Arcelor talks going well, Mittal says

Lakshmi Mittal, the chief executive of Mittal Steel, said talks with the rival Arcelor regarding a €26bn (£17.8bn) takeover have proceeded well, adding that the bid could turn friendly after further discussions.

Arcelor is resisting Mittal Steel's approaches. It has opted instead to bid €13bn for the Russian steel company Servestal and buy back shares to block the move.

Mr Mittal, who was talking to the Belgian senate, said some Arcelor shareholders were unhappy that the Russian steel magnate Alexei Mordashov could potentially control the company without paying a control premium. Under Arcelor's proposals, Mr Mordashov's stake would increase to 38 per cent as a result of a share buy-back. "This is a device to let a Russian company take control," Mr Mittal said.

The Servestal deal has proved contentious because Mr Mordashov will not be required to table an offer to buy out Arcelor despite holding a stake of more than 33.3 per cent - the threshold at which a formal offer is mandatory. Because he has not bought the shares, he will be exempt from making a bid according to Luxembourg law. Mr Mordashov will also elect two of the four members of Arcelor's strategic committee under the company's proposals.

Despite Arcelor management's belligerence, Mr Mittal told Belgian senators his discussions with Arcelor were proceeding well and that another meeting has been planned. He said the two parties have discussed synergies, corporate governance and value in the recent meeting. Mr Mittal said synergies as a result of the deal should be more than $1bn.

Mr Mordashov owns 89.6 per cent of Servestal. He will also contribute a €1.25bn cash payment as part of the deal with Arcelor and has said he will consider sweetening his offer if Mittal Steel ups its bid.