[lbo-talk] Arcelor accepts improved Mittal bid

uvj at vsnl.com uvj at vsnl.com
Sun Jun 25 14:02:13 PDT 2006


Reuters.com

Arcelor accepts improved Mittal bid http://today.reuters.com/business/newsarticle.aspx?type=ousiv&storyID=2006-06-25T203101Z_01_BRE000406_RTRIDST_0_BUSINESSPRO-MINERALS-ARCELOR-MERGER-DC.XML

Sun Jun 25, 2006

By Julien Ponthus and Mathieu Robbins

LUXEMBOURG/LONDON (Reuters) - European steel maker Arcelor (CELR.PA: Quote, Profile, Research) bowed to an improved 25.8 billion euro ($32.46 billion) takeover bid from Mittal Steel (ISPA.AS: Quote, Profile, Research) on Sunday to create a world steel giant three times larger than its nearest rival.

After a bitter five-month battle involving an Indian-born billionaire, a Russian oligarch and several European governments, Arcelor Chairman Joseph Kinsch announced his board had voted to accept for Mittal's revised cash-and-stock offer.

"In the end, it was decided unanimously by the Arcelor board that (it will) recommend the new offer by Mittal Steel," Kinsch told reporters, adding that Mittal's improved bid was a 10 percent premium over its previous offer. The decision after a nine-hour board meeting represented a climbdown by Arcelor's management, which had cobbled together a white knight deal with Russia's Severstal (CHMFF.MM: Quote, Profile, Research), controlled by steel magnate Alexei Mordashov, to try to fend off Mittal.

Amid mounting shareholder agitation against that idea, Arcelor entered talks this month to end the feud over Mittal's unsolicited plans to acquire its rival and create a global champion with an annual output of more than 100 million tonnes.

"We have always sought a recommended merger in the interests of all stakeholders -- we are delighted that is what we have now achieved," a Mittal spokesman said.

The new company will be called Arcelor Mittal (MT.N: Quote, Profile, Research) and will be based in Luxembourg. Mittal Steel founder Lakshmi Mittal, the world's third-richest man, will be president, and Arcelor's Kinsch chairman until he retires next year.

The Mittal family will hold 43.4 percent of the company.

The revised Mittal bid valued the European steelmaker at 40.40 euros a share, a source familiar with the deal said.

That was 15 percent above Arcelor's last traded price before its shares were suspended last Thursday, and 45 percent above the value of Mittal's first offer unveiled in January.

ECONOMICS OVER NATIONALISM

The combined company will produce about 10 percent of the world's steel and have a joint turnover of some 55 billion euros and a total worldwide staff of 334,000, according to 2005 data.

The deal was a triumph for global business over economic nationalism. Luxembourg Prime Minister Jean-Claude Juncker, backed by France, initially vowed to fight it, and Arcelor CEO Guy Dolle said Mittal's bid was paid for with "Monopoly money."

But Luxembourg Economics Minister Jeannot Krecke praised the outcome, saying the decision-making center would remain in the Grand Duchy and the government would consider later whether to take cash or shares for its 5.6 percent Arcelor stake.

Mittal's board convened in London to ratify the new terms. Talks had continued over the weekend on the price Mittal would have to pay to win over Arcelor's board. Its earlier offer in May was 23 billion euros, or 35.37 euros per share.

Arcelor will have to pay a 130 million euro penalty to disengage from Severstal.

The Russian company, which according to a source on Saturday secured a multibillion-euro loan facility from investment bank ABN AMRO to give itself fire-power, had no comment on the deal.

Last month, Arcelor proposed merging with Severstal in an arrangement under which Mordashov would buy a significant minority stake in the Luxembourg group.

Severstal improved the terms of this proposed merger last week, saying it would settle for a 25 percent stake in the combined group and argued it was offering to improve its original deal by 2 billion euros to Arcelor shareholders.

(Additional reporting by Sabina Zawadzki in Luxembourg and Anshuman Daga in London)

© Reuters 2006. All Rights Reserved.



More information about the lbo-talk mailing list