The steel giant owned by British-based tycoon Lakshmi Mittal is facing a battle to convince European powerbrokers of the merits of its £12.7 billion bid for Arcelor.
Political leaders in France, Luxembourg and Belgium yesterday raised concerns about the hostile bid which caught European markets by surprise on Friday and was rejected by Arcelor on Sunday evening.
The budget minister and economic minister of Luxembourg issued a joint statement raising their concerns about "the apparent hostile nature of the bid" and the lack of guarantees over employment and investment in the principality.
Winning their support is important to Mittal as Luxembourg holds 5.6 per cent of shares in Arcelor, which is the principality's largest employer with 6,000 work-ers.
The government of Belgium said it would seek more commitments before it agreed to any sale of its 2.4 per cent stake, while French finance minister Thierry Breton said he wanted further details about the bid.
Mr Breton met Mr Mittal yesterday and said he had told him of his "profound concerns".
Arcelor was in no doubt that the approach from Mittal was unfriendly and said the companies did "not share the strategic vision, business model and values".
It warned of "severe consequences" that the proposal could have on its employees and customers, urging shareholders not to sell out to Mittal.
The company was drawing up its own charm offensive, having rejected Mittal's offer.
Arcelor chief executive Guy Dolle, who described Mittal's offer as a "bit ridiculous", said a bid would be bad for all aspects of his company.
Mittal's proposal to buy Arcelor would involve handing Canada's Dofasco to German rival ThyssenKrupp, thereby scuppering Arcelor's recent agreement to buy Dofasco.
Arcelor said it was ready for a fight that could last at least four to six months.
A Mittal/Arcelor combined group would be three times the size of its nearest rival, Nippon Steel.
Mr Mittal, meanwhile, said he would honour Arcelor's social commitments.
He hopes to acquire Arcelor by the second quarter.
Mr Mittal said 60 per cent of the anticipated $1 billion in synergies from the merger would be realised within the first year.
Referring to the potential for regulatory challenges, he said he saw no major competition problems in either Europe or the Americas. "We think there won't be major questions of competition in Europe. No major questions in America either," he said.
He said Mittal did not buy steel plants to close them, and that the workforce would not be reduced if the acquisition succeeds. He said the steel industry was too fragmented, and that if European employees in it wanted to be protected in the future, "this is a good way".
Mittal also said he was ready to talk with Arcelor about establishing a joint management.
The headquarters of the combined group after the acquisition could be located in Luxembourg. He reiterated that his company would not modify its offer, saying it is already attractive.
Separately, it was announced in Brussels that Mr Mittal will meet with EU Competition Commissioner Neelie Kroes tomorrow.
A Mittal bid poses a sharp test for French Prime Minister Dominique de Villepin's policy of "economic patriotism", especially with unemployment likely to be a key issue in presidential elections in 2007.
The impact of the bid was being felt across the world's steel industry and stock markets, with shares of a number of steelmakers rising sharply as investors bet a bidding war could lift values across the sector.