Brussels (Belgium): Steel maker Arcelor SA said on Monday that its board has rejected Mittal Steel's revised offer and recommends that shareholders approve a deal with Russia's OAO Severstal.
But Arcelor said the Severstal transaction does not preclude Mittal's offer, and the board said officials will meet with Mittal in order to explore possible improvements to the bid.
Arcelor, which has long resisted Mittal, said the current offer ''is inadequate as it continues to undervalue Arcelor'' and called the Severstal transaction ''a more attractive alternative from a strategic, financial and social point of view.''
The company had announced a deal last month with Severstal - a white knight favored by Arcelor's board - under which that company's main shareholder Alexei Mordashov would get about 32 per cent of the combined company.
Arcelor said Mittal's revised offer does not take into account the company's financial results for 2005 and the first quarter of this year, or Arcelor's strategic plan.
The company has maintained all along that its plans will bring shareholders more benefits that a takeover by Mittal.
Arcelor has announced plans to buy back up to a quarter of its shares.
Arcelor also defended the structure of the vote it has set up for the Severstal deal.
Mittal has complained that Arcelor has sewn up the deal by saying that 50 per cent of all shareholders need to vote against it to block it.
Only 35 per cent went to Arcelor's annual meeting in April.
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