Shareholders in the European steel group Arcelor voted by a majority of 58% to reject an alliance with Severstal of Russia, clearing the way for a deal with Mittal Steel.
Arcelor board president Joseph Kinsch told a general assembly of shareholders that "more than 50 % (of the capital) declared itself against the operation with Severstal".
Severstal had agreed a merger deal with Arcelor in May that would have seen Sevestal owner Alexei Mordashov take a 32% stake in Arcelor, but Arcelor management on June 25 accepted an alternative offer to merge with rival Mittal Steel.
Kinsch told shareholders that the plan with Severstal had offered the best industrial strategy for Arcelor but acknowledged that financial markets had "reacted badly" and that some Arcelor shareholders had also voiced strong opposition. Kinsch said that 60% of the shares in Arcelor were represented at the meeting.
Arcelor is now recommending acceptance of a share and cash from Mittal Steel which values Arcelor at about 25.4 billion euros (US$32.3 billion) and would create a group with 320,000 employees producing about 116.0 million tons of steel per year, about 10% of the world market.
A spokesman for Mittal hailed the news. "This is another important step in completing the merger between Arcelor and Mittal. We would now urge shareholders to tender their shares into the Mittal Steel recommended offer by the July 13 closing date," he said.
Copyright Agence France-Presse, 2005