Arcelor says 'I do' to $33.83B proposal

LUXEMBOURG, June 26 (UPI) -- The board of Luxembourg's Arcelor SA, the world's second largest steelmaker, has accepted a $33.83 billion takeover offer from its main rival.

The cash-and-stock offer from Mittal Steel NV Co., the world's largest steelmaker, would create an entity controlling 10 percent of the world's steel market. Mittal agreed to not lay off any of Arcelor's European workers.

Sunday's decision by Arcelor's board, which five months ago first reacted to news of Mittal's unsolicited offer by appealing to political allies Paris and Brussels, marks a defeat for presumptive white knight OAO Severstal, the Russian steel company that Arcelor earlier appealed to in an anti-takeover move widely denounced by Arcelor shareholders. Arcelor and Mittal are urging Arcelor shareholders to vote against the Severstal proposal at a Friday meeting.

The $33.83 billion offer marks a 49 percent improvement to Mittal initial offer.

The family of Mittal's chief executive, Lakshmi Mittal, will own 43 percent of the combined group and accept a 5-year share lock-up and agree to increase its stake to no more than 45 percent.

The seven-member board of the combined company will include four Arcelor directors.