Originally hailed by Arcelor's board as a saviour, the deal with Severstal is now an obstacle to the company's agreement with Mittal to join forces.
LUXEMBOURG: Shareholders in steel maker Arcelor will have the chance on Friday to vote down a proposed merger deal with Russia's Severstal and clear the way for an agreed $32-billion takeover by Mittal Steel instead.
Originally hailed by Arcelor's board as a saviour, the deal with Severstal is now an obstacle to the company's agreement with Mittal to join forces and there are mounting signs shareholders will vote against it.
At 0935 GMT Arcelor shares were up 1.2 percent at 37.94 euros. Mittal's shares were up 2.7 percent at 24.78 euros to value the Mittal offer of 13 shares plus 150.60 euros in cash for every 12 Arcelor shares at 39.40 euros.
Severstal shares were up 2.4 percent at 286 roubles on Moscow's Micex exchange. To block the Severstal tie-up shareholders representing more than 50 percent of Arcelor's capital must veto the plans under which Severstal's main owner Alexei Mordashov would get a key stake in the merged group.
The shareholders meeting began at 0900 GMT. "I understand that the situation has been confusing for you and that I owe you an explanation," Arcelor Chairman Joseph Kinsch told shareholders, adding that the battle to protect the company had been 'long and hard.'
"It is certain that in the months and years to come we will see an acceleration of alliance deals in the steel industry."
Earlier, the president of a group for minority shareholders and an employee representative had argued over Arcelor's future outside the building.
Arcelor's biggest shareholder, Carlo-Tassara International with a 7.8 percent stake, said it would vote against the Severstal deal and would accept Mittal's offer.
The Grand Duchy of Luxembourg, which owns 5.6 percent of Arcelor shares and where Arcelor is headquartered, has also said it would support Mittal's bid. And Mittal Steel Chairman Lakshmi Mittal has said he is confident that Acelor's shareholders will vote against the proposed tie-up with Severstal.
The Severstal deal will also lapse if shareholders representing more than 50 percent of Arcelor's capital on a fully diluted basis accept Mittal's public offer.
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