Steel giant ArcelorMittal, whose CFO Aditya Mittal keeps an 80-page folder of potential takeovers on his desk, is seeking an equity capital expansion authorisation from its shareholders for keeping it ready for future merger and acquisition deals.
The world's largest steelmaker will ask its shareholders at an Extraordinary General Meeting (EGM) on May 13 to authorise the board to increase the company's share capital, so that it is in a position to issue shares for entering into potential growth opportunities such as merger and acquisition.
Pursuant to the effectiveness of the merger of Arcelor and Mittal Steel and the subsequent full integration of both the companies, "it has quickly appeared to be crucial to offer to the board of directors the necessary means to react with the necessary promptitude in a constant moving and globalising steel environment," the board has said in a report to be presented before the shareholders at the EGM.
Therefore, the board "considers it of paramount importance in the globalisation context of the steel industry to be in a position to issue additional shares as a mean to enter into potential growth opportunities and consequently conclude mergers, acquisitions or any other similar transactions, amongst others, by way of exchange of shares."
Recently, ArcelorMittal CEO Lakshmi Mittal's son and the company's Chief Financial Officer Aditya Mittal had mentioned in an interview to the Sunday Times about an 80-page thick folder on his desk of potential takeovers with three deals a page. "That is the number of global opportunities," he had said.
Aditya is understood to have been the key man behind Mittal Steel's hostile takeover bid for Arcelor as well as a number of other M&A deals.
Arcelor deal was completed successfully and it created the world's biggest steel company ArcelorMittal which is being run by NRI billionaire Lakshmi Mittal.
"I have been personally been involved in 20, but in charge of about 50," 32-year old Aditya told the Sunday Times. The publication noted that "he has probably headed more acquisitions than any young man alive."
At present, ArcelorMittal is probably the only steel firm across the world with a market capitalisation in excess of USD 100-billion (about 127 billion dollars).
There had been various M&A deals by ArcelorMittal, in which Mittal family owns about 45 per cent stake, since the Arcelor takeover, but speculations are still rife about what would be the next big acquisition move after Arcelor.
In the meantime, board's decision to seek authorisation to enlarge equity capital base could give an indication about some big moves being close, said an investment banker.
The board has said it is seeking an authorisation to increase the authorised share capital by 643.86 million euro, to about 7.08 billion euro, in order to "allow the issuance of new shares, within the limit of the authorised share capital, for mergers, acquisitions or similar transactions."
The shareholders had authorised the board on November 5, 2007 to increase the company's share capital, in one or more tranches, within a limit amounting to 6.4386 billion dollars, with the power to limit or cancel preferential subscri
The board has also said that it "strongly believes that the limitation or cancellation of preferential subscription right of existing shareholders is justified taking into consideration the company's and its subsidiaries' need to enter into potential growth opportunities while offering shares in exchange rather than cash, which shall demonstrate the strong value plan and strategy development scheme of the management."
The board would be authorised to use this enlarged authorised share capital for a period ending on November 5, 2012 - that is till about four and half years from now.