next three years. The deal had already claimed its first victim, Arcelor CEO Guy Dolle. At the press conference in Luxembourg on Monday he remained silent and made a hurried departure. Mr. Dolle is considered the architect of Arcelor's failed strategy to fend off the Mittal bid and he has been accused of making disparaging and even insulting comments on Mr. Mittal and his managerial style.