Bloomberg News

Arcelor Declines to Comment on Request to Hold EGM (Update2)

June 01, 2006

Arcelor SA declined to comment on a report by the Independent that shareholders of the steelmaker have urged it to hold an extraordinary general meeting to discuss a planned takeover of Russia's OAO Severstal.

Investors representing 30 percent of Arcelor's shares have written to the steelmaker asking for a meeting, the London-based newspaper said today, without saying where it got the information. Luc Scheer, an Arcelor spokesman based in Luxembourg, was unable to say if a letter was received.

Arcelor, the world's second-biggest steelmaker, on May 26 agreed to buy 90 percent of Moscow-based Severstal in a 13 billion-euro ($16.6 billion) transaction to repel a hostile bid by Mittal Steel Co. Goldman Sachs Group Inc., which is advising Mittal, is organizing resistance to the planned purchase of Severstal, the Wall Street Journal said on May 28.

``This is a very good initiative from Mittal,'' said Francois de Rambuteau, who manages $2.3 billion at Cholet-Dupont Gestion SA in Paris, including Arcelor shares. ``Tactically, it's a good move.''

Arcelor's plan to buy Severstal is backed by the Russian government, Russian Prime Minister Mikhail Fradkov said. The government is giving its ``moral support so that this deal takes place,'' Fradkov said today, addressing a Cabinet meeting.

Shares of Arcelor rose 48 cents, or 1.4 percent, to 33.78 euros as of 12:14 p.m. in Paris. Mittal stock climbed 29 cents, of 1.1 percent, to 26 euros in Amsterdam. They are up 61 percent and 16 percent respectively this year.

Half Must Oppose

Under the terms of the agreement, Alexei Mordashov, Severstal's billionaire owner, will get stock equal to 32.2 percent of Arcelor. Arcelor said on May 26 it will scrap the deal if at least 50 percent of its shareholders oppose it. Arcelor shareholders will vote on the proposed transaction on June 28.

Severstal, based in Cherepovets, Russia, is the country's third-biggest steelmaker. The company, which makes flat-steel products used in cars and home appliances, already has a venture with Arcelor in Russia making automobile steel.

``We welcome this initiative'' for the extraordinary meeting, said Nicola Davidson, a Mittal spokeswoman in London. ``Shareholders should have the right to decide between the two combinations.''

To contact the reporter on this story: Julie Tay in London at

To contact the editor responsible for this story: Justin Carrigan at

Toyota's Hydrogen Man
blog comments powered by Disqus