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Brussels: European Union Antitrust Regulators on Friday approved Mittal Steel Co's hostile takeover bid for rival Arcelor SA, on condition the new combined steel giant sell off some of its facilities if the bid succeeds.
The European Commission said its investigation into Mittal's €25.8 billion bid for Arcelor showed it "would not significantly impede effective competition" in the 25-nation bloc.
It did say that Mittal would have to sell off some of its production lines making heavy section beams, which Mittal has agreed to do.
If its bid succeeds, it plans to sell two Arcelor heavy and medium section steel mills in Germany and Italy and a Mittal mill in Poland.
The commission said the three plants account for around 10 per cent of the total production capacity for heavy section products in the EU and including Norway, Switzerland and Iceland.
It feared the combined company would become the dominant maker in the production of heavy section beams, leaving limited alternatives for customers.
"The other competitors active on the market would be much smaller in terms of production capacity, geographic coverage and product range," the commission said.
EU Competition Commissioner Neelie Kroes said she was "completely satisfied that, through the substantial remedies offered by Mittal, these requirements would be met".
The commission said its investigation showed the two companies' businesses "are largely complementary," saying Arcelor was principally active in western Europe, North and South America, while Mittal was strongest in North America, central and eastern Europe, Africa.
The EU blessing is likely to put added pressure on Arcelor shareholders as they mull Mittal's bid and a separate bid put together by Arcelor and Severstal to merge, in an attempt by the Luxembourg-based steel giant to avoid being taken over by Mittal.
Arcelor SA last week reached a deal that would give it a controlling stake in Severstal and € 1.25 billion in cash in exchange for 32 per cent of Arcelor.
Mittal on Friday handed a detailed plan of its takeover to Arcelor at its Luxembourg headquarters.
Roeland Baan, chief executive of Mittal Steel Europe told Dow Jones Newswires his company had "absolutely no plan" to raise its bid for Arcelor after the Arcelor-Severstal merger plan.
Mittal needs more than 50 per cent of Arcelor shareholders to sell their stock to Mittal to overturn the planned Luxembourg-Russian merger.
Baan said he remained confident Arcelor shareholders will accept Mittal's offer by July 5, which is when the formal takeover offer closes.
Even if that is not the case, Mittal may yet decide to keep a minority stake in the company, Baan said.
"We will not take a decision until that day and moment arrives," he added.
Arcelor shareholders are due to meet on June 21 to discuss a share buyback and on June 28 to vote on the Mittal and Severstal deals.
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