Arcelor board to answer disgruntled shareholders
Arcelor investors can call for a meeting if they hold over 20 per cent of the European steelmaker's shares.india Updated: Jun 02, 2006 11:59 IST
The board of Arcelor, the Luxembourg-based steelmaker fighting a hostile bid from rival Mittal Steel, will meet shortly to answer angry shareholders who want more say over a proposed tie-up with Russia's Severstal, its would-be white knight.
"It is clear that the board will meet, certainly next week," Arcelor Chief Executive Guy Dolle told reporters at a joint briefing with Severstal Chairman Alexei Mordashov in Brussels.
Mittal Steel said on Wednesday that rebel shareholders of Arcelor representing roughly 30 per cent of the capital would call for a shareholders meeting over the Severstal deal.
Arcelor investors can call for a meeting if they hold over 20 per cent of the steelmaker's shares.
"If it has been reached (the 20 percent threshold) in a legal procedure, it is evident that it (a shareholders meeting) will take place," Dolle said, adding it would be up to Arcelor's board to decide the timing and agenda of the meeting.
The deal will be cancelled if shareholders representing 50 per cent or more of the capital reject it at a meeting provisionally set for June 28.
Arcelor critics say such a figure will be hard to reach as less than half of the investors attend Arcelor's meetings.
""Why is it so difficult to turn in at a meeting?" Mordashov asked reporters.
Dolle and Mordashov defended the logic of their tie-up and denied that they were preventing shareholders from deciding themselves what is best for Arcelor.
"It seems to me that 50 percent is democratic," Mordashov said.
A number of shareholder groups said they were considering legal action against the Arcelor-Severstal tie-up in order to get a public offer from Mordashov for the whole of Arcelor or a standard merger procedure, which would need over 66 percent of investors present at a shareholders meeting to back the deal.
Severstal said on Thursday that Mordashov would not be obliged to bid for all of Arcelor even though his stake in the enlarged company could rise above a key level which might otherwise trigger a mandatory bid after Arcelor's planned 6.5 billion euro ($8.3 billion) share buyback.
Arcelor plans to buy Severstal in a 13-billion-euro ($16.6 billion) deal that would give Mordashov 32.2 per cent of the combined Luxembourg-headquartered company.
That stake could rise to 38 per cent after Arcelor's buyback.
Luxembourg regulators, without commenting directly on Severstal, said that under takeover regulations, a mandatory bid would not have to be made except after the acquisition of shares.
"The text of the law is precise and rigid. It says a mandatory bid is triggered by way of acquisition of shares," said an official at the CSSF, Luxembourg's financial regulator.
"If it (a stake) becomes higher through means other than the acquisition of shares, then the mandatory bid rule is not triggered," the official added.
Severstal said the Luxembourg regulator had confirmed to it that the rule did not apply in its case.