Severstal likely to make new offer to Arcelor

Russian steel group Severstal has not given up on a merger with European rival Arcelor and is preparing to make a sweetened offer, Severstal owner and chairman Alexei Mordashov said today, according to a French parliamentarian.

Arcelor announced on Sunday that it had agreed to a merger with Mittal Steel, the world's biggest steel producer, ending a five-month battle between the companies and seemingly ending plans for an Arcelor-Severstal tie up.

"Alexei Mordashov said he was disappointed, but that he had not given up," said Leonce Deprez, secretary of a French parliamentary commission for economic affairs, after talks with Mordashov.

Mordashov, the chairman and owner of 83% of Severstal, appeared at a closed doors hearing in front of the commission, which is examining the proposed merger of Arcelor and Mittal.

"He (Mordashov) said that he would make an additional offer ... Very shortly, I think," added Deprez.

A spokesman for Severstal said that Mordashov had only indicated that all options were on the table.

"No decision has been taken at this moment about an additional offer. During his hearing with the economic affairs commission, Alexei Mordashov said that all options were available," said the spokesman.

"The comments from Leonce Deprez create confusion." Arcelor had previously been opposed to a deal with Mittal and had entered into talks with Severstal with a view to creating a defensive alliance to protect itself against a hostile bid from Mittal.