Severstal won't increase Arcelor stake above 32% | india | Hindustan Times
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Severstal won't increase Arcelor stake above 32%

The firm was denying a report that said the Russian steel tycoon, seeks to eventually hold 45% in the new co.

india Updated: May 31, 2006 11:33 IST

Severstal owner Alexei Mordashov does not intend to increase his stake in Arcelor SA above 32 per cent, Severstal said on Tuesday.

The company was denying a report that said the Russian steel tycoon, who is joining with the Luxembourg-based giant, seeks to eventually hold 45 per cent in the new company.

Earlier, the head of Russia's anti-monopoly agency said he would approve the Arcelor-Severstal merger, which would create the world's biggest steelmaker and make Mordashev its main shareholder. The Interfax news agency had reported Monday that Mordashov said he wanted to increase his interest to 45 per cent, "but only as long as this meets the interests of other shareholders and the regulators in Luxembourg."

Severstal swiftly played down the report, with a spokeswoman Monday saying only that Mordashov had the option of increasing his stake and that it could only happen after five years under the terms of the deal.

Tuesday's statement said that "Mordashev does not intend to increase his stake in Arcelor above 32 per cent," though it added that his stake could reach about 38 per cent if Arcelor shareholders decide to carry out a buyback of shares.

Russian anti-monopoly agency chief Igor Artemev said earlier that he would approve the merger. "The decision will be positive. There's no doubt about it," the RIA-Novosti news agency quoted him as saying.

Arcelor shareholders will consider the merger, which is also subject to approval by EU and US regulators, at a June 28 meeting. Arcelor, fighting a hostile bid from Mittal Steel Co, said Friday it reached a deal with Mordashov that would give it a controlling stake in Severstal and euro1.25 billion ($1.6 billion) in cash in exchange for Mordashov's getting 32 per cent of Arcelor. Mittal is racing to torpedo the deal: Goldman Sachs Group, Mittal's financial adviser, is calling for the Severstal-Arcelor tie-up to be approved by two-thirds of shareholders. Arcelor said Friday at least half of its shareholders would need to vote against the deal to block it.