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Fri, Jun 23, 2006 - Page 10 News List

Arcelor undecided on competing bids

NY TIMES NEWS SERVICE , LONDON

Aleksei Mordashov, CEO of Severstal of Russia, speaks at a press conference on the proposed merger with Arcelor on June 2 in Madrid.

PHOTO: AFP

The board of the Luxembourg steel giant Arcelor seems to be having a hard time deciding what to do next.

The company said on Wednesday evening that the board would meet on Sunday to choose between two competing bids, one from Severstal of Russia and the other from Mittal Steel of London. The announcement came after a six-hour board meeting to discuss the two proposals.

An appearance of indecision may have its advantages. Delaying a decision until Sunday creates a deadline for either side to sweeten its bid and increase its chances of victory. Analysts and investors in Europe, though, speculated that the delay was occurring because the board was divided on which deal to choose.

Arcelor had no comment on the tenor of the discussions, but said that all 18 members of the board were represented.

Mittal's cash and share offer, made last month, values all of Arcelor at 24 billion euros (US$30.2 billion), based on Wednesday's closing price.

Severstal's chief executive, Aleksei Mordashov, on the other hand, is offering to buy 25 percent of Arcelor for assets he values at 8.1 billion euros (US$10.2 billion).

Mordashov changed the terms of his offer late on Tuesday night, reducing the control he would have at Arcelor, after several weeks of criticism from shareholders.

"Any board is under pressure to fulfill their fiduciary duty," Robert Miller, an adviser to Mordashov, said in response to the Arcelor announcement.

"We feel really confident. We have a contract that is legal and binding, and a value proposition that is higher than Mittal's value at the present time," he said.

Arcelor's management agreed to do a deal with Mordashov last month, to fend off a hostile bid from Mittal.

Arcelor has since entered into negotiations with Mittal to make a friendly deal, but as of Wednesday night Mittal had not put a new offer on the table.

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