Sao Paulo: Mittal Steel Co NV has said it would appeal a ruling by Brazilian regulators requiring it to make a buyout offer to shareholders of a Brazilian division of Arcelor SA, as part of a merger of the world's two largest steel makers.
While analysts said the side deal could raise the estimated cost of the $31.9 billion merger by another $5 billion, an Arcelor Brazil executive noted that the Brazilian Security and Exchange Commission didn't say how much compensation Arcelor Brazil’s minority shareholders should receive.
Regulators "didn't specify an amount or method of payment for the offer," Leonardo Horta, Arcelor Brazil’s director of investor relations, told reporters.
Besides fighting the issue in Brazilian courts, Horta suggested it may be possible to craft a compromise acceptable to regulators, the Agencia Estado news service reported.
Mittal, based in the Netherlands, on Wednesday claimed that there was no change of control in Arcelor, headquartered in Luxembourg, and that it did not have to make an offer for Arcelor Brazil SA.
However, Brazilian regulators who scrutinized the deal said the day before that Mittal is "legally bound" to buy out minority shareholders of Arcelor Brazil, though not Acesita SA, which is controlled by Arcelor.
Arcelor and Mittal are trying to create a steel giant with close to 10 per cent of global production that will save the combined operations some $1.6 billion a year.
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