Lakshmi Mittal

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Paris: Luxembourg-based Arcelor, world's second largest steel maker, has accepted a merger offer from Mittal Steel, world's number one, based in Rotterdam, the Netherlands.

At an all-day meeting on Sunday, the Arcelor Board members considered two offers, one from Mittal and the other from Russia's Severstal.

The development comes after months of bitter dispute between the rival companies. Mittal Steel has offered 40.37 euros an Arcelor share from the previous 37.74 euros.

"It's over ... It was long," Jean-Pierre Hansen, an Arcelor director, told AFP. The Board will now send its recommendations to the shareholders, who are to meet on June 30.

A spokesman for Mittal Steel said the Arcelor directors have accepted a partnership offer from Mittal that would create a global steel champion.

The merger will lead to the world's first 100 million tonnes plus steel making company.

Chairman of Mittal Steel Lakshmi Mittal has always maintained that consolidation was needed in the industry to face wide fluctuations in steel prices.

Earlier, an Arcelor spokesman said all the 18 board members were present or represented at the session, which was chaired by Luxembourg's Joseph Kinsch, who is expected to become the number two of the new company, Arcelor-Mittal.

Unflattering comments

In the months of controversy surrounding the takeover bid by Mittal Steel, Guy Dole, Arcelor Chief Executive, had made unflattering comments about Mr. Mittal's nationality and this stirred up a major controversy worldwide, with allegations of racism and xenophobia.

Mr. Dolle denigrated Mittal Steel products, saying: "They make eau de Cologne, we make perfume."

Mr. Dolle's attempts to enter into a tie-up with Severstal were blocked by shareholders. They felt they were being pushed into the arms of the Russian simply because the CEO wished to stall the Indian bid at all costs.

Collette Neuville, who represents small shareholders, said Mr. Dolle had acted against the interests of the company and the shareholders. It was shareholder opposition that finally prompted the Arcelor management to enter into talks with Mittal Steel, whose first bid was announced on January 27.

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