Indian Economy: Growth -2

[Naresh]

[center]<b><span style='font-size:14pt;line-height:100%'>Arcelor shareholders reject Severstal deal</span></b> <!--emo&:ind--><img src='style_emoticons/<#EMO_DIR#>/india.gif' border='0' style='vertical-align:middle' alt='india.gif' /><!--endemo--> [/center]

<b>Arcelor shareholders on Friday voted against the company’s merger deal with Russia’s Severstal, clearing the way for a merger with Mittal Steel to create a new steel titan.

About 58 per cent of Arcelor’s share capital - or 96 per cent of the shares present at the company’s extraordinary meeting - voted against the binding agreement Arcelor had made with Severstal as part of its defense against early approaches from Mittal.</b>

Luxembourg-based Arcelor struck a deal with Severstal last month in an effort to repel Mittal Steel’s hostile takeover bid. But Arcelor changed its mind and agreed to a merger on Monday after Mittal raised its offer to €26.9bn ($33.9bn), 44 per cent above its opening offer after a five months epic battle that turned into one of the most sustained corporate dramas of the past decade.

The Severstal deal would have gone ahead unless more than 50 per cent of Arcelor shareholders voted against the plan at the meeting.

Severstal shares jumped 9 per cent in Moscow. Arcelor shares were 0.3 per cent higher and Mittal Steel shares 0.3 per cent lower by late afternoon.

<b>Romain Zaleski, the Franco-Polish businessman who has built a 7.8 per cent stake in Arcelor, said earlier this week he would vote against the Severstal deal and back the merger with Mittal. Luxembourg earlier this week also backed the Mittal/Arcelor alliance, after initial hostility. The country is thought to be the third-largest shareholder, with a 5.6 per cent stake.

Severstal could still make a counterbid for Arcelor. On Wednesday, Alexei Mordashov, Severstal’s chief executive told a French parliamentary commission he was planning to make an ‘improved’ proposal. A person close to the deal said then that Severstal was reviewing ‘all the options.’</b>

Mittal’s offer for Arcelor, which would create a new Luxembourg-based entity called Arcelor Mittal, by far the world’s largest steel company, has been extended from an original deadline of July 5 to July 12, to allow regulators to look at Mittal’s improved offer.

Meanwhile, it is likely that Arcelor and Mittal will wait a while before deciding the fate of Dofasco, the Canadian steel company bought by Arcelor for $4bn in January. Mittal had promised to sell Dofasco to Thyssen-Krupp of Germany if it was successful in taking over Arcelor, but Arcelor maintains that it wants to keep Dofasco

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->