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Arcelor on Monday night hastily cancelled a crucial shareholder vote on Wednesday over on a planned share buyback, an embarrassing climbdown that increases the chances of success for Mittal Steel’s hostile €25.8bn (£17.6bn) bid.

The Luxembourg group – which has been battling Mittal, the Netherlands company controlled by Indian billionaire Lakshmi Mittal for five months – said it was taking the decision “in order not to impair any solution for the future of Arcelor”.

The meeting’s cancellation was being interpreted on Monday night as a sign that Mr Mittal might be able to push through his bid, possibly even with the approval of the Arcelor board, which has so far been opposed to any link.

An adviser to Arcelor said the company was “ready to be pragmatic and prudent”. A US-based shareholder in the steel group said: “The momentum seems to be swinging towards Mr Mittal.” Mittal refrained on Monday night from saying how it would react to the cancellation of the meeting.

Wednesday’s meeting of Arcelor shareholders in Luxembourg had been called to consider a proposed €6.5bn share buyback. Many Arcelor shareholders believe the scheme was designed to block the offer by Mittal.

Several prominent shareholders have told Arcelor in the past few days that they were ready to vote against the buyback in protest at the group’s handling of the debate about its future.

The cancellation of the shareholders’ meeting offers an important sign to Mr Mittal that if he were to sweeten his offer – which he has already pushed up by a third since unveiling his first bid nearly five months ago – he might stand a chance of winning over the Arcelor board.

Representatives of the two companies have been meeting in secret in the past few days to discuss Mittal’s proposals.

The meetings were arranged after the Arcelor board agreed to shareholder requests and authorised contacts between the two – albeit with the proviso that it still thought an alternative deal with Severstal of Russia was a better option.

The deal with Severstal was proposed last month as part of a package of measures designed to fight off the approach by Mr Mittal.

However, this is an option many Arcelor shareholders dislike because it would in effect give control of the combined business to Alexei Mordashov, the Russian steel tycoon.

Monday night’s decision over the meeting still means that Arcelor shareholders have the option of saying they prefer the Severstal deal to the Mittal merger.

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