Mittal Steel says outcome of Arcelor talks uncertain

BRUSSELS, June 20 (Reuters) Mittal Steel, the world's largest steel producer by volume, said on Tuesday that talks with takeover target Arcelor were continuing but the likely result was uncertain.

''Mittal Steel confirms that discussions are taking place with Arcelor. The outcome of these discussions remains uncertain at this stage,'' the group controlled by billionaire Chief Executive Lakshmi Mittal said in a statement.

Mittal and Arcelor Chief Executive Guy Dolle are both due to attend a steel industry conference in New York on Tuesday. But neither group would comment on whether the two men would take the opportunity to hold talks about how to resolve their takeover battle.

Arcelor said on Monday evening it cancelled a shareholder meeting scheduled for Jun. 21 on a planned 6.5-billion-euro (.18 billion) share buy-back plan which has been seen as defence against its rival.

Mittal told the Wall Street Journal that Arcelor's decision made him increasingly confident he could convince Arcelor shareholders they should back his offer to buy their company and pressure management into dropping its resistance.

''Mittal's bid is gaining momentum,'' said Mickael Vandenhauwe, an analyst from the Dexia banking group.

He nevertheless cautioned that Arcelor's planned shareholders meeting to back a white knight rescue plan with Russia's Severstal constituted the main ''roadblock'' ahead.

The Jun. 30 meeting is planned to give Arcelor shareholders the chance to oppose the deal.

Minority shareholder group ADAM told Reuters on Monday that it had taken legal steps to postpone it.

''The rules of the votes that are planned by the convocation are in violation in regards to the law and the statutes of Arcelor,'' ADAM said in a letter sent to a Luxembourg court.

Arcelor said that it would cancel its deal with Severstal if shareholders representing 50 percent of the capital voted against it.

''We remain determined to bring our proposal to a successful completion and, in that context, strongly urge Arcelor shareholders to actively participate in the Jun. 30 vote on the Severstal combination and vote it down,'' Mittal said.

A source familiar with the matter has told Reuters Arcelor hopes to decide by June 30 whether it can recommend a sweetened Mittal bid.

The source said Arcelor would like to have wrapped up talks with Mittal by that date so the board could change its recommendation before the shareholder meeting if the talks were successful.

REUTERS CS DS1550