ArcelorMittal SA dropped its planned takeover of a joint venture with struggling car-part manufacturer CLN-Coils Lamiere Nastri SpA after the Italian government imposed restrictions, paving the way for a domestic rival to take control.

The steel conglomerate had originally agreed to take control of the 51% stake of ArcelorMittal CLN Distribuzione Italia Srl it didn't own as part of a broader debt restructuring agreement reached between CLN and its lenders.

The decision follows government intervention that blocked the transaction, altering the restructuring landscape for the distressed Italian automotive supplier.