Arcelor, Trying to Fend Off Suitor, Is Buying Russian Steel Company

Arcelor is going to great lengths to avoid hostile takeover by Mittal Steel Company, even wooing a Russian billionaire who controls Servestal. If successful, an Arcelor-Servestal merger would create the world’s largest steel company in the world – moving Mittal to second place. Mittal is based in London and Rotterdam, yet Arcelor executives have turned to Aleksei Mordashov, describing him as a “true European” and snubbing Lakshmi Mittal, who was born in India. Investors have reason for annoyance, especially after Mittal raised the value of its proposal last week and pledged to eliminate any family preferential voting rights. Steel firms that have embraced consolidation produce more profits, and Russia steelmakers also want to join that trend. Shareholders have questions about the real value and transparency of both offers. The latest offer requires Mordashov, who would be Arcelor’s largest shareholder, to hold off selling his shares for at least five years – and so the long-term fate of Arcelor remains uncertain. – YaleGlobal