Luxembourg/Brussels: The world's biggest steel maker Lakshmi Narayan Mittal faced further pressure to raise its Euro 23 billion bid for rival Arcelor after Russian suitor Severstal improved its friendly merger offer.
Directors from Arcelor were gathering in Luxembourg on Wednesday to discuss which of its suitors in the five-month-old battle would make the best match.
"It seems to be a win-win situation for Arcelor because Severstal has improved the offer substantially and now this might force Mittal to sweeten its offer if it really needs Arcelor," said a trader at a French brokerage.
Shares in Arcelor were up 1 per cent at Euro 35.8 at 1441 IST while Severstal shares were off 0.3 per cent at Rouble 280 after reaching an earlier high of Rouble 285.87 Mittal shares, traded in Amsterdam, were up 1.2 per cent at Euro 25.65, valuing its current offer of one new share and Euro 10.05 in cash for every Arcelor share at Euro 35.70.
On Tuesday Severstal revised the terms of its merger proposal, saying that majority owner Alexei Mordashov would settle for 25 per cent of the new group rather than the initially proposed 32.3 per cent and raised its offer by about Euro 2 billion.
Under the previous deal, which envisaged Arcelor acquiring Severstal for shares on the basis of valuing Arcelor at Euro 44 a share or Euro 29.5 billion, Mordashov would end up owning 32.3 per cent of the combined group after buying an additional tranche of new Arcelor shares, with that stake increasing to 38 per cent under a separate Arcelor share buyback proposal, which was also priced at Euro 44 a share.
Mittal said on Wednesday it had no immediate comment to make about the Russian group's move to block its proposed takeover of Arcelor, which also declined to comment ahead of the board meeting.
Arcelor directors also faced their own pressures after a newspaper report that a leading shareholder has recommended that Arcelor scrap its merger plan with Mordashov and make a normal cash and share bid for Severstal instead.
The Financial Times said that Arcelor directors would discuss the proposal by Jose Maria Aristrain at Wednesday's meeting to ditch the Severstal deal.
Aristrain, whose family own about 3.6 per cent of Arcelor according to Reuters data, also called for the resignation of Chairman Joseph Kinsch and Chief Executive Guy Dolle, the first time that such a request has been made by a shareholder.
"We will see," said Arcelor director Georges Schmit on his way into the board meeting, asked if the board would discuss Aristrain's proposal. "They (the shareholders) can always ask."
Comments
0 comment