Shareholders of steel giant Arcelor SA, that was acquired by L N Mittal''s Mittal Steel last year (See: Mittal-Arcelor: Saga of a bidding war) despite the stiff resistance by its management, are seeking a court order from a Dutch Court to prevent Mittal Steel Co. NV''s takeover at a share swap they say they are not happy with. (See: Arcelor acquisition terms provoke minority stakeholders)

ArcelorMittal yesterday said that it had received a writ of summons from three hedge funds, SRM Global Master Fund Ltd. Partnership, Trafalgar Catalyst Fund and Trafalgar Entropy Fund to appear before a Rotterdam court on 22 August, where Mittal Steel is headquartered.

The writ of summons by the three shareholders seeks an injunction to block the first phase of the merger that would enable the two companies to formally merge into ArcelorMittal SA.

The three hedge fund investors represent 3 per cent or half of the remaining minority shareholders.

They say they are unhappy over the second phase of the ArcelorMittal merger being governed by Luxembourg law that allows the steel giant to force them out with a lower offer even though Mittal has not managed to reach its legal threshold of 95 per cent share holding required.

In May, Arcelor had offered to buy out the minority shareholders at a lower share exchange than what Mittal Steel had offered last year. Arcelor''s board said three investment banks found the price fair but some shareholders who were dissatisfied by the swap ratio had threatened legal action.

The dissatisfied shareholders say the new offer should be higher because the original share swap had neither factored in the improved steel industry outlook nor the subsequent ruling allowing the company to retain Dofasco Inc, which had strengthened the company''s position.

Mittal had planned to seek shareholder approval for this on 28 August and complete this on 3 September. ArcelorMittal would then merge with Luxembourg-based Arcelor at a later date.

The merged Mittal Steel - Arcelor SA, which already calls itself ArcelorMittal after combining the operations and assets of the two largest steel companies, has emerged the world''s single-largest steel maker. Its holdings include Canadia''s Dofasco, which Arcelor had grabbed in a hostile bidding war, edging out the original buyer ThyssenKrupp of Germany, just three days before Mittal announced its bid for Arcelor.