Mittal wary of Severstal-Arcelor ties
The world's largest steelmaker fears that Arcelor's alliance with the Russian company may foil its takeover bid.Updated: May 26, 2006 11:18 IST
Mittal Steel, the world's largest steelmaker, has said it was concerned about attempts by Arcelor to ally itself with Russian company Severstal in order to thwart Mittal's hostile takeover bid.
"We are concerned that Arcelor is contemplating a dilutive transaction, possibly without recourse to its shareholders, which could potentially thwart the Mittal Steel offer," Mittal said in a statement issued on Thursday evening.
A company spokesman said the statement referred to an offer to open up Arcelor's capital to Severstal. Media reports have said Severstal could acquire 23 per cent of the European steel manufacturer.
"We have offered a compelling 70-per cent premium to Arcelor shareholders which contrasts with a possible reverse takeover of Arcelor," the statement said.
Mittal is offering 25.8 billion euros to buy Arcelor, or 37.74 euros per Arcelor share.
Arcelor declined to comment on any overtures to Severstal or on Mittal's response.
But a source close to Arcelor, the world's second largest steel producer, said its board had met on Thursday and was expected to issue a statement on Friday.
Arcelor and Severstal set up a joint venture in 2002 and opened a joint factory in Russia in April.
For several weeks the media has speculated that Arcelor is seeking a white knight to prevent Mittal's bid, which the Arcelor management has rejected.
Several potential Russian partners have been mentioned. In addition to Severstal, they have included magnate Valadimir Lissin and Magnitogorsk Iron and Steel Works.
First Published: May 26, 2006 09:24 IST