Case Study of Merger of Mittal Steel and Arcelor. Today ArcelorMittal is the largest steel products manufacturer in the whole world. This case study entails about how the merger happened and details of it. This presentation was a part of our Merger & Acquisition Projects.

1. MERGER OF ARCELOR MITTAL
Team Members: Charvi Singh
Dibyajyoti Saikia
Shefali Naval
Shoubhik Pakrasi

2. BACKGROUND
OF COMPANIES

3. Mittal Steel Company N.V. - CEO Lakshmi Mittal
Formed by the merger (2004) of
• LNM holdings & ISPAT International
• International Steel Group Inc
Headquartered in Rotterdam, Netherlands.
2005 Revenues was $28.10 billion
World’s largest steel producer by volume and also
the largest in turnover
Major player in following products : Steel, Flat Steel
products, Coated Steel, Tubes and Pipes Mittal Steel
Guy Dolle was the CEO of Arcelor and its
Arcelor was the world's largest steel producer in
terms of turnover before takeover
Second largest in terms of steel output
Headquartered in Luxembourg city
In 2005, Arcelor had revenues of $38.84 billion
Arcelor was created through the merger of three
companies: Arbed, Aceralia and Usinor

5. FINANCIAL BACKGROUND OF DEAL

6. CAPACITIES BEFORE AND AFTER

7. MERGER DEAL
The Initial Deal
• 27 January
2006 : Mittal
Steel offers
the
shareholders
of Arcelor to
create the
world's first
100 million
tons plus steel
producer
The deal
valued at
$27.05 billion
offer to
Arcelor’s
shareholders
The deal was
split between
Mittal Shares
(75 percent)
and cash (25
percent)
But soon the
deal landed
into
controversy
The Final Deal
Deal finally
clinched
when the
shareholders
of Arcelor
agreed to
Mittal Steel’s
offer – In
June 2006
Mittal raised
its valuation
of Arcelor to
$35.3 billion.
The Mittal
family holds
43 % of the
combined
group.
The
combined
company
holds 10
percent of
the global
market for
steel.

8. MERGER DEAL
SWAP Ratio = 0.875
ArcellorMittal Share Price = 35.32 Euro
Arcellor Share Price = 40.37 Euro
• Luxembourg Law states that Fraction
share is transferrable and cannot be
listed.
• So final agreement was for a 1:1
SWAP deal.

11. WHY ARCELOR?
An Attractive Target:
• Arcelor had 71% pre merger revenue share from Europe while
Mittal had only 34%
• While in North America the revenue share for Arcelor was only
9% but Mittal had 42%
Resulted in having complementary industrial and
market footprint

12. THE TWO STEP MERGER PROCESS
The two-step merger process was structured to
enable Mittal Steel to comply more rapidly
and efficiently with part of the MOU
undertakings. In addition, the first-step merger
permitted a simplification of the group’s
corporate structure, as both ArcelorMittal and
Arcelor are located in the same jurisdiction
(Luxembourg) with the same headquarters. The
first-step merger therefore contributed to a
more efficient and rapid integration of the
management and administrative teams of
Mittal Steel and Arcelor.
The second-step merger of ArcelorMittal into
Arcelor will constitute the second and final step
of the combination of Mittal Steel and Arcelor
into a single legal entity governed by
Luxembourg law. In this second-step merger,
ArcelorMittal (the surviving entity in the Mittal
Steel and ArcelorMittal merger) will merge into
Arcelor and shareholders of ArcelorMittal will
become shareholders of Arcelor, which will be
renamed “ArcelorMittal”.

13. TWO STEP MERGER FLOWCHART
Mittal Steel
• Verger Investments S.A
(Wholly-owned
Subsidiary of Mittal
Steel)
• Later renamed as
Arcelor Mittal
ArcelorMittal
Arcelor
Later renamed
as ArcelorMittal
Both ArcelorMittal and Arcelor are under Luxembourg Jurisdiction
Merger by absorption of
Mittal Steel by ArcelorMittal
w/o liquidation
ArcelorMittal merged
into Arcelor for a 1:1
Exchange Ratio of
Shares
Step 1 Step 2

14. NEGOTIATIONS : TIMELINE
27 January
2006 Mittal
announces EUR
18.6 bn (about
US$ 27.05 bn)
cash and
shares offer
29 January 2006
Arcelor rejects
Mittal’s proposal
as “hostile”
4 April 2006 Arcelor
announces return of
more than EUR 5 bn
(about US$ 6.6 bn) to
shareholders and puts
Dofasco into Dutch
foundation
18 May 2006 Mittal
offer officially opens
following regulatory
clearance in France,
Belgium, Netherlands
and Luxemburg
19 May 2006 Mittal
raises offer to EUR
25.8 bn (about US$
32.9 bn)

15. NEGOTIATIONS : TIMELINE CONTD.
31 May 2006 20
to 30% of Arcelor
shareholders sign
a letter
demanding the
right to choose
between the
Severstal and
Mittal proposals
25 June 2006 Arcelor
board recommends
increased Mittal offer
of euro 26.9 bn
(about US$ 35.3 bn)
26 July 2006 92%
acceptances announced
17 august 2006 Closing
od subsequent offer
period ( 93.7%
acceptances announced )
17 November 2006
Closing of the
mandatory sell-out
period ( <95%
acceptances announced
)

16. ARCELOR MITTAL STATS:
POST MERGER

17. REFERENCE
SEC Document :
https://www.sec.gov/Archives/edgar/data/1243429/000115697307001457/y0
1811b3e424b3.htm#104
Iron and Steel Industry:
https://www.ukessays.com/essays/business/analysis-mittals-acquisition-arcelor-
3891.php

18. THANK YOU