Paving the way for a merger between Arcelor and Mittal Steel, an overwhelming majority of shareholders of the Luxembourg-based firm on Friday voted down a merger proposal from Russia's Severstal.
About 58 per cent of Arcelor shareholders voted against the Severstal offer.
In the process, they accepted Mittal Steel's $32.3 billion offer, which was approved by the Board of Arcelor on June 25 after a five-month long battle.
Arcelor had recommended acceptance of share and cash from Mittal Steel valuing at about 32.3 billion dollar, which would create a group with 3,20,000 employees producing about 116.0 million tonnes of steel annually, accounting for about ten per cent of the world market.
Arcelor Chairman Joseph Kinsch told shareholders that the long fight with Mittal was worth it, saying the India-born steel tycoon LN Mittal and the markets had finally recognised Arcelor's "true value."
The Board of Arcelor had called on shareholders to vote against Severstal, saying it believed the Mittal deal, which it had originally described as unfriendly and hostile, was better and set a benchmark for the steel industry.
"We have created in five months more than euro 12 billion in value," Kinsch said.
"The battle was long and hard," he said. "This defence allowed us to come out with the best solution for the group and the most value for shareholders."
Meanwhile, Severstal Chairman Alexei Mordashov has said his company was examining all its options in relation to Arcelor, which had announced a merger with the Russian company on May 26 to ward off the bid from Mittal.
Kinsch, however, rejected suggestions that the Severstal deal was a tactic to block Mittal's offer and force the stakes higher, claiming the board had only been able to change its mind about Mittal after it discussed the detailed business plan early this month.
Even though Arcelor CEO Guy Dolle had offered to quit after the proposed merger with Mittal Steel, Joseph Kinsch has desired that Dolle should stay with the company.
As per the merger proposal, LN Mittal would become President of the new steel entity Arcelor-Mittal, while Kinsch would continue to be in the position till his retirement.
Initially, the Chairman position will be held by Kinsch and the President position will be held by Mittal. Upon the retirement of Kinsch, Mittal will assume the role of Chairman and successor to the President will be proposed by Kinsch.
For a period of three years, the agenda of each Board of Directors meeting shall be jointly agreed by the Chairman and the President of the company and shall include any matters proposed to be included on the agenda jointly by the Chairman and the President.
In the new entity, Mittal Steel would hold 49.5 per cent while the Mittal family's holding would be 43.5 per cent.
The Mittal family has agreed to a 5-year lock-up, subject to certain exceptions, including the right to dispose of up to 5 per cent of the company share capital after the second year.
According to the agreement between the two companies, each initial Board of Directors will be composed of 18 non-executive members, the majority of whom will be independent. Six members will be nominated by Mittal Steel, three of whom will be independent.
Six members will be from the existing Arcelor Board. Three members will be from the Arcelor Board representing existing Arcelor major shareholders. A further three members will be employee representatives.
Aditya Mittal will join new the company's management board, while other Mittal Steel executives will be named to the management board in due course, it added.