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No three-way merger: Severstal

Mordashov has ruled out merger option with Mittal and Arcelor, saying that such a deal would have no business logic.

india Updated: Jun 29, 2006 15:34 IST

Severstal Chairman Alexei Mordashov has ruled out a three-way merger with Mittal Steel and Arcelor, French National Assembly Economic Committee head Patrick Ollier said.

"He clearly told us that it was not an option because it would have no business logic," Patrick said.

Ollier said that Mordashov was intent on pulling out a revised Arcelor deal before a key shareholder meeting on Friday, when Arcelor could approve a link-up with Mittal.

The French lawmaker also said that Mordashov had said that he was unsure of managing to construct a new deal by that time.

"He reckoned that he needed to overcome some financial difficulties to do that," Ollier said.

Arcelor had on Sunday agreed to be taken over by Mittal in a Euro 25.4 billion deal after five months of resistance.

In the same period Arcelor committed to a deal with Severstal's principal owner Mordashov.

Severstal reacted furiously to the Arcelor-Mittal deal, saying that Arcelor had not even informed it that its own sweetened merger proposal had been rejected.

Severstal could still pose problems for the Arcelor-Mittal deal because Arcelor made the Severstal agreement binding, which means that the Arcelor board cannot undo it itself.