The general meeting was seen as part of Arcelor's struggle to get its shareholders to accept a proposed merger with Severstal [RTS: CHMF], Russia's top steelmaker, as it bids to fend off a hostile takeover from world No. 1 Mittal Steel.
"In light of the current discussions between the management of Arcelor and Mittal Steel, and in order not to impair any solution for the future of Arcelor the board of directors has resolved to withdraw the convening of the extraordinary general meeting of June 21st, 2006," Arcelor said in a press release.
Shareholders in the Luxembourg-based world No. 2 have expressed unhappiness with the mooted Severstal deal, and have threatened to block it, preferring instead to negotiate a deal with London-based Mittal.
Arcelor denied the share buyback deal, worth 6.5 billion euros ($8.3 billion), was aimed at blocking any deal with Mittal, but confirmed it still wanted to press ahead with the plan.
"The board of directors nevertheless confirms its intention to implement the Arcelor value plan and to distribute EUR 6.5 billion to its shareholders, as per its decision of April 3, 2006. The board of directors reserves the right to convene an extraordinary general shareholders' meeting in order to allow its shareholders to decide on such distribution in case the unsolicited offer by Mittal Steel was not successful," Arcelor said.
Earlier reports said the price of one share in the buyback had been set at 44 euros ($55.9). Mittal is offering 34.4 euros ($43.7) per share ($32.8 billion), and it is ready to pay up to 7.6 billion euros ($9.7 billion) in cash.
"That meeting will also vote on the proposal of the board to amend Arcelor's Articles of Association in order to allow shareholders holding at least 1% of the shares outstanding to request that draft resolutions be placed on the agenda of the meeting," the press release said.
The Arcelor-Severstal deal, announced May 26, would create the world's largest steel producer if it goes ahead. The companies said the new firm would have "46 billion euros [$60 bln] in sales ... and 70 million tons of production" based on last year's results.
Under the deal, Severstal's principal shareholder, Alexei Mordashov, will swap his stake in Severstal, Severstal-resurs, and Italy's Lucchini, plus 1.25 bln euros (about $1.62 bln) in cash, for an additional issue of 295 million Arcelor shares, at a rate of 44 euros per share ($55.9).
Mordashov will be the new company's largest single shareholder, with a 32% stake. Arcelor's current shareholders will hold the other 68%.
Arcelor shareholders have expressed concern over the merger, and demanded an emergency shareholders meeting. About one third of shareholders have already signed a petition demanding a change in the merger approval procedure, and said the deal should require a two-thirds majority vote at an emergency meeting.
The deal has yet to be approved by the Russian antimonopoly agency, and is slated to be completed in July. Both President Vladimir Putin and the head of Russia's antimonopolies watchdog have expressed their approval of the deal.
