Mittal's offer values Arcelor at around €36 a share based on current share prices. Reports in the French press suggested that Mittal could raise its bid to €43 a share, but sources said that a bid worth some €40 a share is more likely.
Mittal has already raised the value of its original bid by 34 per cent over the past five months in an intense battle to create the world's largest steel maker.
Arcelor's board, led by chief executive Guy Dollé, has resisted the hostile bid thus far.
Controversially, Arcelor devised a plan to take over the Russian steel-maker Severstal and buy back shares to resist Mittal's advances. Some major Arcelor shareholders have opposed the deal with Severstal as it potentially handed control of the company to the Russian steel magnate Alexey Mordashov.
Despite amendments to the Severstal deal to appease shareholder concerns, Mittal has yet to amend the terms of its offer. Yet following talks between the two companies, Mittal looks more likely to get its way and is determined to get a recommendation.
A Mittal Steel spokesman said: "Mittal Steel is in advanced discussions with Arcelor which may or may not lead to a recommended transaction." The spokesman declined to comment on whether Mittal would raise its bid. Arcelor refused to comment.
Arcelor's board meets tomorrow morning to discuss the situation. Mr Dollé said earlier this week that he wants Mittal to make a higher offer for the company, suggesting a recommended bid might be likely.
Reports in France have suggested that Mr Dollé will stay on as chief executive of a merged company while Lakshmi Mittal will share the chairman's role with Joseph Kinsch, 73, until the Arcelor chairman retires. However, it is unlikely that any management structure has yet been defined, with talks between Mittal and Arcelor focused on value, business strategy and corporate governance.
Ahead of tomorrow's meeting, Mittal, Arcelor and Severstal all ran newspaper adverts. Mittal's publicity included a replica voting form that Arcelor shareholders will use at the company's extraordinary general meeting on 30 June. The advertisement said: "Arcelor shareholders, vote 'No' to the forced Severstal merger." Arcelor's campaign emphasised its preference for the Severstal deal and asked, "Is it better to be everywhere or there where it matters?"
- More about:
- Iron And Steel Manufacturing