Mittal bags deal, but Arcelor 'still wins'

Arcelor used a rival merger bid by Russia's Severstal to shoehorn Mittal.

European steel group Arcelor cunningly used a rival merger bid by Russia's Severstal to shoehorn Mittal Steel into the improved offer that was finally accepted on Sunday, Russian newspapers said.

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"By courting both Severstal boss Alexei Mordashov and Mittal, the Arcelor management completed a brilliant operation that boosted the deal's final value and forced the unyielding Mittal to pay up and agree to some important compromises," the Nezavisimaya Gazeta wrote.

"By loudly advertising a possible merger with Severstal, Arcelor managers effectively used Mordashov as a battering ram in bargaining with Lakshmi Mittal, who tried a hostile takeover of Arcelor," the daily added.

The Kommersant, meanwhile, suggested that "Arcelor's sudden friendliness toward Mittal is possibly explained by his agreement to keep the current management in their posts" and that "Mittal could have promised Arcelor a share in Evraz group and thus access to the Russian market".

But it warned that "the renunciation by one of Europe's largest companies of a deal with a Russian partner may seriously strain ties between Russia and the European Union before the G8 summit due to be held in Saint Petersburg in mid-July."

"President Vladimir Putin has on several occasions rather openly hinted that Russia's stance on energy supplies to Europe depends directly on how open the European economy is for Russian companies," the daily added.

Izvestia daily wrote, "It is already obvious that in this battle for world steel supremacy Russian business was shown its place. Lakshmi Mittal fully exploited the 'Russian menace' myth in negotiating with Arcelor shareholders, and apparently found common ground with the Europeans.