New York: Mittal Steel Co is racing to arrange support among Arcelor SA shareholders for a special meeting aimed at derailing Arcelor's proposed combination with Russian steelmaker OAO Severstal, according to a newspaper
report.
Goldman Sachs Group, Mittal's financial adviser, must gain the support of at least 20 per cent of Arcelor shareholders to convene an "extraordinary" meeting at which the Severstal deal would be subject to debate and approval, The Wall Street Journal reported on its website on Sunday, citing people familiar with the situation.
Arcelor, which has been battling a hostile bid from Mittal, announced the Severstal deal on Friday.
If it succeeds, the new company would surpass Mittal in terms of revenue and production, becoming a global steel titan.
Under terms of the proposed transaction, Severstal's controlling shareholder Alexei Mordashov will pay Arcelor $1.59 billion in cash and give it his stake in all of Severstal's steel assets and Italian steelmaker Lucchini SpA.
In exchange, Mordashov would own 32 per cent of the enlarged Arcelor group.
Existing shareholders will own the remaining 68 per cent.
Mittal is offering about $33 billion for all of Arcelor, and the Arcelor deal with Severstal threatens to make Mittal's bid far more precarious.
Over the weekend, Goldman wrote to Arcelor Chairman Joseph Kinsch, saying the company's decision to force the deal through unless shareholders reject it was unacceptable, according to a copy of the letter obtained by the newspaper.
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