Mittal under duress to up Arcelor bid

LUXEMBOURG/BRUSSELS: The world’s largest steelmaker Mittal faced further pressure to raise its E23bn ($29-bn) bid for rival Arcelor after Russian suitor Severstal improved its friendly merger offer.
Directors from Arcelor were gathering in Luxembourg on Wednesday, home of the world’s second largest steelmaker to discuss which of its suitors in the five-month-old battle would make the best match.
“It seems to be a win-win situation for Arcelor because Severstal has improved the offer substantially, which might force Mittal to sweeten its offer if it really needs Arcelor,” said a trader at a French brokerage.

Shares in Arcelor were up 1 % at 35.8 euros at 0911 GMT while Severstal shares were off 0.3 % at 280 roubles after reaching an earlier high of 285.87 Mittal shares, traded in Amsterdam, were up 1.2 % at 25.65 euros, valuing its current offer of 1 new share and 10.05 euros in cash for every Arcelor share at 35.70 euros.

On Tuesday Severstal revised the terms of its merger proposal, saying that majority owner Alexei Mordashov would settle for 25 % of the new group rather than the initially proposed 32.3 % and raised its offer by about E2bn.

Under the previous deal, Mordashov would end up owning 32.3% of the combined group after buying an additional tranche of new Arcelor shares.

It envisaged Arcelor acquiring Severstal for shares on the basis of valuing Arcelor at 44 euros a share or 29.5bn euros. That stake has now increased to 38% under a separate Arcelor share buyback proposal, which was also priced at 44 euros a share.

Mittal said it had no immediate comment to make about the Russian group’s move to block its proposed takeover of Arcelor, which also declined to comment ahead of the board meeting.

Arcelor directors also faced their own pressures after a newspaper report that a leading shareholder has recommended that Arcelor scrap its merger plan with Mordashov and make a normal cash and share bid for Severstal instead.

The Financial Times said that Arcelor directors would discuss the proposal by Jose Maria Aristrain at Wednesday’s meeting to ditch the Severstal deal.

Aristrain, whose family own about 3.6 % of Arcelor according to Reuters data, called for resignation of chairman Joseph Kinsch and chief executive officer Guy Dolle, the first time that such a request has been made by a shareholder.

“We will see,” said Arcelor director Georges Schmit on his way into the board meeting, when asked if the board would discuss Aristrain’s proposal. “They (the shareholders) can always ask.” Meanwhile, Mittal Steel said on Wednesday that talks between it and takeover target Arcelor are continuing and going well. “They are ongoing and constructive,” a Mittal spokesman said, when asked for an update on the talks.


‘Consolidation a must for steel industry’ New York: Seeking to woo Arcelor shareholders, steel magnate LN Mittal has said Arcelor’s merger with Mittal Steel would go a long way in consolidating the global steel industry and ensuring its stability and sustainability. “They (both the companies) are complementary to each other.

They have a lot of synergies. They share the same region,” he said, addressing the Steel Success Conference organised by the World Steel Dynamics here last evening. “I think no other company can match Mittal Steel and Arcelor for the future of the industry. We need more companies to consolidate,” Mittal said.