Severstal has offered to revise the terms of its merger agreement announced on 26 May 2006 with Arcelor in a bid to outflank Mittal Steel’s competing bid. The proposal is in response to investor feedback provided by Arcelor’s shareholders over the course of the last several weeks. Severstal proposes the following changes to the merger agreement: Mr Mordashov will now receive 210 million new Arcelor shares (previously 295 million), representing approximately 25% of the enlarged company (previously 32%); the Strategic Committee will be eliminated. In return, Mr Mordashov will be free to vote his shares in line with normal shareholder practice and the standstill and lockup provisions will be eliminated; the cash contribution from Mr. Mordashov of EUR 1.25 billion will no longer be included; and in all other respects, the merger agreement will remain unchanged. In addition, Mr Mordashov confirms his intention not to increase, either actively or passively, his shareholding in Arcelor above 33.3% without making a mandatory tender offer to all shareholders in accordance with Luxembourg law.
