Hedge Funds To Sue Over ArcelorMittal Merger

Nov 5 2007 | 4:36pm ET

Three hedge funds say they will sue ArcelorMittal, the world’s largest steelmaker, after Arcelor shareholders approved its €30 billion (US$43.5 billion) merger with Mittal Steel.

The outcome was never in doubt: Only 6% of Arcelor shares remained in free float on Euronext Paris after 94% tendered their stakes in exchange for shares in ArcelorMittal, at a rate of 11 ArcelorMittal shares for seven Arcelor shares. ArcelorMittal later cut the exchange ratio to eight to seven, angering the hedge funds who snapped up the few remaining Arcelor shares.

After failing in several earlier attempts to block the merger or to force ArcelorMittal to offer more favorable terms, Deminor Investment Management, SRM Advisers and Trafalgar Asset Management said Monday—after the merger was officially approved at a meeting in Luxembourg—that they would sue ArcelorMittal over the merger terms. The hedge funds, which claim the new ratio would cost Arcelor investors €1 billion (US$1.5 billion).

“ArcelorMittal has taken €1 billion of value from Arcelor minorities and its actions are a flagrant abuse of European corporate governance standards,” the hedge funds said in a statement. The funds, which plan to file suit in the Grand Duchy, also threatened to sue “any party liable, without distinction, in any possible jurisdiction, in order to recover losses resulting from the dilution.” The warning is said to be directed at ArcelorMittal board members.

For its part, ArcelorMittal dismissed the hedge funds’ claims, saying, “the exchange ratio reflects the intrinsic value of those companies and that we are confident it is fair to all shareholders.”


In Depth

Kettera Q&A: The Advantages of Alternative Investment Platforms

Oct 28 2016 | 5:52pm ET

The past several years have seen a distinct push towards easier and cheaper access...

Lifestyle

Midtown's Plaza District Fades As Manhattan Office Landscape Shifts

Nov 22 2016 | 6:32pm ET

Lower leasing costs, more efficient office space and the hope of projecting an image...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR