Severstal's press release on its merger with Arcelor

The press conference on the merge of Russian steelmaker Severstal and world's second largest steelmaker Luxemburg-based Arcelor was held in Moscow on May 27. During the press conference, Alexander Mordashov, the largest shareholder of Severstal group expressed his wish to increase his stake in Arcelor to 45 percent from 32.2 percent he received from the merger deal made a day early. As a part of merger terms, according to which, Mr. Mordashov will transfer his stakes in all companies belonging to Severstal group, including stakes in Severstal North America, Severstal-Resource and Italian asset Lucchini and pay additional Euro 1.25 billion in exchange to 32.2 percent of Arcelor shares, Mr. Mordashov is not entitled to buy additional shares in Arcelor for the period of four year but can increase his own stake if other shareholders reduce theirs. The next step in closing the deal will be to receive approval for the merger by both Russian and the EU anti-monopoly committees. As far as the Russian government is concerned, there should be no obstacle on the merger, since the deal had full support from the government from its very beginning. Thus, Mr. Kudrine, the Minister of Finance of Russian Federation, commented that the merger between Severstal and Arcelor shows trust of foreign partners in Russian economy. Therefore it would positively affect the further integration of Russian economy into world economy. The merger of the two companies came out as result of long negotiation process between two companies, which, according to the Severstal representative, started as earlier as 2002. The merger is very beneficial to both companies. On the one hand, it allows Arcelor to avoid hostile take over by Mittal Steel and on the other will help Severstal, according to the market speculation, increase its export deliveries to the markets it currently experiences problems due to quotas and other import regulations.