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. Last Updated: 07/27/2016

Politicians Criticize Rejection as Biased

Russian politicians have criticized Arcelor's rejection of a merger with steelmaker Severstal, saying Monday that the decision showed anti-Russian bias in international markets.

Industry and Energy Minister Viktor Khristenko led a chorus of disapproval from prominent Moscow officials when he said "double standards" were in evidence with regard to Arcelor's decision to pick Mittal Steel over Severstal. "I am completely dissatisfied with this decision and regard it as a bad sign," Interfax quoted Khristenko as saying.

On Sunday, Arcelor bowed to an improved $32 billion takeover bid from Mittal Steel to create a world giant three times larger than its nearest rival. It rejected a proposed merger with Severstal.

"I consider the events taking place around this deal as an example of Russian business facing serious obstacles when trying to expand into global markets," State Duma Speaker Boris Gryzlov said in a statement.

"The unprecedented propaganda campaign that has been launched around the merger of Russian company Severstal with Europe's Arcelor shows that people don't want to let us into global markets," Gryzlov said.

Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, was quoted by agencies as saying: "It looks like some people don't want to see Russia as a strategic partner in some countries."

Severstal said in a statement that it was reviewing its options, which analysts said could include an improved bid for a stake in Arcelor, consolidation in the Russian steel sector or a legal challenge to Arcelor's disengaging from an earlier agreement.

Severstal's Alexei Mordashov, had agreed to settle for a 25 percent stake in a combined company, rather than 32.2 percent.

Khristenko, speaking in Minsk on Friday, had warned of "Russophobia" in other countries in relation to Russia's maturing economy, which is growing at more than 6 percent a year.

"As soon as the Russian economy strengthened and became open, we began to meet with certain attitudes -- and more than once," Interfax quoted Khristenko as saying on Monday, referring to the Arcelor deal and political opposition to Gazprom's attempts to buy British gas distributor Centrica.

"I consider it double standards," he said.

Vladimir Katunin, a metals analyst at Aton brokerage, said in a research note that Arcelor highlighted some of the difficulties faced by Russian companies overseas. "The news is likely to be negative for market sentiment in general, as it suggests it is not as easy for Russian companies to participate in international M&A as we had hoped," he said.