Arcelor Board Backs Merger with Mittal
Jun 26, 2006
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Arcelor's board yesterday unanimously recommended the latest merger proposal from Mittal Steel.

In the latest twist to this merger drama, Mittal Steel Company NV last week submitted revisions to its latest merger offer. Arcelor yesterday issued a statement announcing its recommendation of the offer, which the board said was a "substantial improvement compared to Mittal Steel’s preceding offer announced on 19 May." The board said the new offer is a 49-percent improvement over Mittal's initial offer, made on January 27, 2006, and is a 108-percent improvement of the cash component. Taking into account the cash portion of Mittal Steel’s offer, Arcelor said, the shareholders of Arcelor and Mittal Steel would hold 50.5 percent and 49.5 percent of the new company, respectively.

The merger apparently ends Arcelor's plan to merge with Russian steel supplier Severstal.

The new steel company that would result from the merger, Arcelor-Mittal, will be headquartered in Luxembourg, according to Mittal's release on the agreement. Arcelor-Mittal will be listed in New York, Paris, Madrid, Amsterdam, Brussels, and Luxembourg. The industrial and corporate governance model will be based on Arcelor’s model, Arcelor said.

Arcelor continues to be opposed to the sale of Dofasco, its steel producing business in Hamilton, Ontario, Canada. However, Mittal's U.S. antitrust approval for the merger was contingent on the sell-off of Dofasco.

"Intense discussions with Mittal Steel in the past weeks have resulted in a significantly improved offer by Mittal Steel that the board of directors is unanimously recommending. The merger will give rise to the leading steel company in the world," said Joseph Kinsch, chairman of the Arcelor board.

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