LUXEMBOURG: Directors at European steel group Arcelor said they would meet on Sunday to take a decision on both a merger proposal from Russian producer Severstal and a hostile takeover bid by Mittal Steel.
"The board decided unanimously to meet again on Sunday June 25 at 10 am to take a decision concerning the latest proposals from Mittal Steel and Modashov," the chairman of Severstal, Arcelor said here on Wednesday.
It added that the directors had heard a report on recent discussions between representatives from Mittal Steel and number two Arcelor, which got under way recently despite strong opposition to the Mittal bid by Arcelor management.
The meeting here followed presentation of proposed new terms by Severstal for a merger with Arcelor that would reduce the Russian group's stake in a combined company.
The new Severstal offer was seen as bid to placate those Arcelor shareholders who are hostile to the deal.
Severstal said Mordashov would "receive 210 million new Arcelor shares... representing approximately 25 percent of the enlarged company" instead of 32 percent in the initial plan.
The proposed merger, announced May 26, was interpreted by analysts as a ploy by Arcelor management to thwart the hostile takeover initiative from Mittal Steel, which has Indian origins but is now based in the Netherlands.
While a Severstal-Arcelor union would deprive Mittal of its number one ranking, it has sparked a revolt among some Arcelor shareholders who fear that Mordashov might one day take control of the entire company.
Minority investors succeeded in postponing an extraordinary Arcelor shareholders' assembly called for Wednesday to approve a share buyback plan that would have allowed the Arcelor-Severstal deal to go ahead.
The buyback would also have resulted in Mordashov's stake in Arcelor increasing to 37.5 percent.
The Severstal statement said that under its latest proposal a strategy panel for the new group, which was to have been led by Mordashov, "will be eliminated."
In addition, the Sevestal boss would not contribute 1.25 billion euros ($1.58 billion) in cash to the transaction as previously agreed.
"The revised terms are significantly more attractive for Arcelor shareholders and reflect a valuation of the assets to be contributed by Mordashov that is extremely compelling," it added.
The new terms represent "a value enhancement of two billion euros ($2.5 billion) for Arcelor shareholders," it claimed.
But Mittal Steel criticized the revised Severstal proposal, asserting that it fails completely to deal with key shareholder concerns."
"It remains a partial transaction, undervaluing Arcelor, which is to be pushed through without a proper shareholder vote," the company added.
"Even as restructured, it provides a great deal of control for Mordashov without any control premium for shareholders. Mittal Steel remains a superior partner for Arcelor in every way."
On Tuesday, Arcelor chief executive Guy Dolle said he too would improve the conditions for an alliance with Severstal.
"It's clear that this transaction has been and will be improved, answering some of the concerns of shareholders," Dolle said.
Arcelor's board approved the 12 billion euro ($15.3 billion) deal with Severstal last month. Mittal Steel's offer is worth 25 billion euros ($31.6 billion) in cash and shares.
Trading in Arcelor shares was suspended at 1100 GMT on Wednesday on the four European exchanges where they are listed -- Paris, Madrid, Luxembourg and Brussels -- as the board convened.
Prior to the suspension, Arcelor shares in Paris were down 1.07 percent at 35.02 euros.
