Mittal Steel said last night it had finally won the backing of the directors of rival Arcelor for a merger which will create the world’s largest steelmaker five months after first announcing its interest.Last night, after a day-long board meeting, Arcelor was understood to have agreed to give its blessing to a €26bn (£17.7bn) bid from Mittal Steel. The decision in effect ditches the merger with the Russian steel group Severstal which Arcelor had previously backed.
Severstal, which could still increase its own offer, stands to pocket a €140m “break fee” if the Mittal/Arcelor deal goes through with the blessing of the Luxembourg-based company’s board.
Yesterday’s €40.37 a share offer from Mittal - which was approved at a Mittal board meeting in London yesterday afternoon - represents an 85% premium on Arcelor’s share price when Mittal first signalled its interest. The new company is expected to be called Arcelor Mittal, with Arcelor management well represented on the new board.
“We have always sought a recommended merger in the interests of all stakeholders - we are delighted that is what we have now achieved,” a Mittal spokesman said in a statement last night. The company added that it had paid a “fair price for what is a very good business”.
There was no immediate official confirmation from Arcelor though the two companies are expected to hold a joint news conference later today.