Brussels, 26/06/2006 (Agence Europe) - Mittal's stubbornness has finally paid off. Following an Arcelor Executive Board meeting, agreement between the two steel giants was found on Sunday evening, thus removing the Russian Severstal from the race to acquire European company Arcelor, which had called on the Russian firm to help it counter the initial Mittal offer. Mittal finally increased its offer from €18.6 billion in January, when it began its takeover campaign, to €26.9 billion. According to the terms of the agreement, Indian magnate Lakshmi Mittal will not assume direct control of the new Arcelor-Mittal, initially at least. Although holding 43.3% of shares, he will be a non-executive director on the new 18-member Executive Board, made up of six representatives from Arcelor, six from Mittal, three from the other shareholders and three from the workforce. Based on this agreement, the Arcelor Executive Board has decided to recommend acceptance of the Mittal offer to its shareholders.
The European Commission, which examined Mittal's proposed takeover in June, says there are no problems from the point of view of competition. After investigation, it decided that Mittal's proposals for heavy section beams sufficiently addressed its concerns. Mittal proposed a 10% reduction in its total heavy section beam manufacturing capacity in the European Economic Area (EEA), by divesting two Arcelor steel mills which produce heavy and medium section beams in Germany (Unterwellenborn) and Italy (Pallenzano), as well as one of its own section and bar mills in Poland. On Monday, the competition commissioner's spokesman said that “unless there are changes in the substance of the agreement, we have no further comment to make” on this case, for which approval had already been given.
After all the distrust and criticism, the proposed takeover now appears to have the blessing of politicians. “I am satisfied, firstly, because the headquarters and decision-making centre of the world's largest steel maker will be in Luxemburg and also because the interests of Luxemburg industry have been maintained,” the Luxemburg economy minister Jeannot Krecké told AFP on Monday. “Arcelor-Mittal will need the political support of the government to serve its major strategic options,” added Mr Krecké, before going on to say that, “the privileged relations will continue because the firm needs the government to support and represent it”. The reaction in Moscow is quite different, with the agreement between Arcelor and Mittal signifying that the Russian group Severstal had been completely sidelined. “I am very unhappy with this decision and I see it as a bad sign,” Russian industry and energy minister Viktor Khristenko told the Interfax agency, saying he felt there had not been “a level playing field”.