Arcelor – Mittal Merger Reached After Bumpy Road
On June 2, the European Commission approved a €25 billion bid for Luxembourg-based steel company Arcelor by Netherlands-based Mittal, the world’s largest steelmaker, noting that a merger “would not significantly impede effective competition” in the European Union. This approval was provisional based on a divestiture of two Arcelor heavy and medium steel mills in Italy and Germany, as well as a Mittal mill in Poland, without which the combined entity would become the dominant manufacturer of heavy section beams.
Arcelor was also reported to be in merger talks with Russian steelmaker Severstal. A vote on the merger will likely be brought before shareholders by the end of June. While the Severstal deal was seen as a “white knight” offer against the hostile Mittal bid, a Mittal spokesperson was quoted as saying that they hoped that an Arcelor shareholder rebellion would derail the bid.
The white knight offer, however, did not materialize, and on June 25, Arcelor and Mittal announced that the boards of both companies had reached a deal valued at $30.91 billion, which is a significant improvement over the initial offer in January. As a result of the merger, Arcelor cancelled plans to merge with Severstal, incurring a $175 million break up fee.
Authored by
D. Sexton
202-589-1836
dsexton@dbmlawgroup.com
