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Mittal will lead merger of global steel giants

india Updated: Jun 27, 2006 01:34 IST
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INDIA-BORN Lakshmi N. Mittal will lead the integration of Arcelor-Mittal Steel -- being formed after the merger of two of the world's largest steel companies.

The roadmap was unveiled at a joint press conference in Luxembourg on Monday, a day after Arcelor's board ended five months of vehement opposition and accepted Mittal's improved offer for the merger.

Mittal, who will be the president of the board of directors for three years under the merger scheme, has committed to strictly adhere to corporate governance norms. The organisational integration will be completed in three years. As part of the integration plan, Joseph Kinsch will step down as the chairman after three years to make way for Mittal, who would then lead the new entity. After three years, the company's corporate governance norms will be reviewed.

Mittal said there would be no deviation in the corporate governance of the two companies and also in the new entity. "Since the new company is to be listed at NYSE, its parent companies will have to follow the corporate governance norms," he said.

Mittal said the next six months would be spent on integration, synergy and speaking to employees. Acknowledging the point made by Mittal, Kinsch said it was important for the functioning of the new entity.

Kinsch described the deal as a "marriage of reason", while saying he hoped it could turn into a marriage of love. Mittal responded with: "We've been trying to persuade the bride for the last five months that we love her and she should accept our marriage proposal."

Meanwhile, Arcelor's former Russian suitor Severstal has said in a statement that it would not give up yet. It said it would improve its offer to Arcelor to thwart a partnership with Mittal.

Severstal and Arcelor, had on May 26, announced with great fanfare that the two companies would merge. Severstal said on Sunday that in light of the "legal agreement" it has with Arcelor, it was studying "all its options".

On compensation of euro 130 million to be paid to Severstal as part of the agreement, Kinsch said: "Arcelor would follow all commitments that we have made."

Kinsch, however, said there was a possibility of considering a new offer if it is for the whole company. "If a new offer for Arcelor was made for 100 per cent of its capital, the board must discuss it," he said.

Mittal said he was "very relaxed" about another offer, saying he was sure Arcelor's board and shareholders backed his deal. "Any partial bid will not be entertained by the company," he said.

But his son, Aditya Mittal, who will also be on the board of the new entity, said Arcelor shareholders, who meet on Friday to vote on the deal, must reject the Severstal merger plan to keep the Arcelor-Mittal tie-up on track.