Clock is ticking for ThyssenKrupp to bid on Dofasco

Clock is ticking for ThyssenKrupp to bid on Dofasco

In the latest in the Dofasco bidding war, German steelmaker ThyssenKrupp has until midnight in Toronto to raise its current bid of CA$68 per share to match Arcelor's latest bid of CA$71 per share for the Hamilton, Ontario-based steel giant. If ThyssenKrupp does not increase its bid by midnight, Arcelor will win Dofasco and Dofasco will likely have to pay ThyssenKrupp a CA$215 million break fee, a fee which US investment fund P. Schoenfeld Asset Management LLC (PSAM) declared in a letter to the Canadian flat rolled producer last week, unfair to shareholders and a "breach in (the company's) fiduciary duty." PSAM, who owns two percent of Dofasco's stock, accused Dofasco's board of robbing the company's shareholders of at least CA$1.46 per share by entering the break fee agreement, which represents about four percent of the total offer. Though PSAM, and the rest of Dofasco's shareholders for that matter, worry ThyssenKrupp might not outbid Arcelor, Dofasco's shares are going for CA$72.49, indicating investors expect Dofasco's preferred suitor, ThyssenKrupp will offer a better deal. Bidding started in November with Arcelor's CA$56 per share hostile takeover offer and escalated into a competitive standoff between Arcelor and ThyssenKrupp after Dofasco executives approached ThyssenKrupp to secure a better offer of CA$68 per share. Some might argue, however, that Dofasco -- the European rivals' entrance ticket to the American auto industry -- might not be such an "asset" after all, as the state of the domestic auto industry is so poor. Ford just announced its new plan to cut costs by shutting down 14 plants and shedding 30'000 hourly and salaried workers, but analysts don't think that this plan will be sufficient in solving the company's financial woes. With Ford and GM, North America's two largest automakers, still on the verge of Chapter 11 bankruptcy, is Dofasco, a flat rolled producer whose main customer is the US auto industry, really such a valuable prize to be won?