Severstal threatens to derail deal; Spanish union welcomes Mittal
26 June 2006
A Severestal statement said it was annoyed at the way its representatives were treated at Sunday's Arcelor board meeting and that it would improve its bid ahead of the shareholders meeting on June 30. Severestal said it was also not given a chance to respond to Mittal's revised offer.
The Arcelor-Mittal deal still needs ratification by Arcelor shareholders.
Severestal chief Alexei Mordashov had forged an alliance with Roman Abramovich, the owner of UK's Chelsea football club, to offer a higher price for Arcelor shares. ABN AMRO Bank had also offered the required money to the Russian steel maker, according to reports.
Mittal Steel chairman Lakshmi Mittal, however, said he would not contemplate a tie-up between the newly created Arcelor-Mittal and Russia's Severstal. Mittal had shot down an Arcelor proposal for a defensive merger with Severstal. Arcelor will now ask its shareholders to vote against the Severstal deal at the June 30 meeting.
'I definitely rule out a three-way merger with Severstal. This would not be in the interest of shareholders,' Lakshmi Mittal said at a joint press conference of Arcelor and Mittal executives in Luxembourg.
Arcelor chairman Joseph Kinsch said it would honour its commitments to Severstal if the shareholders vote for it at the June 30 EGM. In any case, Kinsch said the new company would continue working with Severstal, which already has a joint venture with Arcelor. 'Whatever might happen, we will still have the best relationship possible with Severstal,' he said.