Severstal all set to counter Mittal

Severstal was jostling to thwart any potential raised Mittal offer for Arcelor as the battle for Arcelor nears its climax.

Russian steelmaker Severstal was on Saturday jostling to thwart any potential raised Mittal Steel offer for rival steelmaker Arcelor as the battle for Arcelor nears its climax, said a source familiar with the matter.

HT Image

Arcelor and archrival Mittal Steel, the world's two largest steelmakers, were pursuing talks on Saturday evening to find an agreement to put an end to a five-months takeover war.

Arcelor's board is due to meet on Sunday morning to decide whether to approve an improved offer to Mittal's current 23 billion euro unsolicited bid or go-ahead with a white knight rescue plan with Russian steelmaker Severstal.

Sources close to both companies said on Saturday evening that talks were still on-going on corporate governance issues and the price Mittal, controlled by billionaire Lakshmi Mittal, would have to pay to win the heart of the board members of its takeover prey.

The Russian company has secured a multi-billion euro loan facility from investment bank ABN AMRO to give itself firepower to counter any increased Mittal bid with a proposal that would include cash for Arcelor investors, the source said on Saturday.

Arcelor, which has agreed to a deal to buy Severstal to defend itself against an unwanted 23 billion euro takeover offer from Mittal, is still in talks with Mittal about a possible raised offer.

Lakshmi Mittal, chairman and chief executive of Mittal, was on Saturday heading to Luxembourg for the final stages of the battle, another source said. Mittal declined to comment on the movements of its management.

Reporters said they saw Severstal owner Alexei Mordashov entering Arcelor's Luxembourg headquarters late on Saturday.

A source close to Arcelor said the Luxembourg-based company would give Severstal the opportunity to respond to any raised Mittal offer.

Severstal owner Alexei Mordashov is keen to expand his steel empire beyond Russia.

Severstal revised the terms of its proposal this week, saying Mordashov would settle for 25 percent of a new combined Arcelor-Severstal group rather than 32.3 percent and that the revised deal represented a 2 billion euro improvement for Arcelor.

But the revised proposal dropped a cash element for Arcelor shareholders in the event of any deal. The ABN AMRO facility will allow Mordashov to re-introduce cash to any new proposal, the source said..

Mordashov has also entered talks with several Arcelor shareholders including Romain Zaleski and Jose Maria Aristrain, to try gaining their backing, the source said, adding that among options he is pursuing is a purchase of their stakes.