Vaiju Naravane

Merged entity will have 18 board members

Arcelor shareholders to meet on June 30 Mittal family will directly control 43 p.c.

PARIS: Details of the agreement that is likely to produce the world's first 100 million tonnes a year steel maker, Arcelor Mittal, have now been clarified.

Although the deal still needs the approval of Arcelor shareholders, who are to meet in an extraordinary general meeting on June 30, it is widely assumed that the deal will go through, unless the rival candidate, Severstal, comes up with a 100 per cent cash offer for Arcelor that would better the Mittal bid.

The new group will be 50.6 per cent Arcelor-owned while Mittal's shareholding will amount to 49.4 per cent. Of the Mittal shares, 43 per cent will be directly controlled by the Mittal family.

The board of directors will be made up of 18 members, 12 from Arcelor and six from Mittal. There will be three representatives designated by independent shareholders and three will represent employees.

Arcelor shares surged 7.94 per cent to reach 37.80 euro in Paris trading on Monday, while in Amsterdam, Mittal shares fell 3.71 per cent to close at 24.38 euro.

When Lakshmi Mittal first launched his hostile takeover bid on January 27, Arcelor shares were trading between 20 and 22 euro a share.

His initial bid valued each Arcelor share at 28.21 euro which then represented a 27 per cent premium over the closing price and all time high on Euronext Paris of Arcelor shares on January 26, and a 31 per cent premium over the volume weighted average price in the preceding month, and a 55 per cent premium over the volume weighted average share price in the preceding 12 months.

The total initial offer was of 18.6 billion euro.

As the stakes mounted, the Mittal offer climbed steadily to reach 37.74 euro per Arcelor share. But clearly this was not enough and Mittal made a final seven per cent push to clinch the deal at 40.40 euro per share for a total of 26.9 billion euro.

The share offer accounts for 69 per cent of the bid, with 31 per cent 8.5 billion euro in cash.

The new entity has already claimed its first victim, Arcelor CEO, Guy Dolle, who almost single-handedly orchestrated the campaign against Mr. Lakshmi Mittal with personal attacks that were deemed insulting and "unacceptable" in business circles. Mr. Lakshmi Mittal will give up his executive role to become the new company's President.

The post of Chairman will go to Arcelor's present Chairman, Joseph Kinsch, who retires next year. As soon as he steps down, Mr. Mittal will take over the reins again.