Arcelor agrees Mittal terms

24 April 2008

Arcelor's board has recommended an improved takeover offer from mittal steel to its shareholders. In light of the latest development, Luxembourg-based Arcelor has abandoned its previously announced merger with Russia's ServerStal.

Arcelor's acceptance of the revised Mittal bid marks a significant turnaround for the world's biggest steel producer. It has been strongly opposed to a series of offers made by Mittal this year and in May it announced a merger with Russia's biggest steel producer, ServerStal which would have made a takeover by Mittal impossible. Mittal Steel has won acceptance by increasing its May 19 offer for Arcelor by +10%. Shareholders can now receive € 40,40 per share in cash from Mittal or 11 Mittal Steel shares for every 7 Arcelor shares. A mixed offer of 13 Mittal Steel shares and € 150,6 in cash per 12 Arcelor shares is also available.

The cash offer values Arcelor's 639,8 million shares at a total of € 25,9 billion. Mittal Steel's share price on the New York Stock Exchange on the morning of the announcement was US$ 32,17 (€ 25,53), valuing the all- share option at US$ 32,3 billion (€ 25,6 billion) in total. The mixed cash and share offer values Arcelor at € 25,7 billion - € 8,02 billion in cash and US$ 22,3 billion (€ 17,7 billion) worth of Mittal Steel shares.

According to Arcelor, this offer represents a +49% improvement on Mittal Steel's initial hostile takeover bid, made in January. It also represents a +100% premium on Arcelor's share price the day before Mittal first announced its takeover bid.

As CE went to print, Mittal was reported to have received acceptances from shareholders representing more than 90% of Arcelor's share capital.

The merged company, Arcelor-Mittal, will be listed on the Amsterdam, Brussels, Luxembourg, Madrid, New York and Paris stock exchanges. It will be a clear no.1 in the global steel business, with annual revenues of about € 69 billion and the capacity to produce 91 million tonnes of steel per year- about 8% of world demand.

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