http://online.wsj.com/public/article/SB115083638406885494-DVwlm2jhwb86Bq0jnrQYuAxJZGM_20060628.html?mod=regionallinks

Russian steel tycoon Alexey Mordashov made sweeping changes to his £¿3 billion ($16.35 billion) deal to link up with Arcelor SA after its shareholders protested the terms, accepting a sharp reduction in the stake of Arcelor he will receive as payment for his company.

The Russian billionaire removed or revised nearly all of the controversial elements of the deal with Arcelor, including reducing the percentage of Arcelor Mr. Mordashov will control after the sale to 25% from 32%, eliminating his role on a "strategic committee" that would have influenced the board of directors and committing to not increase his stake in Arcelor to more than 33% without making a full bid for the company.

"We wanted to make sure people feel good about this transaction," said Robert Miller, an investment banker representing Mr. Mordashov. "And we think this will do it."

Arcelor agreed to a deal with Mr. Mordashov to absorb a steel company he controls, OAO Severstal, as a defensive move to thwart a hostile cash-and-stock bid by larger rival Mittal Steel Co. currently valued at £¿3.51 billion. But Arcelor has been attacked by its own shareholders for giving away too much to protect itself from Mittal.

Mr. Mordashov's move was a response to investors' requests and concerns after he met with more than 100 institutional shareholders of Arcelor, Mr. Miller said. A Mittal spokesman declined to comment. An Arcelor spokesman couldn't be reached.

Arcelor earlier this week canceled a shareholder meeting where investors were due to vote on a huge share buyback, another key plank of its defense against Mittal that would have benefited Mr. Mordashov by increasing the percentage of his Arcelor holdings.

Under the revised terms, Mr. Mordashov will accept 210 million newly issued shares, down from 295 million, in exchange for his stake in Severstal, of which he controls about 90%. He also won't buy Arcelor shares with his own cash, a change from the previous plan where Mr. Mordashov agreed to buy £¿.25 billion of Arcelor shares at a price of £¿4 apiece, much higher than the price Arcelor trades at in the stock market.

The new format values the Russian company at a lower multiple of its earnings, closer to the level that Russian companies typically trade for and below other big steel firms. Previously, Mr. Mordashov and Arcelor were valuing Severstal at a level far higher than the norm in Russia and far higher than shareholders said they thought it was worth.