Lakshmi Mittal, however, will have to give up his claim on the chairmanship of the combined entity. He will be the board president while Joseph Kinsch will be the chairman of the combined steel giant.
Arcelor chairman Joseph Kinsch however added that the company's administrative council has decided to continue its privileged relations with Severstal.
"The administrative council came to the decision that the Mittal Steel offer, which is at 100 per cent of Arcelor's shares is better than Severstal. Nevertheless, the council has decided to continue its privileged relations at an industrial level with Severstal," said Joseph Kinsh, chairman, Arcelor Board.
Jeanneau Krecke, Luxembourg's Minister for Economy said clinching the deal is a matter of pride for the country as well.
"If shareholders and regulators accept it, it will be an extraordinary deal for Luxembourg. The biggest steel manufacturing firm in the world will have its headquarters here, I think it's a good victory for us," Jeanneau Krecke, Minister For Economy, Luxembourg said.
Reacting to the Mittal-Arcelor deal, Russian steel maker Severstal said in a statement that its agreement with Arcelor is legal and binding.
The company also added that Arcelor's decision may be breach of contract with SeverStal and that it is reviewing all its options. Jason Hunter of Steel Business Briefing said the deals will give Mittal a presence in South America. He however added that from the investor perspective, it may be attractive for financial investors but not for individuals looking to gain long-term value.
"From Mittal Steel's point of view, it is a terrific acquisition for them. It gives them a very big presence in South America, which they've been looking for a long time, it's a very low cost region to produce in. For Arcelor shareholders, there are two very distinct camps. There are the financial investors that are out to make a very quick buck, they will be very pleased with the deal, I am sure. The longer term investor who is looking to add value to his money and to his investment in the company, I suspect, will lose out in the short-term," said Jason Hunter, Steel Business Briefing.
Jason also said that the biggest barriers for Arcelor-Mittal will be the North American markets.
"Certainly the biggest barrier to Arcelor-Mittal will be the North American markets. Arcelor acquired a company in Canada, which is very big in North American automative industry. We understand that will be retained in the new format of the company and his other North American facilities in order to comply with regulations in there," Hunter added.
Indian Commerce Minister Kamal Nath lauded the deal and said it was a demonstration of the intellectual and entrepreneurial abilities of Indians. "It's a demonstration of India's and people of Indian origin's intellectual and entrepreneurial abilities. I had raised this issue when countries had tried to block it and said that globalisation is not a one-way street. We are going to have in this new economic order, Indian corporates, people of Indian origin investing and creating employment and creating economic activities in other countries. So this is happening and I really think that countries need to realise this that there's a new economic architecture," said Kamal Nath, Commerce Minister.
Finance Minister P Chidambaram has also issued a comment on the deal. "We are very happy and proud that a company with Indian links is the world's largest steel maker in the world," said P Chidambaram, Finance Minister.
"For more on markets & business, log on to www.moneycontrol.com"