ACQUISITION OF B Y GAUTAM CHAKRABORTY NDIM, Delhi
1. INTRODUCTION OF A. POWER & POLITICS B. TWO COMPANY C. ACQUISTION2. THE BID3. CONTROVERSY4. INDIAN GOVERNMENT’S STANCE5. END RESULT6. CURRENT POSITION7. SUMMARY8. CONCLUSION9. QUESTIONS
POWER:- Power is the capacity of a person, team, or organization to influence others. The potential to influence others People have power they don’t use and may not know they possess Power requires one person’s perception of dependence on another person POLITICS:- Attempts to influence others using discretionary behaviours to promote personal objectives Discretionary behaviours — neither explicitly prescribed nor prohibited
INTRODUCTION…..B. THE TWO COMPANYMITTAL STEEL: Mittal steel is the largest producer of steel in terms of volume and also largest in turnover. Despite Mittal steel industry is based in Netherlands, it is perceived that the the company is non- european because its CEO, Lakshmi Mittal, is Indian.ARCELOR: Was the largest producer of steel in terms of turnover. Second largest in terms of steel output. Created by the merger of three companies: Aceralia(Spain), Arbed(Luxembourg), U
INTRODUCTION…..C. ACQUISITION The acquisition of Arcelor by Mittal steel led to the creation of Arcelor- Mittal , the largest steelmaker in the world. It has been one of the most controversial business deals ever. When the European steel maker bowed by the Mittal steel.
In January 2006 Mittal steel offers to the shareholders of Arcelor to create the worlds first 100million tone plus steel producer. And launched a 22.7 billion dollars offer to Arcelor shareholders. In June 2006 Mittal and Arcelor reach an agreement to combine the two companies in a merger of equals.
CONTROVERSY The Arcelor believe that it should acquire other companies rather than the other way around. The management was extremely hostile to Mittal steel’s bid from the beginning. Arcelor repeatedly played the patriotic card to convience shareholders to reject the bid. The CEO of Arcelor dismissed Mittal steel as a company of Indian and unworthy of taking of a European company. The France government was against a deal because of worries over the future of 28000 Arcelor employees. The government of Luxembourg was against a deal as well for a variety a reasons. However all these attempts went wrong when
Most Indian’s were of the opinion that the deal was not getting pushed through because of Mittal’s nationality. The Indian government raised the issue at several forums, especially through Commerce Minister Kamal Nath. There were allegations that India had threatened not to ratify a taxation accord with Luxembourg due to the latter’s opposition to the deal.
The deal was finally clinched when the share holders of Arcelor agreed to Mittal steel’s offer. Mittal steel had to raised its valuation of Arcelor to 32.9 combined company holds 10% of the global market for steel.
Mittal- Arcelor the new entity will be based on Arcelor’s industrial model. It has been decided that the management board will have seven members, four from Acelor and three nominal from Mittal steel. L. Mittal is the CEO and Joseph kinsch from Arcelor is the president of the company. The Mittal family has the 43% stake on the new entity Arcelor- Mittal.
World’s largest and most global steel company with shipment of 49.2 million tones and revenue of over $100 billion in 2010 and net income of $5.4 billion No. 1 high quality steel producer with crude steel capacity with more than 70 million tons per annum Own steel making facilities in 16 countries spanning 4 continents Employs 2240000 people spanning 49 different nationalities
Initially mittal launched an offer of 22.7 billion dollars to acquire arcelor Arcelor tried many tactics to reject the offer Moreover they declared the increase in the dividend by 85% But finally the merger happened at the valuation of 32.2 billion dollars
conclusion•The business strategy that has made the mittal-arcelor steel the world’s largest steel maker is acommitment to consolidate & globalisation & awillingness to take risks that scare off competitors.•As the steel industry overall struggled in thepresent decade ,mittal steel grappling with financialproblems of its own,continued to expand.•And as competitors insisted that steel shouldremain a regional business.•Mittal steel persued its vision of becoming a globalgiant
1. Why did the French government oppose the acquisition of Arcelor by Mittal steel?• Worried about the employees of thearcelor
2. How did Arcelor try to block the acquisition by Mittal steel?•INCREASED THE DIVIDEND BY 85%•DECLARED THE DEAL WITH THE RUSSIANCOMPANY “SEVERSTAL”
3. What influence tactics did Mittal employ to clinched the deal? •INCREASED THE VALUATION OF ARCELOR TO 25.8 BILLION EUROS(32.9 US BILLION DOLLARS)
4. Discuss Mittal’s tenacity in the power struggle for the acquisition?•Mittal was very firm in acquiring the arcelor•Mittal wanted to be the giant player•He tried to convince the french government that theemployees of arcelor will not be laid off•Increased the valuation of arcelor to 32.9 billion dollars