Arcelor weighs rival deals at decisive meeting

Luxembourg, June 25 : Steel maker Arcelor's board members debated on Sunday whether to back a takeover offer from industry leader Mittal or a rescue deal with Russia's Severstal.

''You will have decisions presented to you this evening,'' board member Fernand Wagner told reporters as he arrived for the meeting which started on Sunday morning.

Arcelor and Mittal, the world's two largest steel makers, have held talks to end a five-month battle over Mittal's plans to acquire its rival and create a global giant with an annual output more than three times that of its closest competitor.

Sources close to both companies said late on Saturday that discussions were continuing about the price Mittal would have to pay to win over Arcelor's board. It is now offering shareholders 23 billion euros ( billion), or 35.37 euros per share.

Media reports said Arcelor would not be willing to support a bid below 40 euros a share.

Two Indian television channels reported on Sunday that Arcelor and Mittal had already reached a deal at 43 euros per share, with Arcelor paying a 130 million euro penalty to disengage from Severstal.

Both Arcelor and Mittal declined to comment.

There was no word from the 18 board members inside Arcelor's headquarters. Sources said some were dissatisfied over the extent to which Arcelor representatives had negotiated with Mittal, an issue that had also divided Arcelor's management.

Severstal, unveiled last month as a white knight to thwart Mittal's hostile approach, was meanwhile jostling to remain in the frame.

Arcelor had proposed last month purchasing the Russian firm in a deal in which its majority owner Alexei Mordashov would buy a significant minority stake in the Luxembourg group.

Severstal improved the terms of its proposed merger on Tuesday, saying it would settle for a 25 percent stake in the combined group and arguing it was offering to improve its original deal by two billion euros to Arcelor shareholders.

It could still raise its offer further to counter any increased Mittal bid.

According to a source on Saturday, the Russian company had secured a multi-billion euro loan facility from investment bank ABN AMRO to give itself fire-power.

Reuters

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