June 27, 2006 — Mittal Steel Co. NV announced that it has reached an agreement with Arcelor to combine the two companies in a merger that will be achieved with a tender offer by Mittal Steel for Arcelor shares.

Terms of the transaction have been reviewed by the Arcelor Board, which is recommending the transaction to Arcelor shareholders. The combined group, to be domiciled and headquartered in Luxembourg, will be named Arcelor Mittal.

Under terms of the revised offer, shareholders of Arcelor will receive 13 Mittal Steel shares and 150.60 euros in cash for 12 Arcelor shares. Mittal Steel is also offering to acquire Arcelor Convertible Bonds (OCEANEs 2017) in a mixed offer of 13 Mittal Steel shares and 188.42 euros in cash for 12 Arcelor Convertible Bonds.

Arcelor shareholders will also have the right to receive a mix of cash and stock in any proportion they elect, provided that 31% of the aggregate consideration is paid in cash and 69% in stock. The maximum amount of cash to be paid by Mittal Steel will be approximately 8.5 billion euros and the maximum number of Mittal Steel shares to be issued will be approximately 722 million, assuming the conversion of the outstanding Arcelor Convertible Bonds (2017 OCEANEs).

The revised offer values each Arcelor share at 40.40 euros, as based on the Mittal Steel share closing price on the NYSE on June 23. The revised offer reflects an improvement of 2.66 euros (7%) over the previous offer announced on May 19th, computed based on the prevailing Mittal Steel share price on the eve of the announcement of each of the offers and not adjusted for the dividend paid. Adjusting for the dividend, the increase would be 10%.

This new offer represents an 82% premium over the closing price and all time high on Euronext Paris of Arcelor on January 26th, the last trading day before the initial offer was announced.

Following completion of the transaction and assuming a 100% acceptance rate of the tender offer by Arcelor shareholders, current Arcelor shareholders will own collectively 50.5% of the combined group. The Mittal family will own 43.6% of the capital and voting rights of the combined group.

Mittal Steel says its proposal was developed following extensive discussions with Arcelor's management over the last few days, and was submitted to the Board of Directors of Arcelor with the support of Arcelor's management. Following its review of these terms, Arcelor’s Board of Directors has now resolved to recommend the revised Mittal Steel offer to Arcelor shareholders.

As disclosed by Arcelor, the Strategic Alliance Agreement entered into between Arcelor, SeverStal and Mr. Mordashov will terminate automatically upon (1) the proposed SeverStal combination being rejected by holders of 50% or more of Arcelor's capital at the Arcelor shareholders' meeting scheduled for June 30, or (2) Mittal Steel receiving, in its tender offer, more than 50% of the fully diluted capital of Arcelor, including the shares to be issued to Mr. Mordashov under the Strategic Alliance Agreement (corresponding to approximately 73% of the currently outstanding capital).

Mittal notes that it is critical for shareholders of Arcelor to vote their shares at the June 30 meeting against the proposed SeverStal combination.

Arcelor Mittal will have a unique profile with unprecedented scale, scope and synergies, including a global steelmaking capacity of 120 million tonnes; pro-forma 2005 annual revenues of US$71.9 billion and EBITDA of US$13.3 billion; and pro-forma market capitalization of approximately US$46 billion. The new organization, which will have leading positions in NAFTA, EU, Central Europe, Africa and South America, is expected to result in synergies of US$1.6 billion from purchasing, marketing and manufacturing efficiencies.

Additional advantages for the new organization include exceptional raw material resources with a high degree of iron-ore self sufficiency; reduced volatility through geographic and product diversification; the security of long-term contracts through high value-added products; a low cost profile and high growth prospects from developing markets; and a leading position across a range of key product segments. The new group will have the ability to supply customers on a global basis and a best-in-class corporate governance structure promoting the Arcelor model. The group will have the financial strength to support continued investments and growth initiatives, and a dividend policy representing c30% of earnings over the cycle.

The amendment to the terms of the offer is expected to delay the closing date for the tender offer, which had previously been scheduled for July 5th.

Commenting, Mr. Lakshmi N. Mittal, Chairman, said: "I am delighted that Mittal Steel and Arcelor have agreed to merge. This is one of the greatest days in the history of Mittal Steel and a seminal event in the steel industry that will shape its future. Arcelor is an exceptional company with world class assets and highly regarded management. I want to take this opportunity to express my gratitude to all of our employees, shareholders, and business partners for their support throughout this process of creating the best steel company in the world.

"This combination is a natural alliance that represents a transformational change towards realizing our vision of a more sustainable and stable industry benefiting all stakeholders. It is a winning combination between our two complementary companies, creating the industry leader that will create significant value for our shareholders."

Mittal notes that the two companies have not yet reached agreement as to the ultimate disposition of the Dofasco Group. Discussion of this question will continue following successful completion of the tender offer.

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