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ThyssenKrupp makes Dofasco bid

FRANKFURT, Germany — German steelmaker ThyssenKrupp AG said Monday it has made a friendly offer to acquire Canadian steel company Dofasco Inc. for $4.1 billion, trumping an offer from Luxembourg's Arcelor SA.

The bid, announced by the Dusseldorf-based company's board, was for 61.50 Canadian dollars ($52.59) per share, 9.8 percent higher than the bid made by Arcelor.

Dofasco's board recommended that its shareholders accept the offer from ThyssenKrupp, a quick acknowledgment that it preferred the German suitor to its Luxembourg-based rival.

"The significant premium being offered reflects the strategic value of Dofasco to ThyssenKrupp in accelerating the growth of the combined companies in North America," said Brian MacNeill, chairman of Dofasco's board.

Arcelor had made a hostile offer last week of 4.4 billion Canadian dollars ($3.7 billion) for Hamilton, Ontario-based Dofasco, its first foray into North America and a shift from its previous strategy of making acquisitions in developing markets.

At the time, Dofasco — Canada's largest steel company — said it would review the offer, and urged shareholders to await its recommendation before selling. Arcelor's all-cash bid represented a 27.3 percent premium over the 44 Canadian dollars ($37) closing price of Dofasco's shares on Nov. 22.

ThyssenKrupp's bid is a 40 percent premium over its closing price on the Toronto Stock Exchange on the same day.

Arcelor said it was reviewing Thyssen-Krupp's offer. "We will communicate our position once we have fully evaluated the offer and our options," the company said.

ThyssenKrupp said the acquisition would help it expand its international presence and give it more access to North American markets, particularly the United States and Canada. It said no job cuts were anticipated.

"Strategic fit and the quality of the local employees are our priorities when considering an acquisition," said Chairman Ekkehard D. Schulz. "In the case of Dofasco, we win on both counts by advancing our North American strategy and adding the exceptional management team and highly regarded work force."

Analysts, however, questioned the wisdom of investing in North America.

"I regard this move as negative in light of the high price," Landesbank Rheinland-Pfalz analyst Thomas Hofmann told Dow Jones Newswires.

"I also don't think that it's a wise move to invest in the North American steel market, which is already rather mature. Instead, the company should invest in growth markets like South America, Asia and eastern Europe."

Schulz said the company, which is debt-free, had not ruled out raising its offer for Dofasco if conditions warranted.

The German steel company said the acquisition, which requires both regulatory and shareholder approval, would bring its annual sales to nearly 50 billion euros ($58.8 billion).

Founded in 1912, Dofasco has facilities in Canada, the U.S. and Mexico. It makes various steel products, but mainly sells to U.S. automakers, producing around 5.5 million tons a year of flat steel usually used for cars.

ThyssenKrupp is one of the world's biggest producers of steel, employing more than 187,000 workers, and reported revenue of $48.5 billion (41.2 billion euros) in 2004.