Arcelor defends Severstal deal
Arcelor says a takeover from rival Mittal Steel could lead to 'highly volatile' revenues.Updated: Jun 14, 2006 12:08 IST
Steelmaker Arcelor SA defended a merger deal with Russia's Severstal on Tuesday valuing it at euro 13 billion ($16.34 billion) and saying a takeover from rival Mittal Steel could lead to "highly volatile" revenues.
Mittal separately published a business plan predicting strong growth even if it doesn't manage to win the battle for Arcelor, which yesterday said Mittal's revised euro25.8 billion ($33 billion) cash-and-stock offer was inadequate and undervalued the company.
After resisting Mittal's bid since January, Arcelor agreed a tie-up with Severstal last month that sees it swap newly issued shares for Severstal's steel assets.
Luxembourg-based Arcelor gave a value for the Severstal deal at the first time, saying in a document published on its Web site that its 295 million new shares were worth euro13 billion for a 32 per cent stake.
Severstal's controlling shareholder Alexei Mordashov will pay Arcelor euro1.25 billion ($1.59 billion) in cash and handing over his stake in all of Severstal's steel asssts and Italian steelaker Lucchini SpA - which Arcelor values at euro11.7 billion ($1.7 billion).
The deal will be called off if Mittal acquires more than 50 per cent of Arcelor, the document said, and in that case Mordashov will receive a euro140 million ($176 million) break-up fee.
Some shareholders have criticised Arcelor's failure to consult them before strikig the Severstal deal and the unusual way equity holders will be asked to approve it - it wll go though unless shareholdes representing 50 per cent of all shares vote against it at a June 30 meeting.
First Published: Jun 13, 2006 16:25 IST