Russian steel group Severstal proposed new terms June 21 for a merger with Arcelor, offering to reduce its stake in a merged company to placate Arcelor shareholders hostile to the deal. Severstal said in a statement that its chairman, Alexei Mordashov, would "receive 210 million new Arcelor shares ... representing approximately 25% of the enlarged company" instead of 32% in the initial plan.
The Severstal statement said that under its latest proposal a strategy panel for the new group, which was to have been led by Mordashov, "will be eliminated". In addition, the Sevestal boss would not contribute 1.25 billion euros (US$1.58 billion).
"The revised terms are significantly more attractive for Arcelor shareholders and reflect a valuation of the assets to be contributed by Mr. Mordashov that is extremely compelling," it added. The new terms represent "a value enhancement of two billion euros (2.5 billion dollars) for Arcelor shareholders," it claimed.
While a Severstal-Arcelor union would deprive Mittal of its number one ranking, it has sparked a revolt among some Arcelor shareholders who fear that Mordashov might one day take control of the entire company.
Minority investors succeeded in postponing an extraordinary Arcelor shareholders' assembly called for June 21 to approve a share buyback plan that would have allowed the Arcelor-Severstal deal to go ahead. The buyback would also have resulted in Mordashov's stake in Arcelor increasing to 37.5%.
Copyright Agence France-Presse, 2006
