Arcelor shareholders not happy with Mittal!

BRUSSELS: Shareholders of steel giant Arcelor SA are seeking a Dutch court order to stop the Mittal Steel Co. NV takeover that offers them a share swap they are not happy with, Arcelor said today.

The company, which is already calling itself ArcelorMittal, said it had received a writ of summons from the SRM Global Master Fund Ltd. Partnership, Trafalgar Catalyst Fund and Trafalgar Entropy Fund to appear August 22 before a court in Rotterdam, the Dutch city where Mittal is headquartered.

The hedge fund investors represent half of the remaining minority shareholders and hold around 3 per cent of the company's capital.

They are unhappy that the second phase of the ArcelorMittal merger will be governed by Luxembourg law - instead of Dutch law - alleging that this allows the company squeeze them out with a lower offer, dodging a Dutch legal threshold that would force Mittal to control 95 per cent of Arcelor capital before it could launch a mandatory buyout.

Mittal has 94 per cent at the moment. ArcelorMittal said it believed there were no grounds to the shareholders' claims.

Joseph Kinsch, the company's chairman, said in April that shareholders were wrong to fear that a new offer would be lower, saying Mittal had offered an excellent price.

He also criticised the rebels as speculators who had bought into the company during the hostile-turned friendly takeover battle last year.

Hedge fund activists say this should not matter as all shareholders should be treated the same and all sought to increase the value of the company.