'Mittal must make offer for Arcelor Brasil'
Mittal Steel Co NV must make an offer to buy out shareholders of a Brazilian division of Arcelor SA as part of their blockbuster steel company merger, Brazilian regulators ruled, in a side deal.
By Agencies |
SAO PAULO (BRAZIL): Mittal Steel Co NV must make an offer to buy out shareholders of a Brazilian division of Arcelor SA as part of their blockbuster steel company merger, Brazilian regulators ruled, in a side deal that analysts have said could raise the cost of the $31.9 billion combination by another $5 billion.
Minority shareholders of Arcelor Brasil SA, which trades as a separate company on the Sao Paulo Stock Exchange, had asked the Brazilian Security and Exchange Commission to rule on the issue after Mittal said it didn't plan to offer a buyout.
Luxembourg-based Arcelor and Mittal are trying to create a steel titan with close to 10 per cent of global production that will save the combined operations some $1.6 billion.
Mittal warned last month that its decision not to make an offer for Arcelor Brasil SA and Acesita SA could be challenged by Brazilian regulators or the units' minority shareholders, but believed its position was in line with Brazilian law.
Brazilian regulators ruled that Mittal must make an offer for Arcelor, but not for Acesita. Analysts had put the cost of a buyout of Arcelor alone at about $5 billion.
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The ruling makes it more likely that the full cost of the merger must still be reckoned. Mittal and Arcelor must also resolve the fate of Canadian steel maker Dofasco Inc. Analysts have expressed concern about how much debt the combined company will be carrying.Regulators had been trying to determine whether the tie-up represents a change in control of Arcelor Brasil. Arcelor Brasil told regulators there would be no change in control.
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