Arcelor acquisition terms provoke minority stakeholders

Brussels: Arcelor Mittal plans to buy the 6 per cent of Arcelor it does not already own at an exchange ratio likely to prompt minority shareholders to take legal action.

The world''s largest steelmaker, formed by Mittal Steel''s takeover of Arcelor last year, is likely to give an indication of the exchange ratio when it announces first-quarter results before the market opens on Wednesday.

"It will be below the exchange ratio of the former offer (1.5714) but it will be fair as the chairman told shareholders at the annual meeting," the source said, adding that Arcelor Mittal was seeking to complete the merger in September.

A minority shareholder group calling itself ADAM, which had played an active role in the two groups'' takeover battle last year, previously said it would consider challenging an exchange ratio lower than the one that won over Luxembourg-based Arcelor last year. It represents a number of minority shareholders on the exchange-ratio issue.

Mittal bought Arcelor, offering 11 of its own shares for seven of Arcelor, a ratio of 1.5714. The exchange ratio now offered would likely value the remaining Arcelor shares below their current market price of €59.25, which is itself more than 10 per cent below the below the 11-for-7 takeover ratio.

Mittal Steel''s shares have roughly doubled in price since the deal closed last August, so the value of Arcelor shares based on the 1.5714 ratio is now about €67.00, against the €42.355 they were worth based on Mittal Steel''s share price when the transaction ended.