Ending months of hostility, Arcelor SA has announced acceptance of India-born L N Mittal group's takeover bid, improved by 10 per cent to euro25.9 billion ($32.4 billion), a move that will create the world's largest steel entity.
Announcing the decision, Arcelor Chairman Joseph Kinsch told reporters that his Board has unanimously backed a new takeover offer from Mittal Steel. "We concluded that Mittal Steel's was a better offer than that of Severstal," he said.
The decision preferring Mittal to Russian steel giant Severstal, with whom Arcelor had entered into a strategic tie-up perceived as a last ditch effort to thwart Mittal's bid, was taken after a marathon meeting of the board at the company's headquarters.
The merged entity will be called Arcelor Mittal, Bloomberg quoted Kinsch as saying.
He said the board will recommend the new offer of Mittal Steel, which will now be placed before shareholders for approval.
Luxembourg Economy Minister Jeannot Krecke told reporters: "We are very happy with the situation".
Bloomberg quoted Krecke as saying that Luxembourg, which holds 5.6 per cent stake in Arcelor, will be a winner in the transaction.
While weighing Mittal's offer, which was till recently considered as unfriendly and hostile by its acquisition target, the Arcelor board also discussed the merger with Russia-based Severstal.
Though the Arcelor management gave a thumbs-up to the offer from the Russian company controlled by Alexei Mordashov, many shareholders opposed it.
Arcelor will now have to pay Severstal over euro130 million for breach of contract.
Mittal had launched his bid to takeover Arcelor on January 27.
The new deal values Arcelor shares at euro40.37 a share.
The company's scrip commanded euro26 on January 26, a day before Mittal came out with his bid.
A merger of the two top steel makers will create a company with nearly a 10 per cent share of global production, employing more than 320,000 people.
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