Arcelor chairman under pressure from rebels on Severstal

Joseph Kinsch, the chairman of Arcelor, was expected to receive a letter last night from dissident shareholders controlling about 30 per cent of the steel company's shares demanding an extraordinary meeting at which they can voice opposition toits proposed merger with Severstal.

Opponents of Arcelor's deal with the Russian steel group, which was announced last week, hope to use the meeting to put pressure on Arcelor's board to back a rival offer from Mittal Steel instead.

The rebels cannot force Arcelor to abandon its €13bn (£8.9bn) takeover of Severstal, but they hope the show of strength will persuade Mr Kinsch to think again.

Alexey Mordashov, who controls 90 per cent of Severstal, said yesterday that he would welcome Mittal Steel, the rival bidder for Arcelor, as a minority shareholder in the enlarged company. However, he ruled out a three-way tie-up between his own company, Arcelor and Mittal on the grounds that their industrial strategy was not compatible.

Speaking in London, where he is on a tour of institutional investors to persuade them of the merits of the Severstal-Arcelor deal, Mr Mordashov said: "Mr Mittal is very professional, and it might be good for the company if he became a shareholder. If he gets less than 50 per cent backing from Arcelor shareholders then it will be an interesting situation.

"But I don't think a three-way merger is realistic because of the different strategies being pursued by the companies. It would be very difficult to merge their operations."

Severstal will emerge as Arcelor's biggest shareholder with a 38 per cent stake in the company if the merger goes through. The deal will automatically unwind, however, if Mittal's €26bn offer for Arcelor gains the backing of a majority of its shareholders. In contrast, Arcelor's takeover of Severstal can only be blocked if a majority of Arcelor's shareholders oppose the deal.

Mr Mordashov defended the valuation put on his company by the terms of the merger with Arcelor and the very high shareholder turnout needed to thwart the deal.

Meanwhile, the Anglo-Dutch steel maker Corus insisted it wanted to expand by concentrating on "organic growth and growth in low-cost countries", not necessarily acquisition. First-quarter profits fell from £198m to £61m.