Mittal Steel Launches $22.8 Billion Bid For Rival Arcelor

If the deal is approved, Mittal says it would sell Canadian automotive-steel maker Dofasco Inc., which earlier this week agreed to a $4.85 billion takeover by Arcelor, to German-based steelmaker ThyssenKrupp AG. ThyssenKrupp has an automotive parts manufacturing plant in Terre Haute.

Source: Inside INdiana Business

Press Release

LONDON and ROTTERDAM, January 27 -- Mittal Steel N.V. ("Mittal Steel") (NYSE: MT) today announces that it has launched an offer to the shareholders of Arcelor SA ("Arcelor") which will create the world's first 100 million ton plus steel producer. The offer values each Arcelor share at EUR28.21 which represents a 27% premium over the closing price and all time high on Euronext Paris of Arcelor shares on 26 January 2006, a 31% premium over the volume weighted average price in the preceding month, and a 55% premium over the volume weighted average share price in the preceding 12 months.

This offer values Arcelor at an equity value of EUR18.6 billion on a fully diluted basis.

The new company will have:

- Unprecedented scale, scope and synergies

- Pro-forma* 2005 annual revenues of approximately US$69bn and EBITDA of US$12.6bn (*IBES estimates)

- Pro-forma market capitalisation of approximately US$40 billion

- Leading positions in NAFTA, EU, Central Europe, Africa and South America

- Expected synergies of US$1 billion from purchasing, marketing and manufacturing efficiencies

- Exceptional raw material resources with a high degree of iron-ore self sufficiency

- Reduced volatility through geographic and product diversification

- Security of long-term contracts through high value-added products

- Low cost profile and high growth prospects from developing markets

- Leading position across a range of key product segments

- Ability to supply customers on a global basis

- A dividend policy representing c. 25% of earnings over the cycle Under the terms of the offer, Arcelor shareholders will receive 4 Mittal Steel shares and EUR35.25 cash for every 5 Arcelor shares (equivalent to 0.8 Mittal Steel shares plus EUR7.05 cash for each Arcelor share). In addition, they will have the right to receive a cash or stock mix in any proportion they elect, provided that 25% of the aggregate consideration paid to Arcelor shareholders is paid in cash and 75% in stock. The maximum amount of cash to be paid by Mittal Steel will be approximately EUR4.7bn and the maximum number of Mittal Steel shares to be issued will be approximately 526.6 million, assuming the conversion of the outstanding Arcelor Convertible Bonds (2017 OCEANEs).

Mittal Steel also announces today that it has entered into an agreement with ThyssenKrupp AG ("ThyssenKrupp") to resell to ThyssenKrupp all the common shares of Dofasco Inc ("Dofasco") that Arcelor purchases in its pending tender offer for Dofasco or later, at a price equal to the Euro equivalent of CDN$ 68.00 per share, adjusted based on changes in net financial debt and net working capital from the date of acquisition of Dofasco by Arcelor and the date of resale to ThyssenKrupp.

Mr Lakshmi N. Mittal, Chairman and CEO of Mittal Steel said: "The last ten years have seen a major shift towards consolidation of the steel industry, helping to create sustainable value for all stakeholders. Both Mittal Steel and Arcelor have been at the forefront of this consolidation and share a similar vision for the future of our industry. This combination accelerates this process and leaves us uniquely positioned to benefit from the opportunities created."

"We believe the offer provides a very attractive premium and has been structured so that Arcelor shareholders have the opportunity to participate in the exciting growth potential of the combined company, whilst also receiving a generous cash element. We would encourage them to consider the merits of our compelling offer and play a part in the future of the world's only global steel company."

Highlights of the Offer

The offer values each Arcelor share at EUR28.21 which represents a 27% premium over the closing price of Arcelor shares on Euronext Paris as of 26 January 2006, a 31% premium over the volume weighted average price in the preceding month, and a 55% premium over the volume weighted average share price in the preceding 12 months.

Mittal Steel is offering to acquire all of the outstanding Arcelor shares through three offers:

- a primary mixed cash and exchange offer for Arcelor shares consisting of 4 new Mittal Steel shares and EUR35.25 in cash for every 5 Arcelor shares;

- a secondary cash offer consisting of EUR28.21 per each Arcelor share

- a secondary exchange offer consisting of 16 new Mittal Steel shares for every 15 Arcelor shares.

Arcelor shareholders may tender their shares in either the primary offer or either or both of the secondary offers, but the two secondary offers will, in the aggregate, comprise 75% in Mittal Steel shares and 25% in cash.

Mittal Steel is also offering to acquire Arcelor Convertible Bonds (OCEANEs 2017) based on the following exchange ratio: 4 new Mittal Steel shares and EUR40 in cash for every five Arcelor Convertible Bonds.

The offer is conditioned on the tendering of more than 50% of Arcelor's share capital and voting rights on a fully diluted basis, the extraordinary shareholders' meeting of Mittal Steel having approved the issuance of new Mittal Steel shares to Arcelor shareholders (the Mittal family having undertaken to vote in favour of the issuance of such new Mittal Steel shares) and the absence of events or actions that would alter Arcelor's substance.

The draft offer document will be filed with the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"). In order to coordinate the process in the various jurisdictions in which Arcelor securities are listed, the offer will also be filed with the competent authorities in other countries, including in Spain and Belgium. A draft share offering prospectus will be filed with the Dutch AFM and with the French AMF. A registration statement will also be filed with the US SEC.

In addition, this transaction will be reviewed by antitrust authorities in the EU, the US and possibly other jurisdictions around the world.

About Mittal Steel

Mittal Steel is the world's largest and most global steel company. The company has operations in sixteen countries, covering four continents. Mittal Steel encompasses all aspects of modern steelmaking, to produce a comprehensive portfolio of both flat and long steel products to meet a wide range of customer needs. It serves all the major steel consuming sectors, including automotive, appliance, machinery and construction. For 2004, Mittal Steel had revenues of US$31.2 billion and steel shipments of 57.6 million tons (pro-forma inc. ISG), employing 164,000 employees. The shares of the company trade on the New York Stock Exchange and Euronext Amsterdam under the ticker symbol "MT".

Important Information

In connection with its proposed acquisition of Arcelor S.A., Mittal Steel Company will file important documents with the United States Securities and Exchange Commission (SEC). Investors and Arcelor securities holders are urged to carefully read all such documents when they become available because they will contain important information. Investors and Arcelor securities holders may obtain copies of the documents, when available, free of charge on the SEC's website at http://www.sec.gov, as well as from Mittal Steel on its website at http://www.mittalsteel.com.

Source: Mittal Steel N.V.