The merger between Arcelor and Mittal Steel in 2006 created the world's largest steel company. Though competitors, they had little overlap in operations. Arcelor brought extensive distribution and service centers while Mittal owned raw materials. The $105 billion company faced challenges integrating differing cultures from Europe and India. Communication strategies like conferences calls and news updates helped address cultural barriers. The merger aimed for rapid integration while managing operations and growth, but cutbacks during the recession led to strikes and layoffs.
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.
The presentation talks about the acquisition of Arcelor by the Mittal company in the year 2006 headed by Mr. Lakshi Mittal. It is often regarded as on of the most controversial deals in the M&A industry.
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.
The presentation talks about the acquisition of Arcelor by the Mittal company in the year 2006 headed by Mr. Lakshi Mittal. It is often regarded as on of the most controversial deals in the M&A industry.
Tata Corus is the fifth largest steel maker in the world.
Tata Steel Stocks have experienced 21 per cent absolute gain since February 2007.
Fall in steel production in UK every year since 2007 . The more competitive operations in the Netherlands have fared better, with output staging a recovery in 2010 itself, with production this year up another 10 per cent.
Tata Corus is the fifth largest steel maker in the world.
Tata Steel Stocks have experienced 21 per cent absolute gain since February 2007.
Fall in steel production in UK every year since 2007 . The more competitive operations in the Netherlands have fared better, with output staging a recovery in 2010 itself, with production this year up another 10 per cent.
Mergers and acquisition (A study on main elements and their behavior)Arpit Amar
This presentation is a brief explanation about mergers and acquisition from Indian perspective and was presented by me during my tenure at Bank of America continuums, Indian.
The board of directors might decide it is in the best interest of shareholders to sell the corporation to new owners. In theory, a change in control only makes sense when the value of the firm to new owners, minus transaction costs, is greater than the value of the firm to current owners.
This Quick Guide examines the market for corporate control.
It answers the questions:
• Why do companies merge?
• Do mergers improve performance?
• Who gets the value in a merger?
• How do companies protect themselves from hostile bids?
• Do these protections help shareholders?
For an expanded discussion, see Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences (Second Edition) by David Larcker and Brian Tayan (2015): http://www.gsb.stanford.edu/faculty-research/books/corporate-governance-matters-closer-look-organizational-choices
Buy This Book: http://www.ftpress.com/store/corporate-governance-matters-a-closer-look-at-organizational-9780134031569
For permissions to use this material, please contact: E: corpgovernance@gsb.stanford.edu
Copyright 2015 by David F. Larcker and Brian Tayan. All rights reserved.
Obtaining Australian merger and acquisition clearances in 2012Martyn Taylor
An overview of the current issues and methodology for obtaining a merger and acquisition clearance from the Australian Competition and Consumer Commission in Australia.
En mars dernier, ArcelorMittal présentait son plan de bataille pour l'Italie et notamment pour la reprise d'Ilva et sa remise à niveaux par rapport à ses autres usines.
October 2014 Edition of BEACON, A Monthly Newsletter by SIMCON.
Inside this issue:
INDUSTRY ANALYSIS : Metal
COMPANY ANALYSIS : Tata Steel
Events Report
Concept of the Month
Quiz
Did You Know?
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Arcelor Mittal Merger Case Cross Culture Management
1. ARCELOR MITTAL MERGER CASE- CROSS CULTURE MANAGEMENT TEAM IDiana PRamesh RSaurabh SinghSameerChaubalDeepak ChoediaDeepak ShindeFerdinand JPadmanabhaJohind M
2.
3. IMPACT OF MERGERS AND ACQUISITIONS 1. On workers or employee- layoffs 2. On top level management - clash of egos - variation in culture 3. On shareholders: Acquiring firm - most affected, they are harmed by the same degree to which target firm shareholders benefitted Target firm - benefitted the most -acquiring company usually pays a more
4. THE TWO COMPANIES MITTAL STEEL Was one of the world's 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 2004 ARCELOR Was the world's 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.
