The head of Russian steel group Severstal, Alexei Mordachov, said May 30 he could not immediately afford to increase his planned stake in Arcelor above 38%. Meanwhile, Mittal Steel, which is bidding to buy Arcelor, said it would be prepared to end up with 40% of the Arcelor-Severstal entity.
Severstal and Arcelor, a European group, have agreed that Severstal will contribute all of its assets, plus 1.25 billion euros (US$1.6 billion) in cash, in return for 32% of Arcelor, rising to 38% once Arcelor has bought back and cancelled some shares.
The plan is seen as a defensive move by Arcelor to become too big for Mittal to succeed with its takeover offer of 25.8 billion euros.
On May 30, Mordachov told the French newspaper La Tribune: "I have said that I would like to go up to 45% (of Arcelor) but that it was impossible because I don't have the necessary money." His remarks seemed likely to be interpreted as an attempt to reassure shareholders in Arcelor.
The managing director of Mittal Steel Europe, Roeland Baan, told the Financial Times Deutschland on May 30 that Mittal Steel would be prepared to end up with a minority interest of 40% of the new entity. Until now Mittal Steel, which launched its bid two weeks ago, has said that it wants to acquire at least 50% of Arcelor. But the deal announced last week between Arcelor and Severstal has complicated the outlook for Mittal Steel.
A spokeswoman for Mittal Steel told AFP that "if the operation Severstal-Arcelor goes ahead, our takeover bid continues."
Copyright Agence France-Presse, 2006
