Arcelor to buy Severstal to foil Mittal bid | india | Hindustan Times
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Arcelor to buy Severstal to foil Mittal bid

The merger, due to be finalised at the end of July, will create a company with turnover of $59 billion.

india Updated: May 26, 2006 14:44 IST

European steelmaker Arcelor is to buy Russian company Severstal in a deal worth a net 12 billion euros, the two companies said on Friday, creating the world's biggest steel titan and thwarting a hostile raid by Mittal Steel.

The merger, due to be finalised at the end of July, will create a company with turnover of 46 billion euros ($59 billion), Arcelor and Severstal said in a joint statement.

Severstal's president and owner, Alexey Mordashov, "will contribute all of his economic interests in Severstals steel business" as well as Severstal-Resource, which holds iron ore and coal assets, and his stake in Italian steelmaker Lucchini, it said.

In return, Mordashov will receive about 32 per cent of the new merged group and the position of non-executive president of the Arcelor board of directors, with Guy Dolle remaining chief executive officer.

The merger values Arcelor shares at 44 euros - nearly 13 billion euros in total - double what they were worth on January 26, the day before Mittal launched its takeover bid.

But Mordashov will also contribute 1.25 billion euros in cash to Arcelor making the net cost of the deal about 12 billion euros.

"The combination of Arcelor and Severstal will be the Number 1 steel company in the world with 46 billion euros in sales..." the statement said.

The Severstal president has committed not to increase his stake in the merged group for four years, or to sell any of his shares for the next five years.