Mittal May Cede Family Voting Rights To Clinch Arcelor Deal

Lakshmi Mittal said he might give up special voting rights in family-controlled Mittal Steel in a bid to disarm opposition to his hostile takeover of European steel giant Arcelor, according to a news report March 8. "After this transaction is done, the family will have to look at going to one to one," Mittal told the International Herald Tribune, referring to a ratio of one share to one vote, the norm in publicly held companies.

Currently Mittal family members have ten times more voting power than other stock holders, giving them close to 100% control over the company.

Mittal's surprise statement came the day after Arcelor chief executive Guy Dolle predicted that Mittal's 18.6-billion-euro (US$22.7billion) hostile bid would fail in the face of shareholder opposition. "Given the current terms of the offer," Dolle told AFP, "a huge majority of shareholders" in the Luxembourg-based company will not give up their interests. The same day, a Mittal spokesman had insisted that the company would never reduce family voting rights to less than a 2-to-1 ratio compared to non-family held shares.

Even thus diluted, Mittal would still hold 64% of voting rights in the merged company, with barely more than 50% of total capital ownership, the newspaper noted. If special voting rights were eliminated entirely, the Mittal family voting rights would be proportional to its financial stake of 50.2%.

Mittal's apparent concession on this point may not be enough to persuade reluctant Arcelor shareholder to embrace the deal, said analysts, who note that he has offered to consider the move only after the merger is concluded.

Copyright Agence France-Presse, 2006

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