Friday, May 26, 2006

Arcelor to merge with Severstal to thwart Mittal bid

Arcelor has moved to fend off Mittal Steel's hostile €22.8bn bid by striking a deal with Russian steel rival Severstal.

The European steel giant will buy Severstal in a deal that gives the Russian group's owner a one third stake in what would then be the world's most profitable steel maker.
It values Arcelor at €44 a share, excluding a proposed €1.85 dividend - a premium to the €35.62-a-share value of the cash and share offer currently on the table from Mittal.
Severstal's owner, Alexey Mordashov, a billionaire businessman with close ties to the Kremlin, would use his 32pc stake to vote against Mittal's offer. Arcelor has shareholders who account for another 15pc whom it claims are against the Mittal offer. After the diluting effect of the deal, they would account for another 10pc.
With 42pc of the enlarged company against the bid, Mittal would find it difficult to succeed.
Mittal declined to comment shortly after the announcement.

No comments: