Arcelor Mittal Announces Further Details on Legal Merger Process
05/17/2007 - The Boards of Directors of Mittal Steel and Arcelor announced further details about the process for the legal merger into Arcelor that was agreed in the context of Mittal Steel’s exchange offer completed on August 1, 2006.
The Boards of Directors of Mittal Steel Co. NV and Arcelor announced further details about the process for the legal merger into Arcelor that was agreed in the context of Mittal Steel’s exchange offer completed on August 1, 2006.
As announced earlier this month, the legal merger will occur in two steps:
- STEP ONE is the merger of Mittal Steel into ArcelorMittal, a wholly-owned subsidiary domiciled in Luxembourg, based on an exchange ratio of one ArcelorMittal share for every Mittal Steel share
- STEP TWO is the merger of ArcelorMittal into Arcelor, which will be renamed ArcelorMittal upon completion of the merger.
The Boards of Directors of Mittal Steel, ArcelorMittal, and Arcelor have unanimously decided that the second-step merger of ArcelorMittal into Arcelor will be achieved based on an exchange ratio of 7 Arcelor shares for every 8 ArcelorMittal shares. To determine this exchange ratio, the Boards applied the principles outlined in the June 25, 2006 Memorandum of Understanding and subsequent public statements (which provided that the merger exchange ratio would be consistent with the value of Arcelor shares pursuant to the secondary exchange offer as at the date of its settlement and delivery on August 1, 2006). In compliance with applicable laws, the Boards conducted a multi-criteria analysis, including (but not limited to) EBITDA multiples and discounted cash-flow analyses.
The Boards of Directors of Mittal Steel, ArcelorMittal and Arcelor have received opinions as to the fairness of this exchange ratio from a financial standpoint, respectively, from Goldman Sachs, with respect to the shareholders of ArcelorMittal (i.e., the shareholders of Mittal Steel prior to completion of the first-step merger of Mittal Steel into ArcelorMittal), and from Morgan Stanley, Société Générale, Fortis and Ricol Lasteyrie with respect to the public shareholders of Arcelor. In addition, the exchange ratio will be reviewed by independent auditors as required by Luxembourg law.
In order to provide the market with information equivalent to that provided to the institutions having delivered the fairness opinions, the following information is being communicated:
- Approximately 41% of the previously-announced synergies generated by the combination of Arcelor and Mittal Steel will be realized at the level of Arcelor.
- Arcelor will contribute approximately 49% of the combined Arcelor/Mittal Steel group EBITDA indicated in the combined Arcelor/Mittal Steel group harmonized value plan 2008.
- Arcelor will account for approximately 50% of the combined Arcelor/Mittal Steel group’s capital expenditures indicated in the harmonized value plan 2008.
For the avoidance of doubt, these elements relate to the harmonized value plan 2008 communicated to the market and do not take into account transactions effected since 27 September 2006.
ArcelorMittal and Arcelor are to sign a merger agreement shortly and submit the disclosure documents relating to such merger to the relevant securities regulatory authorities in the near-term. The companies report that they are actively working to implement the two mergers as promptly as possible in the course of 2007.
Regarding the proposed merger of Mittal Steel Co. NV with ArcelorMittal (a wholly owned subsidiary of Mittal Steel), and the subsequent merger of ArcelorMittal with Arcelor, Mittal Steel, ArcelorMittal and Arcelor will file important documents with the relevant securities regulatory authorities, including the filing with the U.S. Securities and Exchange Commission of registration statements that will each include a proxy statement/prospectus.
Arcelor Mittal is the world's largest steel company, with 320,000 employees in more than 60 countries. The company leads major global markets such as automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. An industrial presence in 27 European, Asian, African and American countries exposes the company to all the key steel markets, from emerging to mature, positions it will be looking to develop in the high-growth Chinese and Indian markets.
