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Arcelor talks' outcome doubtful: Mittal

The Mittal Steel chief says Arcelor's planned meeting for a rescue strategy with Severstal is the main 'roadblock'.

india Updated: Jun 20, 2006 15:30 IST

Mital Steel chairman Lakmi Mittal has expressed uncertainty over the outcome of talks with Arcelor.

"Mittal Steel confirms that discussions are taking place with Arcelor. The outcome of these discussions remains uncertain at this stage," chairman of the world's largest steel producer by volume said in a statement.

The comment came after Arcelor announced on Monday evening that it had cancelled a shareholder meeting scheduled for June 21 on a planned 6.5 billion Euro ($8.18 billion) share buy-back plan, which was seen as a defence measure against its rival.

Lakshmi Mittal told the Wall Street Journal that Arcelor's decision made him increasingly confident that he could convince Arcelor shareholders to back its offer to buy the European steel maker and pressure the management into dropping its resistance.

"Mittal's bid is gaining momentum," said Mickael Vandenhauwe, an analyst from the Dexia banking group.

Nevertheless, he cautioned that Arcelor's planned shareholders' meeting to back a rescue plan with Russia's Severstal constituted the main "roadblock" ahead.

The June 30 meeting is planned to give Arcelor shareholders the chance to oppose the deal.

Minority shareholder group ADAM had on Monday told about taking legal steps to postpone it.

"The rules of the votes that are planned by the convocation are in violation in regards to the law and the statutes of Arcelor," ADAM said in a letter sent to a Luxembourg court.

Arcelor said that it would cancel its deal with Severstal if shareholders representing 50 per cent of the capital voted against it.

"We remain determined to bring our proposal to a successful completion and, in that context, strongly urge Arcelor shareholders to actively participate in the upcoming June 30 vote on the Severstal combination and vote it down," Mittal said.

A source familiar with the matter has said that Arcelor hoped to decide by June 30 whether it can recommend an improved Mittal bid.

The source said that Arcelor would like to have wrapped up talks with Mittal by that date so that the board could change its recommendation before the shareholder meeting if the talks were successful.