ATHARVA INSTITUTE OF MGT STUDIES MERGERS AND ACQUISTIONSTOPIC: ARCELOR MITTAL MERGER PRESENTATION BY: SANCHITA S.LAD MMS-3/ROLL NO:A-26
THE TWO COMPANIES…………….MITTAL STEEL Was one of the worlds largest steel producers by volume, and turnover. Formed when Ispat International N.V. acquired LNM Holdings N.V. (both were already controlled by Lakshmi Mittal) and merged with International Steel Group Inc. (the remnants of Bethlehem Steel, Republic Steel and LTV Steel) in 2004ARCELOR Was the worlds largest steel producer in terms of turnover Second largest in terms of steel output. Created by a merger of the former companies Aceralia (Spain), Usinor (France) and Arbed (Luxembourg) in 2002.
THE YEAR 2006… June 2006 - Mittal Steel and Arcelor reach an agreement to combine the two companies in a merger of equals. September 2006 - Arcelor Mittal announces new dividend policy, under which it will pay out 30% of net income annually. December 2006 - sells Thüringen long carbon steel plant, sells the Italian long carbon steel production Travi e Profilati di Pallanzeno and San Zeno Acciai to Duferco, acquires Sicartsa, the leading Mexican long steel producer, signs a MoU for the Greenfield project in Orissa,
RESULT The merger resulted in the creation of the world’s largest steel company. 2007 revenue - $105 billion Steel production - 10 percent of global output 320,000 employees Presence in 60 countries A global leader in all of its target markets.
REACTIONS TO THE TAKEOVER Directors strongly opposed the takeover, with Arcelors chief executive at that time, Guy Dollé, even dismissing Mittal as a "company of Indians". The French, Luxembourg and Spanish governments strongly opposed the takeover. The French opposition was initially very fierce and has been criticized in the British, American and Indian media as double standards and economic nationalism in Europe.
TOP MANAGEMENTArcelorMittal top management set threedriving objectives before undertaking thepost-merger integration effort.- Achieve rapid integration- Manage effectively daily operations- Accelerate revenue and profit growth.
CULTURAL INTEGRATION Most integration initiatives fall short of reachingtheir goals during implementation stage and follow-up. The company should :1. Recruit and promote service oriented candidates,2. Train the workforce in techniques of service3. Set goals that are based on service4. Reward an recognize people for higher level of service
THE VISIBLE DEATH! (FINANCIALS) 2007 - Sales increased by 10% - Net profit increased by nearly 30% 2008 - Sales increased by 11% - Net profit decreased by 10% 2009 - Sales decreased by 47.5% - Net profit decreased by 98.7%