The deal, announced May 26, would create the world's largest steel producer if it goes ahead, but has attracted fierce resistance from shareholders of Luxemburg-based Arcelor, the world No. 2 steelmaker. The companies said the new firm would have "46 billion euros [$60 bln] in sales ... and 70 million tons of production" based on last year's results.
Under the new proposal, Severstal boss and principal shareholder Alexei Mordashov will receive 210 million new Arcelor shares - down from the previous 295 million - which represents approximately 25% of the merged company, against the previous 32%. He will be free to vote with his shares in line with normal shareholder practices and the standstill and lockup provisions will be eliminated.
The original deal would have seen Mordashov swap his stake in Severstal, Severstal-resurs, and Italy's Lucchini, plus 1.25 bln euros (about $1.62 bln) in cash, for an additional issue of 295 million Arcelor shares, at a rate of 44 euros per share ($55.9). The cash contribution from Mordashov of 1.25 billion euros will no longer be included in the deal, but in all other respects the merger agreement will remain unchanged.
Shareholders in Arcelor have expressed unhappiness with the mooted Severstal deal, and have threatened to block it, preferring instead to negotiate a deal with London-based Mittal, the world No. 1, which has been lobbying hard for Arcelor shareholders to reject the deal with the Russian company.
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, the company said in a statement.
"We have met with a large number of Arcelor shareholders over the past three weeks and discussed the transaction at great length with them. These shareholders have generally been very supportive of our value proposition and proposed merger. I have taken careful note of all the investor feedback and believe that this enhanced proposal meets their requirements. The improved terms create outstanding value to shareholders and reflect my continuing belief in the industrial logic of combining these two superb companies into the global steel champion," Severstal's statement quoted its chairman as saying.
Trading of Arcelor shares on bourses in France, Spain, Luxemburg and Belgium was suspended Wednesday until the company's directors meeting.
