Mittal to lower stake in German firm for $1 bn

ArcelorMittal, the world’s biggest steel company, abandoned a bid to take control of Dillinger Hutte GTS, a specialist maker of steel plate used in engineering and construction, as metal prices fall and banks tighten lending.

ArcelorMittal will reduce its stake to 33.4 per cent from 51.25 per cent, with proceeds from the sale totaling ¤777 million ($1 billion), it said in a statement today distributed by the Regulatory News Service.

The Luxembourg-based company said in June it wanted a controlling stake in closely held Dillinger Hutte, based in Saarland, Germany.

The decision to abandon the plan comes as steel manufacturers and mining companies are cutting jobs and production across the world to cope with slumping demand.

ArcelorMittal said on November 27 it may slash as many as 9,000 jobs, or 3 per cent of its global workforce, to lower costs. Posco, Asia’s third-biggest steel maker, said today it may reduce crude steel production next year should market conditions remain weak.

“The underlying steel market is still quite difficult,” said Charlie Dove-Edwin, an analyst at MF Global Securities in London. ArcelorMittal “is struggling to pay down their debt. This is the easiest way. The credit crisis and the economic downturn are doing them in at the moment.”

The company, which will sell its shares to Struktur Holding Stahl GmbH and Dillinger Hutte Saarstahl, fell 9 cents, or 0.5 per cent, to ¤17.71 as of 10:52 a.m. in Amsterdam trading.

“We will continue to be a key industrial partner to Dillinger Hutte,” Michel Wurth, a director at ArcelorMittal, said in the statement today.

Dillinger Hutte, which employs 5,230 people, produced 2.3 million tonnes of heavy plate steel last year, ArcelorMittal said in the statement today. Most of its customers are in the energy industry, it said.