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Dutch judge refuses request to block merger

Dutch judge refuses request to block merger

Courts in the Netherlands and France refused Monday to grant injunctions blocking the 30 billion euros (US$41 billion) merger between steel giants Mittal Steel Co. NV and Arcelor SA.
Legal actions launched in Rotterdam by three hedge funds and in Paris by an activist shareholder were both rejected by judges, clearing hurdles to the creation of the world's largest steel maker, as measured by sales.
The steel companies already call themselves ArcelorMittal, but three funds - SRM Global Master Fund Ltd., Trafalgar Catalyst Fund and Trafalgar Entropy Fund - went to court last week seeking to block the first phase of the two-step merger, when Rotterdam-based Mittal is to combine with ArcelorMittal SA, a Luxembourg holding company.
In the second phase, ArcelorMittal would merge with Luxembourg-based Arcelor, likely before year's end, creating the world's largest steel maker by sales.
Rotterdam Court judge A.A. Rijperman agreed with Mittal lawyers that she did not have jurisdiction in the case because ArcelorMittal and Arcelor are based in Luxembourg.
"The plaintiffs will be able to fight the second phase of the merger in Luxembourg," Rijperman said. "There is no way an injunction can take measures in what will be a Luxembourg matter."
In a brief reaction, ArcelorMittal welcomed the ruling. "We have always been convinced that the merger process was transparent and fair to all shareholders in both companies," the company said.
The hedge funds' legal team argued that the two-step merger was designed to sidestep Dutch courts, which it said were generally more sympathetic to activist shareholders than courts in Luxembourg.
The funds also claimed they were shortchanged because they did not take up an initial offer in August 2006 that would have given them 11 ArcelorMittal shares for seven Arcelor shares. After most shareholders took advantage of the offer, it was revised in May to eight ArcelorMittal shares for seven Arcelor shares.
The funds said the difference in the exchange ratio would cost them 152 million euros (US$207 million).


Updated : 2021-04-13 04:32 GMT+08:00