The multinational steel company Arcelor is to launch its bids for the capital of Luxembourgish steel group Arbed and its French counterpart Usinor today. The bid for Spanish group Aceralia's capital will be delayed until the first week of January by which time the authorisation of the Spanish stock market commission (CNMV) should have come through.

The takeover should conclude in February next year and Arcelor, the merged company, should start listing on stock markets at the end of the same month. Arcelor will have 540.5 million shares and is hoping for an average pre-tax profitability level of 15 per cent and synergies of 700m euros per year from 2006. The company's free float will total 70 per cent of capital.

The merger is taking place in the context of substantial international steel-making over-capacity, with the EU under pressure to reduce capacity. EU trade commissioner Pascal Lamy said last week that the EU is willing to lower crude steel output by 13 million tonnes and finished steel products by 16 million by end-2002. The offer is conditional, however, on action by other countries, and especially on the US not blocking off its market to imports through the prohibitive 40% tariffs recommended by its International Trade Commission, he said.

Over the last 15 years the EU has already made substantial steel production cuts, with employment in the industry being reduced from 1m to just 250,000, and more will be made through the merger of Usinor, Arbed SA and Aceralia SA.