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Ispat International NV and International Steel Group Inc. announced that their Boards of Directors have unanimously approved a definitive agreement under which Ispat International and ISG will merge. The merger will follow Ispat International’s just-announced acquisition of LNM Holdings NV.

Upon completion of both transactions, the newly combined company — Mittal Steel — will be the largest and most global steel company in the world, with operations in 14 countries on four continents and 165,000 employees.

The companies have signed a Letter of Agreement with the United Steelworkers of America and the Independent Steelworkers Union.

Lakshmi N. Mittal will be Chairman and CEO of Mittal Steel. Wilbur L. Ross, chairman of ISG, will become a Board member of Mittal Steel. Aditya Mittal will be President, Group Chief Financial Officer and a Board member. Malay Mukherjee will be Chief Operating Officer. Rodney Mott, President and CEO of ISG, will become Chief Executive Officer of Mittal Steel's combined U.S. operations.

"These transactions dramatically change the landscape of the global steel industry," said Mr. Lakshmi N. Mittal. "We are bringing together Ispat International, LNM Holdings and ISG, one of the largest integrated steel producers in North America, creating a global powerhouse. In recent years, the steel industry has been characterized by predominantly regional consolidation. This combination represents a significant step forward in the globalization of the industry."

Mr. Mittal continued, "The combined company will have excellent positions in raw materials, particularly coal, coke and iron ore, as well as strong positions in key end sectors. This combination also provides Mittal Steel with a more significant presence in important industrialized economies such as those in North America and Europe and in economies that are expected to experience above-average growth in steel consumption, including Asia and Africa. Finally, I am particularly pleased that Wilbur Ross and Rodney Mott, who formed ISG and transformed the U.S. steel industry, will continue to have key roles at the new company."

Mr. Ross said, "This transaction achieves all our financial and business objectives. It provides our shareholders with an excellent rate of return and the potential for strong future appreciation. It accelerates by several years our strategy to become a leading global steelmaker. By joining with Mittal Steel, respected in the global steel industry for both its strategic vision and operational excellence, we have provided our shareholders immediate value, as well as participation in a new, financially strong, profitable global enterprise with excellent growth prospects."

Mr. Aditya Mittal said, "We believe that Mittal Steel will be a leader not only in terms of its global reach and operational excellence, but also among the most profitable steel producers in the world. Mittal Steel's financial strength will enable us to implement return-driven capital expenditure programs at our plants and enhance our ability to pursue future transactions. Most importantly, both the companies can share best-in-class practices at all facilities, accelerating the competitive edge Mittal Steel has due to its global management breadth and expertise."

Mr. Mott said, "For our employees and communities especially, both of whom have experienced the contraction of the industry, this combination provides a strong measure of stability and the greater potential of a financially sound and secure steel company, with a diversity of operations in the United States and internationally. Our scale and capabilities, strong synergies, and a dynamic product offering will enable us to serve customers even better. This is an exciting combination borne out of strength."

Under terms of its agreement with LNM Holdings, Ispat International will issue 525 million new shares, valued at $13.3 billion (Friday's closing share price on the NYSE) to the shareholder of LNM Holdings. The new shares will comprise approximately 140 million class A shares and approximately 385 million class B shares, which is in the same proportion as the Ispat International shares currently held by LNM Holdings' controlling shareholder.

Under terms of the agreement with ISG, ISG shareholders will receive $21.00 per share in cash and a number of Mittal Steel shares equal to $21.00 divided by the average closing price of Mittal Steel for the 20 trading days prior to closing, up to a maximum of 0.6087 shares and a minimum of 0.4793 shares. The value in the merger would be $42.00 per ISG share, or $4.5 billion in the aggregate if the average price of Mittal Steel shares for the 20 trading days prior to the merger is between $34.50 and $43.81 per share. ISG shareholders will be able to elect between cash and Mittal Steel shares, subject to pro ration such that 50% of the total consideration will be in cash and 50% will be in Mittal Steel shares. The closing prices of Ispat International and ISG shares on Friday, October 22, 2004 on the NYSE were $25.34 and $29.68, respectively.

The world's eleventh largest steel producer, Ispat International operates in 6 countries in North America and Western Europe, including the United States through Ispat Inland Inc. Ispat International's operating philosophy embraces both integrated minimill and blast furnace processes for steelmaking. Its steel shipments have increased from 1.5 million tonnes in 1992 to 15.2 million tonnes in 2003 and were 12.4 million tonnes for the first nine months of 2004. In 2003, Ispat International's consolidated sales, operating income and net income were $5,441 million, $151 million and $66 million respectively. For the nine months ended September 30, 2004, Ispat International's consolidated sales, operating income and net income were $6,320 million, $1,243 million and $887 million, respectively.

LNM Holdings NV is one of the world's largest and most profitable steel producers, operating steelmaking and processing facilities in eight countries in Europe, Africa and Asia. LNM Holdings has annual total raw steel production capacity of over 32 million tonnes and owns significant mining assets, annually producing approximately 18 million tonnes of iron ore, 13 million tonnes of coke and 12 million tonnes of coal. In recent years, LNM has significantly increased its production and shipments of steel products, primarily through the acquisition of additional steel-producing assets, notably in Poland, the Czech Republic, Romania and South Africa. LNM Holdings shipped a total of 12.3 million tonnes of steel and steel products in 2003 and 19 million tonnes for the first nine months of 2004, and is targeting 2004 revenues of approximately $14.5 billion.

International Steel Group Inc., one of the largest integrated steel producers in North America, is also among the top ten globally. Since its formation in April 2002, ISG has grown rapidly by acquiring the steelmaking assets of LTV, Acme Steel, Bethlehem Steel, Weirton Steel and Georgetown. ISG has annual total raw steel production capacity of approximately 20 million tons and is targeting 2004 revenues of approximately $9 billion. It produces a variety of steel products including hot-rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, wire rod and rail products and semi-finished shapes to serve the automotive, construction, pipe and tube, appliance, container and machinery sectors.

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