Mittal says in advanced talks with Arcelor
LONDON, June 23 (Reuters) Mittal Steel said it is in ''advanced'' and ''constructive'' discussions with Arcelor which ''may or may not'' lead to an agreed offer.
An agreement would end a five-month bid battle and forge the world's largest steel maker.
''Mittal Steel confirms it is in advanced and constructive discussions with Arcelor which may or may not lead to a recommended transaction,'' a Mittal spokesman said on Friday.
Sources familiar with the situation have said Mittal is likely to raise its 23.2 billion euro (.2 billion) offer to win support from Arcelor's board, which meets on Sunday to decide between Mittal and a deal with Russia's Severstal .
Arcelor could not immediately be reached for comment.
Earlier French newspaper La Tribune reported that after 10 days of talks, the two sides just have to negotiate the final price to be paid for Arcelor after Indian-born steel magnate Lakshmi Mittal gave ground on corporate governance and strategy.
Arcelor Chief Executive Guy Dolle, who had previously backed a merger with Russia's Severstal to block Mittal Steel , could recommend a Mittal deal to the company's board on Sunday, the paper said.
It would be a major reversal for Arcelor which had rubbished Mittal's bid, its family ownership structure and the quality of its steel since Mittal first went public in late January.
The unsourced report came amid signs of eroding support among Arcelor's major shareholders for Dolle's strategy.
A source familiar with the thinking of the Luxembourg government, which holds 5.6 percent of Arcelor stock, said: ''The management will have to convince shareholders that its policy is well founded.
It is obviously having difficulty in doing so.'' Luxembourg Prime Minister Jean-Claude Juncker had initially led outspoken opposition to Mittal's takeover effort, vowing a hostile response to a hostile bid.
MATTER OF PRESTIGE The pan-European steel giant is the only major industrial employer headquartered in the Grand Duchy, and keeping a major corporation in Luxembourg has been a matter of prestige for the government.
''Whether it's with Mittal or Severstal, what is essential is to preserve the interests of the Luxembourg government,'' said the source, speaking on condition of anonymity.
''The Luxembourg government doesn't like hostile takeovers and would have preferred prior talks, but that occurred afterwards once or twice,'' the source added, stressing he was not privy to details of the latest negotiations.
La Tribune said the negotiations between Mittal and Arcelor focused on a price of around 43 euros, slightly below the 44 euro price offered in a controversial Arcelor buyback plan.
It said Arcelor's Luxembourg chairman Joseph Kinsch would keep his post with Lakshmi Mittal accepting the title of co-chairman, at least until 73-year-old Kinsch's retirement.
Of the other largest shareholders in Arcelor, French-born businessman Romain Zaleski with 7.79 percent opposed a share buy-back proposed by Dolle to fend off Mittal's bid, and Spanish investor Jose Maria Aristrain, with 3.55 percent, has opposed the Severstal merger and called for Dolle's resignation.
Colette Neuville, a shareholder activist mandated for 2.3 percent of the capital, has taken legal action to try to thwart Dolle's plan to push through the Severstal merger without giving shareholders a realistic chance to vote it down.
Ahead of the Arcelor board meeting, Mittal Steel, Severstal and Arcelor itself all placed newspaper advertisements.
''Arcelor shareholders, vote 'No' to the forced Severstal merger,'' Mittal Steel said in its Financial Times advert, which included a cut-out-and-keep copy of the voting form to be used at Arcelor's extraordinary shareholder meeting on June 30.
For its part, Severstal said it was pleased with the ''high level of support expressed for our transaction'', which it said was ''extraordinarily compelling'', a choice of words building on Lakshmi Mittal having often described his offer as ''compelling''.
Arcelor put an advert in Belgian papers L'Echo and Le Soir which asked: ''Is it better to be everywhere or there where it matters?'' and said a tie-up with Severstal would be better than with Mittal Steel as it would place Arcelor in key economies.
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