The Telegraph
Since 1st March, 1999
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Mittal masterstroke to retain edge

Calcutta, Jan. 27: London-based Lakshmi Niwas Mittal’s stake in a Mittal Steel-Arcelor behemoth will be just over 50 per cent if the sudden unsolicited bid is accepted. At present, LNM holds 88 per cent in Mittal Steel.

The Mittals have also offered to bring down their voting rights from 97 per cent at present by rejigging the rights conferred to holders of the Class B common stock in Mittal Steel.

Under the present terms, the Class B stock provides holders a voting right of 10 shares for every share held. The Mittal family has offered to bring this voting right down to two per share if the merger goes through.

It is still not clear what the Mittals’ voting rights in a merged entity will be, but it will definitely be higher than the ownership right of 50 per cent. The free float of shares ' that is non-promoter holding ' in the merged entity will rise to 43 per cent from just 12 per cent at present.

“Mittal will still hold a very significant stake in the merged entity. His voting rights will be even higher than that,” a Mittal Steel spokesperson told The Telegraph from London.

The Mittals are trying very hard to sweeten the terms of the unsolicited $23-billion offer to the shareholders and the honchos who run Arcelor.

The Mittals have offered a substantial number of top management positions to the Arcelor shoguns in a bid to get them to accept the offer. “Mittal Steel will allocate management responsibility on the basis of the best available talent within Mittal Steel and Arcelor, and the current expectation is that a substantial number of management positions in the new group will be allocated to current members of the Arcelor management,” says the document.

The shareholders of Arcelor are also being given a variety of options. The broad offer is that Arcelor shareholders will receive four new Mittal Steel shares and 35.25 euros in cash for every five Arcelor shares. In lieu of this mix of Mittal Steel stock and cash, Arcelor shareholders can elect to receive 16 new Mittal Steel shares for every 15 Arcelor shares; or receive 28.21 euros in cash for each Arcelor share.

“Holders will not be required to make the same election for all Arcelor shares tendered, and either of these elections may be made for all or some of the Arcelor shares to be tendered. However, these elections will be subject to a allocation procedure that will ensure that 75 per cent of the tendered Arcelor shares are exchanged for new Mittal Steel shares and 25 per cent are exchanged for cash,” the document said.

If the proposed takeover sails through, then it may see a side deal under which Mittal will sell Canada’s Dofasco to ThyssenKrupp for about $4.7 billion if Arcelor completes its takeover of Dofasco

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