Mittal Steel acquired Arcelor in 2006 in a $33.8 billion deal, creating ArcelorMittal, the world's largest steelmaker. Mittal Steel made several bids at increasing premiums to purchase Arcelor's shares. Arcelor resisted the takeover due to concerns about job losses and loss of control to an Indian company. However, Mittal Steel was eventually able to clinch the deal when shareholders approved its highest bid of $50.54 per Arcelor share. The acquisition resulted in increased revenues, profits, and market share for the combined company.

1. Corporate
Restructuring
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Sandeep kumar

2. Introduction to the Companies
MITTALSTEEL:
Was the largest producer of steel in terms of volume.
Based in Netherlands. Founded in 1989 as Ispat International in Sumatra,
Indonesia.
ARCELOR:
Was the second largest producer of steel in terms of turnover and output.
Created by the merger of three companies: Aceralia (Spain), Arbed
(Luxembourg),Usinor (France)

3. A Glimpse of Company’s Operations…

4. Headquarters of ArcelorMittal in
Luxembourg

5. The Initial Attempts….
1.The first bid made by Mittal was at a premium of 27%.
2.In late May, Mittal increased this bid by 34%.
3.Finally, the last bid was increased by 14% implicating the
purchase ofArcelor’s share at a premium of 93%.
4.The agreement was finalized at the total buy out price of $33.8
billion in cash and stock.
5.The new bid was valued at $50.54 per Arcelor share.

6. Deal finally clinched when the shareholders of
Arcelor agreed
to Mittal Steel’s offer – In June 2006
# Mittal raised 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.

8. • Laxmi Mittal believed that the acquisition would terminate its biggest
competitor dominating the steel industry.
• Acquisition helps in companies improving their sourcing of raw materials;
access to more markets, better utilization, and better efficiency.
Why this takeover was planned?

9. Competition at a Glance….

10. • The CEO of Arcelor rejected Mittal Steel’s bid as it was considered an Indian companyand
unworthy of overtaking an European company.
• The French Government was against this deal as it was concerned about the dismissal of
about 28000 Arcelor employees.
• The managers and employees of Arcelor were trying to protect their personal interestsand
control over the company.
Why the resistance for this takeover by
Arcelor?

11. 2
Takeover Tactics employed by Mittal Steel
• At first, Mittal attempted a friendly takeover but got rebuffed.
• Then another attempt was made by offering Arcelor a two-tiered cash andstock
tender.
• But the main strategy used was increased price for the shares forArcelor at an
attractive and appealing premium of 93% with the approval ofEU.

12. • Initially, Guy Dolle attempted to gain support among local politicians and the press to come
out against the proposed takeover by emphasizing potential job losses and disruption to
local communities.
• Arcelor also provided its shareholders with an attractive alternative to tendering their
shares to Mittal by announcing an $8.75 billion share buy-back at a price well above their
then current share price.
• In an attempt to criticize the offer from Mittal Steel, Arcelor released a 13 Billion Euros
merger plan with Severstal, a Russian company. This merger would have made the new
Severstal-Arcelor entity too big for Mittal Steel to buy.
• On February 16, Arcelor declared a dividend of 1.2 Euros, which was 85% percenthigher
than the previous dividend in 2004.
Takeover Defenses employed by Arcelor

13. • The revenue increased from $28 billion to $105 billion.
• Net Operating Income increased from $4.7 billion to $14.8 billion.
• Net Profit increased from $3.36 billion to $10.36billion.
• Swap ratio was 1 : 1.0833
• Enlarged market share.
• Increase in the share value by 9.9% to $52.99.
Financial Aspects After TheAcquisition….

14. ArcelorMittal Today….
• Headquarters: Luxembourg
• World’s leading steel and mining company
• CEO: Laxmi Mittal & CFO: Aditya Mittal
• 2,45,000 Employees
• Market Cap of $26.64 Billion
• In 2012 alone, produced 88.2 million tonnes of steel and shipped 83.8millions.
• Own steel making facilities in 16 countries.

15. • Mittal Steel took a high degree of risk.
• But succeeded in laying off its biggest competitor.
• Despite many obstacles, Laxmi Mittal achieved his vision of becoming the sole
giant of the steel industry.
Conclusion…

16. THANK YOU!