Arcelor shareholders to decide on Severstal issue

The meeting of Arcelor's shareholders is to be held even though its management had agreed to a merger with Mittal.

Shareholders of steel group Arcelor are set to vote Friday on whether to back a merger with Severstal, even as stock market regulators in four nations sought an answer from the latter over its intentions to buy the Luxembourg-based company.

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The meeting of Arcelor's shareholders is to be held even though its management had agreed to a merger with Indian competitor Mittal Steel.

The regulators in Belgium, France, Luxembourg and Spain said Russian steel tycoon Alexei Mordashov should "explain his intentions towards Arcelor clearly and immediately".

Their joint statement was issued by the Luxembourg regulator Commission de Surveillance du Secteur Financier (CSSF) and referred to both the Friday meeting and a statement last Sunday by Severstal that it was still considering its options.

In late May the Arcelor board favoured Severstal as a partner but has since been convinced by an improved offer from Indian steel billionaire Lakshmi Mittal.

Analysts say that the Severstal bid will be effectively dead if more than half the shareholders vote against it at the meeting. It was unclear Thursday whether enough shareholders would be present to even achieve a quorum for the meeting to take place.

Zaleski holds a 7.8 per cent stake in Arcelor and the Luxembourg state has a 5.6 per cent holding.

But if quorum is not reached and the Severstal bid not rejected, Mittal will instead have to spend many more weeks securing the more than 50 per cent of Arcelor's voting stock needed to bring down the contract with Mordashov.

The Arcelor management has said it hopes the 26.9 billion-euro ($33.7 billion) merger with Mittal will be completed by the end of this year.

A group of Arcelor shareholders seeking to block Friday's meeting in Luxembourg has withdrawn its court action.