rooting for Mittal!
Survival of the fittest man, thats my obnoxious take on globalization- like it or not.
MITTAL'S STRENGTH IN WEAKNESS: Arcelor's management says shareholders should reject Mittal's hostile acquisition bid because the company is too weak, and it will likely point to yesterday's report of a fourth-quarter earnings drop as further evidence.
Don't believe it.
Its apparently poor fourth quarter is more a sign of strength than weakness, although operating margin fell from 28% to 12% and earnings per share dropped by 62%. Breakingviews (which appears daily in the Wall Street Journal Europe) notes that Mittal has proved itself remarkably resilient even though spot steel prices plummeted by a third in the first three quarters last year. Its second half return on equity was 22%.
It's likely Mittal will still have to sweeten its offer (75% is stock). But Arcelor will be hard-pressed to argue that its shares, at seven times earnings, are too costly. Mittal's strength in adversity weakens Arcelor's position.
MITTAL'S STRENGTH IN WEAKNESS: Arcelor's management says shareholders should reject Mittal's hostile acquisition bid because the company is too weak, and it will likely point to yesterday's report of a fourth-quarter earnings drop as further evidence.
Don't believe it.
Its apparently poor fourth quarter is more a sign of strength than weakness, although operating margin fell from 28% to 12% and earnings per share dropped by 62%. Breakingviews (which appears daily in the Wall Street Journal Europe) notes that Mittal has proved itself remarkably resilient even though spot steel prices plummeted by a third in the first three quarters last year. Its second half return on equity was 22%.
It's likely Mittal will still have to sweeten its offer (75% is stock). But Arcelor will be hard-pressed to argue that its shares, at seven times earnings, are too costly. Mittal's strength in adversity weakens Arcelor's position.
