Luxembourg to vote on takeover law

Luxembourg’s parliament is to decide 22 March 2006 whether to introduce new rules which could obstruct the bid of Mittal Steel for Arcelor. Mr Laurent Mosar, head of the finance committee, said on 20 March 2006 that he would not adopt that proposal but did not rule out other changes which might impact the offer. Mr Mosar said he would propose “amendments on liquidity,” but declined to provide more details. However, Ms Anne Marechal, a Paris based partner at law firm DLA Piper Rudnick, said imposing liquidity rules would go against the EU’s takeover directive, probably triggering a legal row with the EU’s executive Commission. Other questions include whether the law can be introduced before Mittal Steel’s bid gets underway, and if it is not, whether it can be applied retroactively, after the bid is launched. Legal sources on both sides of the deal have different interpretations of the regulatory framework. The new law would require that a bidding company to have at least 25% of its shares traded publicly on the market in order to use its stock to buy another listed company. Because the Mittal family owns 88% of the capital of Mittal Steel, the company would have been obliged to launch a cash only offer or at least a cash alternative for Arcelor shareholders.

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