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Arcelor, Mittal Steel Celebrate 'Marriage'

"All the management board's actions of the last five months were well founded," Kinsch said. "We have worked in the interest of all the company's members and the results are there."

He said Mittal had "profoundly altered" its offer, taking on board Arcelor's business model and governance.

The new company would dwarf other steelmakers, controlling close to 10 percent of world steel production, churning out 120 million tons of crude steel a year and employing more than 320,000 people.

Lakshmi Mittal said it would have a total market capitalization of $46 billion and combining operations should save $1.6 billion in synergies.

Under the terms of the deal, Arcelor will name the chief executive of the new company. Kinsch said current Arcelor CEO Guy Dolle _ who once described Mittal's steel as cheap eau de cologne compared to Arcelor's fine perfume _ was ready to step down but would remain on the board and would head Arcelor in the meantime. Dolle was absent from Monday's presentations.

Mittal, 55, will be president of the new company, while Kinsch, 73, will be chairman for an undetermined length of time, to be succeeded by Lakshmi Mittal.

Mittal deflected a question about the level of debt the new company will take on, saying the new company would be in a very strong financial situation.

Fitch Ratings expressed concern, however, noting the extra cash Mittal was paying. "Should the transaction proceed on the currently understood terms announced today, the financial profile of the combined entity would be weaker than that of Mittal Steel on a stand-alone basis," it said.

Standard & Poor's Ratings Services said the new company's financial profile would deteriorate compared to current ratings for Mittal and Arcelor.

Neither Mittal nor Arcelor would say how much they have spent on the takeover campaign.

But Mittal said the high price it will pay for its nearest rival showed that the "undervalued" global steel industry was healthy. "Our consolidation will accelerate a lot of initiatives," he said, adding that he believed there would be at least two 150-million ton steelmakers in 10 years' time.

Mittal and Arcelor have been unable to agree on the future of Dofasco, a Canadian steelmaker Arcelor bought earlier this year. Germany's ThyssenKrupp AG, which had been bidding against Arcelor, told Dow Jones Newswires it expected Mittal to cede Dofasco to it if their deal goes through.


AP Business Writer Alex Nicholson in Moscow contributed to this report.

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© 2006 The Associated Press