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04.07.2006, 05:21 #1
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Arcelor Spurns Severstal Deal
Arcelor spurns Severstal deal
by Paul Whitfield in Paris
Top global steel maker Mittal Steel Co. NV neared victory in a five-month battle for its closest rival Arcelor SA Friday, June 30, after the target's shareholders voted to reject an alternative deal with Russian steel magnate Alexei Mordashov.
Shareholders representing 57.94% of Arcelor's stock voted against the tie-up at a meeting in Luxembourg overturning an agreement Arcelor management had struck with Mordashov as part of its defense against early approaches by Mittal Steel.
"Seeing this vote, the board will now unwind the agreement with Mr. Mordashov," Arcelor Chairman Joseph Kinsch told shareholders.
Luxembourg-based Arcelor agreed June 25 to an improved ?26.8 billion ($34.23 billion) cash and share bid from Rotterdam-based Mittal Steel. In doing so, the company spurned a white-knight deal with Mordashov, who had agreed to swap assets — including 90% of Russian steel maker OAO Severstal — and cash for 25% of Arcelor.
The binding nature of the white-knight deal meant Arcelor's management could not overturn the deal and needed an absolute majority of shareholders to vote it down. The unusual vote structure was put in place by Arcelor earlier this month in what many shareholders saw as an attempt to push through the Mordashov deal. Normally only one-third of voting shareholders would be required to vote against such a merger.
The new company, to be called Arcelor Mittal, will be based in Luxembourg. It will be about three times bigger than its nearest rival, Nippon Steel Co., and will account for about 10% of the world's steel production — a scale that Mittal chairman Lakshmi Mittal hopes will give it more bargaining power with key customers.
"This is another important step in completing the merger between Arcelor and Mittal." Mittal Steel said in a statement. "We would now urge shareholders to tender their shares into the Mittal Steel recommended offer by the July 13th closing date."
The deal could still face a challenge from Mordashov. The Russian billionaire this week told French lawmakers he had not given up hope of launching his own bid for Arcelor and was looking to raise financing for another offer.
Traders dismissed the chances of a new bid for Arcelor as unlikely, and said Mordashov was likely to turn his attention elsewhere. Germany's ThyssenKrupp AG and Britain's Corus Group plc are both seen as possible targets.
Arcelor executives did not get off easy at Friday's meeting. Shareholders took the opportunity to voice their anger at the steelmaker's controversial defense against Mittal Steel — which has included direct attacks by Arcelor CEO Guy Dollé on Mittal's management and an unpopular decision to put key North American assets in a holding company beyond shareholder control.
Kinsch, however, was unbowed, claiming that Arcelor's aggressive tactics were responsible for Mittal Steel twice increasing its original bid of ?18.6 billion. "We have created in five months more than ?12 billion in value," the chairman said.
News of the vote sent shares in both Arcelor and Mittal Steel higher, though Mittal's shares later shed their gains. Arcelor shares traded late afternoon Friday at ?37.75, up ?0.24 from their previous close. Mittal Steel shares traded marginally lower at ?24.01, down ?0.11.
(c) The Deal.com
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04.07.2006, 14:10 #2
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- 21.11.2005
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