Mittal and Severstal set to sweeten offers for Arcelor

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The Independent Online

The two rival suitors for Arcelor, the Indian steel company Mittal and its Russian rival Severstal, are both poised to sweeten their offers, the head of the Luxembourg-based company said yesterday.

Speaking in New York, Guy Dollé, Arcelor's chief executive, said he expected improved offers from both companies but did not elaborate on the detail.

Mittal Steel, run by the Indian billionaire Lakshmi Mittal, has tabled a hostile €26bn (£18bn) offer for Arcelor which shareholders are due to vote on early next month. In response, Arcelor announced a "white knight" merger with Severstal which would involve its owner, Alexey Mordashov, paying $1.25bn (£680m) in cash and taking a 32 per cent stake in Arcelor.

It is thought that Mr Mordashov's improved offer, which could be announced as early as today, will involve him taking a reduced shareholding in the merged company after a large minority of Arcelor shareholders complained he was seizing control by the back door.

The structure of the "strategic committee" which the merged company intends to set up is also expected to be altered. Under the present proposals Mr Mordashov would have control over the strategic committee and thereby a veto over company policy.

But Arcelor investors still need to be won over. Jose Maria Aristrain, of the Spanish steel family which owns 3.7 per cent of Arcelor, called last night for the resignation of Mr Dollé and Arcelor's chairman Joseph Kinsch on the grounds they are ignoring shareholders' wishes. Mr Aristrain is proposing the Severstal deal be reformulated as a takeover of Severstal by Arcelor for €11bn, giving Mr Mordashov the means to buy a 25 per cent stake in Arcelor.

Mr Mordashov is due to host a visit of Arcelor investors to Severstal's main steel plant in the Russian city of Chevropets tomorrow. It is thought that the terms of Severstal's revised proposal will be known by then.

Mittal said last night that it had not raised its offer for Arcelor but that it expected an outcome to senior-level talks which have been taking place between the two sides within the next few days. Mr Mittal said he would not favour a three-way tie-up between his company, Arcelor and Severstal and has ruled out keeping a minority shareholding in Arcelor should his takeover bid fail to secure majority backing.

Arcelor has cancelled a shareholder vote scheduled for today on a proposed €6.5bn share buy-back in a sign that Mittal is gaining the upper hand in the five-month battle over the company.