Arcelor stockholders reject Severstal offer

Over 57.94 per cent of Arcelor stcokholders voted against the proposal to merge with Russian Alexi Mordashov''s OAO Severstal at the shareholders'' meeting at Luxembourg this morning. Severstal was being courted by Arcelor as a "white knight" to fend off the threat of being taken over by Mittal Steel.

However, the threat of a revolt by Arcelor''s shareholders owning almost a third of the stock, earlier in June, compelled the Arcelor management to put the proposed Severstal deal to a shareholder vote.

The rejection of deal by the shareholders this morning has finally cleared the way for the Arcelor-Mittal merger in a deal valued at €25.4 billion.

Not only did the shareholders throw out Arcelor''s proposal to merge with white knight Severstal, they actually chided the management on its conduct throughout the episode — starting from CEO Guy Dolle''s insulting description of Mittal Steel''s proposal to attempts to push the Severstal deal through by requiring at least 50 per cent of shareholders to vote against it.

Joseph Kinsch, president of the Arcelor supervisory board, told the meeting that a possible three-way merger involving Severstal was feasible but the risks of execution would be considerable if done all at once.

The shareholders'' vote has brought the curtains down on Mittal Steel''s five-month-long successful battle for the control of its rival, the world'' second-largest steel maker Arcelor SA. Mittal Steel had announced its intention to take over Arcelor on January 27, 2006, barely three days after Arcelor won Canadian steel maker Dofasco in a bidding war against ThyssenKrupp for $4.9 billion.