Severstal can't raise stake in Arcelor
Meanwhile, Mittal Steel, bidding to buy Arcelor, said it was ready to end up with 40% of Arcelor-Severstal entity.india Updated: May 30, 2006 16:54 IST
The head of Russian steel group Severstal, Alexei Mordachov, said on Tuesday that he could not immediately afford to increase his planned stake in Arcelor above 38.0 per cent.
Meanwhile, Mittal Steel, bidding to buy Arcelor, said it would be prepared to end up with 40 per cent of the Arcelor-Severstal entity.
Severstal and Arcelor, a European group, have agreed that Severstal will contribute all of its assets, plus 1.25 billion euros ($1.6 billioin) in cash, in return for 32.0 per cent of Arcelor, rising to 38.0 per cent once Arcelor has bought back and cancelled some shares.
The plan is seen as a defensive move by Arcelor to become too big for Mittal to succeed with its takeover offer of 25.8 billion euros.
On Tuesday, Mordachov told the French newspaper La Tribune: "I have said that I would like to go up to 45.0 per cent (of Arcelor) but that it was impossible because I don't have the necessary money."
His remarks seemed likely to be interpreted as an attempt to reassure shareholders in Arcelor.
The managing director of Mittal Steel Europe, Roeland Baan, told the International Herald Tribune on Tuesday that Mittal Steel intended to press on with its bid if Arcelor and Severstal went ahead with their plan. But Baan indicated that Mittal Steel would be prepared to end up with a minority interest of 40.0 percent of the new entity.