Around 30 per cent of Arcelor, the Luxembourg-based steel company defending itself against a hostile $24.4bn (£14bn) cash and shares bid from Mittal Steel, is now owned by hedge funds, it emerged last week.
The revelation means that hedge funds, rather than other large shareholders such as the Luxembourg government, hold the key to the deal. Hedge funds are typically footloose investors seeking short-term profits.
Last week Arcelor sought to woo them by promising a €5bn (£3.4bn) cash return for shareholders. “By putting more cash on the table there is more incentive for them not to take the Mittal offer,” an executive familiar with thinking at Arcelor said last week. “It encourages short-term investors to take a long-term approach.”
