Global steel giant is born: Arcelor Mittal

European steel maker Arcelor has agreed to a 100 per cent takeover bid made by world sector leader Mittal Steel, creating a global steel giant that will dwarf its rivals

European steel maker Arcelor has agreed to a 100 per cent takeover bid made by world sector leader Mittal Steel, creating a global steel giant that will dwarf its rivals, its chairman said on Sunday.

“At the end, it was decided unanimously by the Arcelor board that (it will) recommend the new offer of Mittal Steel,” Joseph Kinsch told reporters, adding that Mittal’s improved offer was a 10 per cent premium over the one it had previously submitted.

“We concluded that Mittal Steel’s was a better offer than that of Severstal,” he added.

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The new company would be called Arcelor Mittal, he said.

Arcelor and Mittal, already the world’s two largest steel producers, have held talks to end a bitter five-month feud over Mittal’s unsolicited plans to acquire its rival and create a global giant with an annual output of over 100 million tonnes.

Arcelor’s board members were debating on Sunday whether to back the sweetened offer or a merger with Russia’s Severstal, controlled by steel magnate Alexei Mordashov.

Mittal’s board had also convened in London to ratify the new terms.

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Sources close to both companies had said late on Saturday that discussions were continuing about the price Mittal would have to pay to win over Arcelor’s board. Its earlier offer, made in May, was 23 billion euros ($ 29 billion), or 35.37 euros per share.

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

Both Arcelor and Mittal declined to comment.

Last month, Arcelor proposed buying the Russian firm Severstal in a deal in which Mordashov would buy a significant minority stake in the Luxembourg group.

Severstal improved the terms , saying it would settle for a 25 per cent stake and offered to improve its original deal by 2 billion euros to Arcelor shareholders.

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According to a source on Saturday, the Russian company had secured a multi-billion euro loan facility.

The deal

• Mittal’s new offer: Reportedly, 43 euros per share

• Earlier offer: Total of 23 billion euros, at 35.3 euros per share

•n Arcelor paying 130 million euro penalty to disengage from Severstal

What it means

• World’s two largest steel makers merge

• New entity will be three times larger than rivals