Arcelor cancels key vote on €6.5bn buy-back

The European steel giant Arcelor has cancelled tomorrow's shareholder meeting as it continues talks with its unsoliticated suitor Mittal Steel.

The shareholders had been due to vote on a €6.5bn (£4.4bn) buy-back that is widely seen as part of a poison pill against the €26bn bid from Mittal.

In a statement last night Arcelor said: "In light of the current discussions between the management of Arcelor and Mittal Steel, and in order not to impair any solution for the future of Arcelor, the board of directors has resolved to withdraw the convening of the extraordinary general meeting."

Arcelor's board is still due to meet tomorrow, and the company said it intended to press ahead with the buy-back, which would see it repurchase almost one-quarter of its shares, after Mittal's offer closes on 5 July. Arcelor's shareholders are also set to meet on 30 June to vote on a rival merger deal with the Russian steel group Severstal, owned by Alexey Mordashov.

The delay to tomorrow's vote fuelled speculation last night that Arcelor's board could finally be prepared to back a bid from Mittal. It has rejected offers from Mittal, the world's largest steel maker, for the past five months, but entered talks with the company last week at the request of shareholders.

Shareholders, including the Italian financier Romain Zaleski, who acquired a 7 per cent stake last month, had threatened to vote down the buy-back.

A number of investors in Arcelor have also voiced concerns about the deal with Severstal, which would give the Russian magnate a 38 per cent stake after the buy-back, without having to table a bid for the whole company.