/ 6 June 2006

Mittal bullish on Arcelor takeover

Mittal Steel this week played down suggestions that it could keep a minority stake in bid target Arcelor if its hostile â,¬24-billion takeover bid fails, claiming it was confident its offer would win shareholder backing and see off Arcelor’s plans to merge with Russia’s Severstal.

Roeland Baan, chief executive of Mittal’s European operations, was quoted recently as suggesting it might be prepared to hold on to a minority stake if it failed to deliver a knock-out blow in the battle.

That would raise the intriguing prospect of Mittal and Alexei Mordashov, the Russian oligarch who owns almost 90% of Severstal, each owning significant minority stakes in Luxembourg-based Arcelor.

”With more than 20% we would be able to call an Arcelor shareholders’ meeting at any time,” Baan told the Financial Times Deutschland.

A Mittal spokesperson declined to speculate on the company’s plans if it does not win sufficient backing from Arcelor shareholders. ”We remain focused on gaining 51% of Arcelor and are confident of doing so given the substantial 70% premium we are offering … Should we gain less than 50%, we would evaluate our options at that time.”

Arcelor revealed that it was planning to team up with Severstal in a â,¬13-billion deal under which it would acquire the Russian company’s assets, including coal and iron ore mines, the Italian steel company Lucchini, plus a cash payment from Mordashov of â,¬1,25-billion. In return Mordashov would emerge with 32% of the combined Arcelor/Severstal group.

The Severstal proposal has divided Arcelor shareholders, some of whom are concerned that the deal can only be derailed if 50% of shareholders vote against it. One of Mittal’s banks, Goldman Sachs, is actively supporting Arcelor shareholders who oppose the deal and is helping to try to assemble a block of 20% of shareholders who could call an extraordinary meeting to change the voting rules. — Â