Mittal faces legal battle over 'pirating'

A fresh skirmish broke out yesterday in the takeover battle between two steel giants after Arcelor took legal action against its unwanted suitor, Mittal Steel, for patent infringement in the United States.

A spokesman for Arcelor, which is trying to fend off a €21.5bn cash-and-share bid from Mittal, said the Luxembourg-based group had filed a lawsuit accusing Mittal, the world's largest steel maker, of pirating its Usibor steel technology which is used in the manufacture of cars.

He denied the action was connected to Mittal's bid, arguing such suits were quite common within the industry, though Arcelor has never before brought such legal action against Mittal. The size of the claim is unknown.

Mittal, headed by the Indian billionaire Lakshmi Mittal, said the lawsuit was groundless: "We believe that this lawsuit is without merit and are confident that we have not infringed Arcelor's patent on this product. We regard this as a frivolous action which seeks to discredit Mittal Steel."

Relations between the world's two largest steel producers remain tense after Arcelor earlier this week rejected negotiations with Mr Mittal, saying he had not provided enough information about the benefits of the deal. That provoked the steel magnate to attack the directors of Arcelor as "court jesters" for snubbing his offer to raise the bid and overhaul the board of his family-controlled company in return for a recommendation from Arcelor's board.

The bid battle is set to intensify today when both companies unveil first-quarter figures. Arcelor has said it would only enter into talks with Mittal if it comes forward with an-all cash bid, or a share offer with a detailed business plan. It has said that even after Mittal's concessions on its board structure , the Mittal family would continue to control a majority of shares in the combined business.