Courts in the Netherlands and France refused on Monday to grant injunctions blocking the 30 billion euro (US$41 billion) merger between steel giants Mittal Steel Co NV and Arcelor SA.
Legal actions launched in Rotterdam by three hedge funds and in Paris by an activist shareholder were both rejected by judges, clearing hurdles to the creation of the world's largest steelmaker, as measured by sales.
The steel companies already call themselves ArcelorMittal, but three funds -- SRM Global Master Fund Ltd, Trafalgar Catalyst Fund and Trafalgar Entropy Fund -- went to court last week seeking to block the first phase of the two-step merger, when Rotterdam-based Mittal is to combine with ArcelorMittal SA, a Luxembourg holding company.
In the second phase, ArcelorMittal would merge with Luxembourg-based Arcelor, likely before year's end, creating the world's largest steelmaker by revenue.
Rotterdam Court Judge A.A. Rijperman agreed with Mittal lawyers that she did not have jurisdiction in the case because ArcelorMittal and Arcelor are based in Luxembourg.
"The plaintiffs will be able to fight the second phase of the merger in Luxembourg," Rijperman said.
"There is no way an injunction can take measures in what will be a Luxembourg matter," Rijperman said.
The hedge funds claimed they were shortchanged because they did not take up an initial offer last August that would have given them 11 ArcelorMittal shares for seven Arcelor shares.
After most shareholders took advantage of the offer, it was revised in May to eight ArcelorMittal shares for seven Arcelor shares.
"We are only getting 3.3 percent of a valuable company, and we should be getting 4.4 percent," Philip Price, chief operating officer of SRM Global, told reporters on Wednesday after a hearing at Rotterdam Court.
The funds said the difference in the exchange ratio would cost them 152 million euros.
In France, an injunction request by an activist shareholder who was also upset at the change in the share swap ratio was also rejected.
Philip Price, chief operating officer of SRM, said the hedge funds were "actively considering their options to appeal."
If shareholders approve the deal, as expected, Mittal wants to complete its merger with ArcelorMittal by Monday.