Arcelor''s shareholders are meeting today to discuss the buyback proposal.

The new offer values Arcelor at €37.74 per share based on Mittal Steel''s May 18 share price, a premium of 34 per cent over the last offer, and 70 per cent over the offer on January 26, 2006, the previous day''s closing when Mittal announced its take-over intentions on January 27. The latest offer raises Arcelor''s equity value to €25.8 billion ($32.9 billion).

The new "mix and match" offer gives Arcelor shareholders three options:

• They can now choose between one Mittal Steel share and €11.10 euros ($14.16) in cash for each Arcelor share they own
• Or 17 Mittal Steel shares for every 12 Arcelor shares
• Or €37.74 ($48.15) in cash for each Arcelor share

Shareholders may opt for a cash or stock mix in any proportion they choose, provided the maximum consideration does not exceed 29.4 per cent of the aggregate amount in cash and 70.6 per cent in stock.

Accordingly, the maximum amount of cash that Mittal Steel would pay will be approximately €7.6 billion ($9.7 billion) — an increase of 57 per cent — and the maximum number of Mittal Steel shares to be issued will be approximately 684.46 million.

Mittal''s first offer in January valued Arcelor at about €28.21 ($36.02) per share, or euro18.6 billion ($23.75 billion) total. Arcelor had dismissed the previous offer to combine the world''s largest steel makers as hostile saying its board would meet to evaluate the new terms.

Calling it a materially improved offer that provided an exceptionally attractive premium to Arcelor shareholders Lakshmi Mittal, chairman and CEO, Mittal Steel Co, said the new offer was not only very significant increase in the cash component, but also offered a greater participation in the combined company.

To allay corporate governance issues arising out of 87-per cent control of his company by his family Mittal Steel also announced substantial changes to its corporate governance, and the adoption of a one-share one-vote structure — irrespective of the duration of ownership of the shares. The board of directors will be expanded to 14, with all directors elected by the shareholders for a three-year term.

Mittal, whose family stake in the combined entity will be around 45 per cent in share capital and voting rights, also intends to relocate the combined company to Luxembourg to make the takeover more palatable to Arcelor''s largest shareholder — the Grand Duchy of Luxembourg, which owns a 5.6-per cent stake.