Arcelor shareholders seek court order blocking buyout

ROTTERDAM (NETHERLANDS): Hedge fund investors in steel giant Arcelor SA asked a Dutch court on Wednesday to block the company's $40 billion takeover by Mittal Steel Co NV, saying that a revised share swap deal has cost them $205 million.

"We are only getting 3.3 per cent of a valuable company and we should be getting 4.4 per cent," Philip Price, chief operating officer of SRM Global, told reporters after the hearing at Rotterdam Court.

The steel companies already call themselves ArcelorMittal, but three funds, SRM Global Master Fund Ltd, Trafalgar Catalyst Fund and Trafalgar Entropy Fund, want to block the first phase of the merger, when Mittal is to combine with ArcelorMittal SA, a holding company.

Under a takeover offer made in August 2006, investors were offered 11 ArcelorMittal shares for seven Arcelor shares. But the bid was revised in May to offer eight ArcelorMittal shares for seven Arcelor shares.

Rotterdam-based Mittal plans to seek shareholder approval for the deal on Aug 28 and complete it on Sept 3. In the second phase, at a later date, ArcelorMittal would merge with Luxembourg-based Arcelor, creating the world's largest steel maker by sales.

The Rotterdam court will issue its written decision Monday on whether to block the merger, a day before the shareholder meeting. Mittal lawyer Harmen de Mol van Otterloo said the Dutch court had no jurisdiction because under the complex structure of the merger it will involve two Luxembourg-based companies.