Severstal offers better merger terms to Arcelor

Russian Severstal announced today that it has proposed to the Border of Directors of Arcelor, the largest European steelmaker, to improve the terms of the merger deal announced on May 26, 2006. According to the new merger terms, Mr. Mordashov, the biggest shareholder of Severstal, will reduce his stake in the Severstal-Arcelor merged company from 32 percent to 25 percent. In addition, Mr. Mordashov will be free to vote his shares in accordance to general shareholders practice in return for eliminations of Strategic Committee, and standstill and lockup provisions practices. Euro 1.25 billion in cash to be contributed by Mr. Mordashov is no longer included in the merger terms. Moreover, Mr. Mordashov confirmed that he has no intentions to raise his stake in the new company above 33.3 percent without a full tender offer. The new offer seems to be more attractive to Arcelor shareholders than the pervious one. The improved offer came as a response to Arcelor's shareholders hostile feedback on possibility of Arcelor-Severstal merger.