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Western companies afraid of Russian steelmakers - MP

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Foreign companies refuse to compete with Russian metallurgical businesses on an equal footing, a senior Russian MP said Friday.
MOSCOW, June 30 (RIA Novosti) - Foreign companies refuse to compete with Russian metallurgical businesses on an equal footing, a senior Russian MP said Friday.

Vladimir Medinsky was speaking in the wake of a decision by shareholders of world No. 2 Arcelor to reject a merger with Russian steelmaker Severstal Friday in favor of a bid from the world's No. 1 Mittal Steel

"They [foreign companies] are afraid of them [Russian steelmakers] and do not want to compete with them on equal terms," said Vladimir Medinsky, deputy chairman of the State Duma Committee on Economic Policy, Enterprise, and Tourism.

He also said Arcelor's decision to tear up agreements with Severstal was "strange behavior" for Western business culture.

The Severstal deal would have gone through if shareholders holding at least half of Arcelor's stock had voted for it. Now, the Luxembourg-based company will have to pay 140 million euros ($175 million) to the Russian company in compensation.

The vote was preceded by a bitter five-month takeover battle with Mittal, resulting in the London-based company raising its offer to 25.4 billion euros. Arcelor and Mittal will hold 50.6% and 49.4%, respectively, in what will be the world's largest steelmaking group.

Severstal offered to pay 13 billion euros for a 25% stake in Arcelor.

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