LUXEMBOURG-based steel manufacturer Arcelor could yet fall to a takeover bid by rival steel producer Mittal after the two agreed to begin talks over a possible deal.
Arcelor had agreed to a merger with Russian producer Severstal in a bid to ward off the unwelcome advances of Mittal, but shareholders at the Luxembourg company have forced the board to rethink its rejection of Mittal's offer and open up talks.
The world's two largest steel producers clashed when Mittal launched a £15 billion hostile takeover bid for Arcelor earlier this year. It was swiftly rejected and a war of words between the two companies broke out.
But now Arcelor has revealed that it has programmed a series of meetings with Mittal over the deal to forge a worldwide super steel company.
It is hopeful the talks will result in an increased offer per share for the company, but industry sources are unsure whether this would be forthcoming.
They claimed that the only room for movement on the Mittal deal was an improvement in the management structure that could see more Arcelor bosses sitting on the board of the merged company.
Severstal bosses remained unmoved by the talks and insisted the contact did not mean its own deal with Arcelor was dead in the water.
Severstal owner Alexei Mordashov said the move was not underhand and that the talks did not mean the contract it had with Arcelor was being broken.
He said: 'The talks are about Mittal Steel's industrial plan, which shareholders have been insisting on. We have a contract with Arcelor and talking to Mittal does not mean it is being violated.'
Anglo-Dutch steel producer Corus, tipped to be a takeover target for Mittal if its Arcelor deal falls through, is understood to be watching developments closely.
It unveiled a 73 per cent drop in profits during the first quarter this year and announced a £30 per tonne price hike on deliveries from August 1 in a bid to claw back high production costs.
An industry insider said of the possible takeover: 'Most of the structural steel used on sites in the UK is produced by Corus. There should be no real effect on the sector.'