M Dollé, who was in London to begin a whistle-stop tour of British investors, said that he would not need to rely on politicians to see off the unwanted approach, but would argue that the proposal seriously undervalued Arcelor and its prospects.

“I can only fight on shareholder value but I am sure that we will be successful in showing our shareholders that it is more valuable for us to remain independent,” he said.

The company is digging in for a four to six-month campaign and said that it had a number of strategies up its sleeve, but would not disclose them at this stage. Returning cash to shareholders and buying a rival were both tactics under consideration, the steel giant admitted. For the second day running M Dollé directly questioned Lakshmi Mittal’s integrity, although he insisted the takeover battle was not a “personal” issue.

He said there was a world of difference between the three-way merger that created Arcelor and the merger that Mr Mittal was proposing. In the earlier merger there had been months of discussion before a deal was eventually agreed, but it was now too late for similar discussions to take place with Mittal Steel.

“He does not want to do that. I could not trust him now,” M Dollé said. On the question of job losses and plant closures, which Mr Mittal has said he will avoid, he said: “I don’t know if he will do what he has promised. You have to look at what he has done in other countries.”

Analysts said that defence strategies for the company were limited. A return of cash could be underpinned by asset sales, banking sources said. Arcelor could also try to find an acquisition that was more compatible and provided a fresh impetus for growth.

M Dollé appeared to rule out a tie-up with the Anglo-Dutch company Corus, on the grounds that the European Commission would force the merged company to dispose of some key assets.

Finding a suitable white knight is also likely to be difficult, although other companies, such as South Korea’s Posco and the American group Nucor, could possibly offer Arcelor more cash than Mittal’s bid, which is mostly in shares.

Arcelor was created in 2002 through the merger of France’s Usinor, Spain’s Aceralia and Luxembourg’s Arbed. Thierry Breton, the French Finance Minister, the Luxembourg Government and Pedro Solbes, the Spanish Economy Minister, have all made public comments about the bid.

The French group could go to court to buy time to organise its defence. Mittal will need the four stock market authorities where Arcelor is listed to clear its offer. Arcelor could file legal challenges in all the four countries to delay matters.

Mr Mittal continued to meet French and Luxembourg politicians yesterday to explain his case. A Société Générale analyst’s note said: “Mittal Steel has the upper hand.”

• Arcelor’s shareholder base remains largely opaque because, under Luxembourg listing rules, large shareholders do not have to disclose their stake, either to the company or to the market. Funds that are known to hold the stock include Schroders, Gartmore, Chicago-based Citadel, Alliance Capital Management and France’s Groupama. Roger Guy, senior fund manager at Gartmore, said: “I am certainly not against this deal, but they might need to sweeten it a bit.”

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