Mittal under pressure to raise bid for Arcelor

24 June 2006

Mittal had earlier raised his original bid to 25.8 billion euros, which Arcelor rejected. Arcelor, however, hinted that it might accept a revised bid if the offer is increased substantially, even as it favoured a merger with rival suitor Severstal owned by Russian billionaire Aleksei Mordashov.

Severstal already has a venture with Arcelor in Russia for making galvanized steel.

Talks between Arcelor and Mittal, meanwhile, intensified on Saturday over an improved offer. Earlier, reports quoting Arcelor sources had said that Mittal was willing to make concessions on the merger proposal and on corporate governance.

Mittal raised his offer for Arcelor by 34 per cent last month, after making a first bid in January. Severstal says that Mittal''s strategy focuses on building volume, which would expose the company to the risks of price swings in the steel market, while the plan followed by Arcelor and Severstal focuses more on an "integrated product mix."

Severstal, which has the backing of the Russian government, is optimistic about a merger with steel giant Arcelor, though there were complications in the mooted deal.

Severestal owner Alexey Mordashev, who had revised his merger offer under pressure from Arcelor shareholders, had also agreed to a lower stake of 25 per cent stake in Arcelor against the earlier bid for 32 per cent.