5. THE YEAR 2006… January 2006 - Mittal Steel offer to the shareholders of Arcelor to create the world's first 100 million tonne plus steel producer. February 2006 - Mittal Canada completes the acquisition of three Stelco subsidiaries, the Norambar and Stelfil plants, located in Quebec, and the Stelwire plant in Ontario. April 2006 - Renewal after Hurricane Katrina and new galvanised line May 2006 - Mittal Steel announces US antitrust clearance for Arcelor bid and the approval of the offer documents by European regulators.
6. 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,
7. 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.
8. RESULT Though competitors they exhibited little overlap in terms of their operations. Arcelor’s attributes proved to be highly complementary with Mittal owning much of its raw materials such as iron ore and coal and Arcelor having extensive distribution and service center operations. Unlike many mergers involving direct competitors, a relatively small portion of cost savings would come from eliminating duplicate functions and operations.
9. REACTIONS TO THE TAKEOVER Directors strongly opposed the takeover, with Arcelor's 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.
10. THE INDIAN GOVT’s STANCE Deal was not getting pushed through because of Lakshmi Mittal’s Indian nationality. Issue raised at several forums especially through commerce minister KamalNath. Alleged that India had threatened not to ratify a taxation accord with Luxembourg due to the latter’s opposition to the deal. Irony - LN Mittal himself felt that there was no case of “racism” here as Mittal Steel was a European company and NOT an Indian one.
11. TOP MANAGEMENT ArcelorMittal top management set three driving objectives before undertaking the post-merger integration effort. - Achieve rapid integration - Manage effectively daily operations - Accelerate revenue and profit growth.
12. CULTURAL INTEGRATION Most integration initiatives fall short of reaching their goals during implementation stage and follow-up. The company should recruit and promote service oriented candidates, train the workforce in techniques of service Set goals that are based on service Reward an recognize people for higher level of service
13. STRATEGIES FOR MANAGING HUMAN RESOURCE IN M&A Communication Common culture Training and development Mutual respect Individual counseling
14. CULTURAL PROBLEMS ADDRESSED COMMUNICATION - Between different cultures and time zones - Internal communications play a very important role - Regular conference calls with CEO’s, management and employees, send out news up-dates, hold proximity meetings, etc.
15. CULTURAL PROBLEMS ADDRESSED AVOID REDUNDANCIES - Introduced a range or measures to avoid forced redundancies to date. - Launched Group-wide VRS and early retirement programmes. - Flexible rotating work schedules at various sites.
16. CULTURAL PROBLEMS ADDRESSED THE MONEY PART - Voluntary salary cuts at management level. - Necessary measures. - Employees affected will be taken care of in the most socially sensitive way possible in-line with economic employment legislation, where the company continues to take responsibility.
17. 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%
18. BAD TO WORSE!! Malay Mukherjee, a former SAIL executive, stepped down from ArcelorMittal's Board, opposing the measures taken by Arcelor Mittal, indifference to employees, no effort to put down strikes, massive lock-outs, no effort to reduce pollution.
19. THE DUTCH Vs THE FRENCH Strike is a typical French corporate practice, the Dutch adapt and go ahead. The Dutch were work oriented – Low cost operations was their strength. In France, higher you are placed in the hierarchy, more tensed is the atmosphere.
20. THE DUTCH Vs THE FRENCH The French are more stressed, but spend on average less time at their offices or workplaces in general. For the Dutch performance mattered – while for the French their pride mattered-ARCELOR, the largest turnover company in Steel. Arcelor had high end customers while Mittal dealt with the low end customer base.
21. CHECKLIST - MERGERS AND CORPORATE CULTURE Develop a strategy for cultural integration Analyze existing cultures - identify cultural barriers, differences in communication and other potential problems. Decide which role the new culture shall play in the merged organization. Establish ‘bridges’ between both companies. Establish a basis and mechanisms for the new culture. Be patient People take time to be acquainted to a new cultural reality.