1. ACQUISITION OF ARCELOR STEEL BY MITTAL
STEEL
Presented by-
Avaya Agasti, Roll No. 011
Gyanendra Mishra, Roll No.026
Himanshu Sekhar Nayak, Roll No. 027
Jaydev Chand, Roll No. o29
Manoj Kumar Pradhan, Roll No.037
2. ACQUISITION OF ARCELOR STEEL
Mittal Steel Company N.V. was formed by the merger of
• LNM holdings & ISPAT International
• International Steel Group Inc.
• CEO Lakshmi Mittal’s family owned 88% of the company
and its headquarter was in Rotterdam, Netherlands
• The company was the world’s largest steel producer by
volume and also the largest in turnover and is now a part
of ArcelorMittal
• It was the major player in Steel, Flat Steel
products, Coated Steel, Tubes and Pipes
3. ACQUISITION OF ARCELOR STEEL
Arcelor was created through the merger of
•Arbed (Luxembourg)
•Aceralia (Spain)
•Usinor (France)
• Merger was launched on 19 February 2001Choice of
Arcelor name was anounced on 12 December 2001
• It was a major player in all its main markets:
• automotive, construction, metal processing, etc
• Guy Dolle was the CEO of Arcelor and its headquarter
was in Luxembourg city.
5. ACQUISITION OF ARCELOR STEEL
• THE BIG DEAL
• In January 2006, Mittal Steel launched a $22.7 billion
offer
to Arcelor’s shareholders
• The deal was split between Mittal Shares (75 percent)
and
cash (25 percent)
• Under the offer, Arcelor shareholders would have
received 4
Mittal Steel shares and 35 euros for every 5 Arcelor
shares
they held
6. ACQUISITION OF ARCELOR STEEL
THE CONTROVERSY
• Arcelor Management –
• The management was extremely hostile to Mittal Steel’s
bid
• It believed to have been doing the acquisitions and not
the
other way around
• The CEO of Arcelor dismissed Mittal Steel as a “company
of Indians”
• European governments –
• The French Government and the government of
Luxembourg
was against the deal
7. ACQUISITION OF ARCELOR STEEL
MOVES BY ARCELOR TO COUNTER THE BID
• Declaration of dividend –
On February 16, Arcelor declared a dividend of 1.2
euros to
convince the shareholders of a positive situation under
current management
• The Russian Angle –
To thwart the offer from Mittal Steel, Arcelor released a
13
billion Euro merger plan with Severstal, a Russian
company
8. ACQUISITION OF ARCELOR STEEL
• ROLE OF GUY DOLLE
• Analysts believe that Guy Dolle had issues with the
personality and management of LN Mittal
• Guy Dolle raised several issues about the safety record
of Mittal
• Guy Dolle is not a part of the new Arcelor-Mittal
organization
9. ACQUISITION OF ARCELOR STEEL
• THE STANCE OF INDIAN GOVERNMENT
Most Indians believed that the deal was not getting
pushed
because of Lakshmi Mittal’s nationality
The Indian government raised the issue through
commerce
minister Kamal Nath
LN Mittal himself felt that there was no case of “racism”
here as Mittal Steel was a European company and NOT
an
10. ACQUISITION OF ARCELOR STEEL
• END RESULT- THE FINAL DEAL
On 25t h June, 2006 the deal finally clinched when the
shareholders of Arcelor agreed to Mittal Steel’s offer
Mittal had to considerably sweeten the initial offer-by
raising its valuation of Arcelor to $32.9 billion
The Mittal family holds 43 percent of the combined
group
The combined company holds 10 percent of the global
market for steel
Term - VIIIM&APresentationPresentation.doc
11. ACQUISITION OF ARCELOR STEEL
ARCELOR MITTAL
Arcelor Mittal is now the largest steel company in the
world
ArcelorMittal is the leader in major global
markets, including automotive, construction, household
appliances & packaging
The company is headquartered in southern Luxembourg
City, the former seat of Arcelor
Lakshmi Mittal (owner of Mittal Steel), a non-resident
Indian is the Chairman and CEO
12. ACQUISITION OF ARCELOR STEEL
It employs 310,000 employees in more than 60 countries
ArcelorMittal key financials for 2007 show revenues of
US$ 105.2 billion
A crude steel production of 116 million
tones, representing around 10% of world steel output
As of May 17 2008, the market capitalization of
ArcelorMittal was $144.37 billion
13. ACQUISITION OF ARCELOR STEEL
• BRAND AND PHILOSOPHY
• ArcelorMittal's brand promise is 'transforming
tomorrow', underpinned by a consistent set of values:
•Sustainability
•Quality
•Leadership
Company’s goal is to provide the leadership that will
transform tomorrow's steel industry
14. ACQUISITION OF ARCELOR STEEL
• THE PROS AND CONS OF THE DEAL
• According to us the deal has been in favor of both the
companies.
• This can be suggested by the following PROS of the deal –
• Increase in revenue of the company from $28.123 billion to
$105.2 billion and operating income from $4.746 billion to
$14.83 billion
• Venture into new businesses and market like
Luxembourg, Senegal, Liberia and looking to develop positions
in the high-growth Chinese and Indian markets
• Profit of the company has risen from $3.36 billion to $10.36
billion
• Decreased competition and increased market share
• Enlarged brand portfolio
• Increase in economies of scale and share value.
