Dofasco employees are eager for answers concerning the sale of the company by Mittal Steel Company (MT), an agreement that is part of a hostile take over bid against Arcelor.
As part of Mittal's bid an agreement was signed to sell the highly profitable Dofasco, the manufacturer of flat-rolled and tubular steel products, to a German company, ThyssenKrupp.
Arcelor put Dofasco, its recently acquired Canadian subsidiary, into a Netherlands trust. The trust plan was meant to keep Dofasco out of Mittal's grasp and make the whole acquisition of Arcelor more difficult.
The stratagem failed and Mittal acquired Arcelor for $33.5 billion and the merged company is now based in Luxembourg.
Although the sale of Dofasco is still planned the positive cash flow and trust issues have worked in the merged companies favor. According to this NYTimes.com article, under an antitrust agreement, the United States government (which has jurisdiction over companies with operations in the United States) has ordered Arcelor Mittal to sell Dofasco. If it cannot do that because of the trust structure, the company must divest either Mittal’s Sparrows Point mill near Baltimore or its mill in Weirton, W.Va.
The antitrust order means that Dofasco must operate like a stand-alone company. It cannot disclose any substantive information about operations to Arcelor Mittal; the six directors the European company appointed to Dofasco no longer attend board meetings, which are now conducted by the Dofasco’s six independent directors; and Arcelor Mittal only receives very limited information about the Canadian company’s financial performance.
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