Update: Mittal under pressure to raise Arcelor bid

Mittal Steel is under increased pressure to revise its $23 billion bid for the Luxumbourg-based Arcelor following a revision of merger terms by rival Severstal and reports that its owner Alexei Mordashov would settle for 25 per cent of the new group rather than the initially proposed 32.3 per cent. Severstal also raised its offer for Arcelor's shares by about $2 billion.

Severstal's new proposal, however, envisages raising its stake in the combined entity to 38 per cent under a separate share buyback plan, involving a block of new Arcelor shares post merger.

Mittal Steel CEO Lakshmi Mittal refused to comment on the Russian steel maker's bid to block his proposal. He also declined to comment on the outcome of the Arcelor board meeting.

Arcelor, however, is in a win-win situation following a substantial revision of the Severstal offer and the subsequent pressure on Mittal to revise its own bid further.

The Arcelor board is meeting in Luxembourg to discuss the two offers and select the better of the two suitors.

In early European trading, Arcelor shares rose 1 per cent to €35.8 while Mittal shares were up 1.2 per cent at €25.65 in Amsterdam. Severstal shares were down 0.3 per cent at 280 roubles after reaching a high of 285.87 earlier.