The UK's richest man hailed a "seminal event" for the steel industry yesterday after his firm Mittal Steel agreed a takeover of rival Arcelor worth around £18 billion.
Lakshmi Mittal won the backing of the Arcelor board after a five-month battle to merge the world's two largest steel companies and create a powerhouse capable of producing 120 million tonnes of steel a year - ten per cent of the global market and three times more than its nearest rival.
Mr Mittal said the new company, which will be called Arcelor-Mittal, will be "the undisputed sector leader and global giant with a footprint in every region of the world" if it receives the backing of Arcelor shareholders on June 30.
"This is one of the greatest days in the history of Mittal Steel and a seminal event in the steel industry which will shape its future," said Mr Mittal, whose 88 per cent holding in Mittal will be reduced to 43 per cent of the new company.
The deal was struck after R otterdam-based Mittal sweetened its offer to 40.4 euros (£28) a share - up seven per cent from its earlier offer and 49 per cent higher than the initial hostile approach in January.
Arcelor also secured a number of concessions from Mittal in how the company will be run, with its industrial and corporate governance based on the Arcelor model.
Arcelor chairman Joseph Kinsch sounded a note of caution when he said that integration of the two firms will be "exhilarating, thrilling, but difficult".
Mr Kinsch added that the Arcelor board would consider any new offer if another party bid for the entire company.
"If a new offer for Arcelor was made for 100 per cent of its capital, the board must discuss it," he said at Arcelor's headquarters in Luxembourg.
The deal was agreed after months of bitter wrangling in which Arcelor mounted an aggressive defence against Mittal.
Arcelor even agreed to an alternative deal with Russian firm Severstal in an effort to thwart Mr Mittal.
But Arcelor shareholders became increasingly frustrated at the board's refusal to negotiate with Mr Mittal and talks between the two firms began earlier this month.
On Sunday the Arcelor board unanimously backed the proposal after Mr Mittal tabled an improved cash and share offer which valued Arcelor at between 25.4 billion euros (£17.5 billion) and 27 billion euros (£18.6 billion).
The combined company will have 320,000 employees, annual sales of £38 billion and earnings of £7.3 billion.
Indian-born Mr Mittal said: "The steel industry has never before seen a company with the strength and potential of Arcelor-Mittal."
Severstal could now be in line for a 140 million euros (£96 million) break-up fee from Arcelor.
Severstal said it was "very surprised" Arcelor's board did not invite it to discuss its revised offer and that it was reviewing its options.
Controlling shareholder Alexei Mordashov is under-stood to be preparing a war chest to counter Mittal's offer, although Mr Mittal said he was "very relaxed" about a rival bid from the Russian.
Mr Kinsch said the fierce five-month battle was vindicated as it secured Arcelor a "substantially improved" offer from Mittal.
The offer was 100 per cent higher than the value of Arcelor's shares the day before the bid in January. Mr Mittal will be installed as president with Mr Kinsch its chairman. Mr Mittal is expected to take over as chairman when Mr Kinsch stands down.
Arcelor chief executive Guy Dolle is ready to stand down immediately and allow Arcelor to nominate a new candidate for the top job, although Arcelor said Mr Dolle will help integrate the two companies.
Arcelor-Mittal will have a board of directors made up of 12 members from Arcelor and six from Mittal, while the management board will have four Arcelor members including the chief executive and three from Mittal.