Arcelor''s largest shareholder calls for rejection of Severstal proposal

Romain Zaleski, the single-largest shareholder of Luxembourg-based Arcelor with a 7.8- per cent, has been rallying Arcelor''s shareholders to block Arcelor''s earlier merger €13-billion merger proposal with Russia''s OAO Severstal at the shareholders'' meeting scheduled for June 30.

The Severstal deal can blocked only if over 50 per cent of Arcelor shareholders oppose it. Rejection of Severstal''s proposal would enable Mittal Steel complete the €25.6-billion deal, which Arcelor accepted last Sunday. Even if an absolute majority of shareholders do not vote to reject the Severstal proposal on June 30, the Mittal deal would still stand if investors representing 73 per cent of Arcelor tender their shares to Mittal, by July 12, the closing date.

Zaleski, who owns the Arcelor shares through Luxembourg- based holding company Carlo Tassara International, has been building up his stake in Arcelor since Mittal''s first offer on January. 27. He had a 2.4 percent holding as recently as April 11.

Arcelor had mooted the deal with Severstal on May 26 to thwart Mittal Steel''s take-over proposal, prior to accepting under pressure from a group of shareholders with an approximately 30-per cent stake, at its board meeting on June 25, after five months of fierce opposition.

If Arcelor shareholders had ratified the deal, Severstal''s billionaire owner Alexei Mordashov would have become Arcelor''s largest shareholder with a 25-per cent stake in the merged entity.

According to Zaleski a combination of Mittal and Arcelor with a 10 per cent control over global steel production was preferable to a merger between Arcelor and Severstal that would create a company producing 5 per cent of the global automotive steel.