Mittal, Arcelor close to a friendly deal?

23 June 2006

Influential French newspaper La Tribune has reported that the two companies have broadly decided on the contours of a friendly merger and only the final price needs to be agreed now. Quoting a senior Mittal executive, Bloomberg has reported that Mittal Steel has in principle agreed to some parts of the final deal.

It is speculated that the final price to be paid by Mittal would be lower than €44 per share, the buy back price announced by Arcelor, but considerably higher than the existing offer by Mittal.

Representatives of the Mittal and Arcelor have been holding discussions for more than a week now to thrash out a friendly merger. Arcelor had to cancel a board meeting to consider a share buyback at €44 per share, fearing opposition from shareholders.

Publicly, Arcelor continues to favour a merger with Russian steel company Severstal. Alexei Mordashov, majority owner of Severstal, had earlier this week voluntarily modified the terms of the merger and agreed to lower his stake to 25 per cent from 32 per cent in the merged entity to make it more palatable to Arcelor shareholders.

All three companies, Mittal, Arcelor and Severstal have come out with advertisements in European newspapers to explain their positions to shareholders.