ACQUISITION OF ARCELOR STEEL BY MITTAL STEEL

Presented bySONUKA AGARWAL (M.B.A. Design Management)

What are Mergers and Acquisitions?
Corporate Strategy, Corporate Finance & Management

Buying, Selling & Combining of different Companies

Aid, Finance or Help a growing Company in a given Industry

 An Acquisition (takeover) is buying of one company (target) by another  An Acquisition may be friendly or hostile  An Acquisition can be a ‘Reverse Takeover’  Acquisitions can be done in two ways – • the buyer buys the shares of the target company • the buyer buys the assets of the target company  There are pros and cons involved in every take over .

Flat Steel products.N. Coated Steel.V. Netherlands  The company was the world’s largest steel producer by volume and also the largest in turnover and is now a part of ArcelorMittal  It was the major player in Steel. Mittal Steel Company N. Mittal . was formed by the merger of • LNM holdings & ISPAT International • International Steel Group Inc.  CEO Lakshmi Mittal’s family owned 88% of the company and its headquarter was in Rotterdam. Tubes and Pipes L.

metal processing. Guy Dolle . Arcelor was created through the merger of •Arbed (Luxembourg) •Aceralia (Spain) •Usinor (France)  Merger was launched on 19 February 2001  Choice of Arcelor name was anounced on 12 December 2001  It was a major player in all its main markets: automotive. etc  Guy Dolle was the CEO of Arcelor and its headquarter was in Luxembourg city. construction.

THE BIG DEAL  In January 2006.7 billion offer to Arcelor’s shareholders  The deal was split between Mittal Shares (75 percent) and cash (25 percent)  Under the offer. Arcelor shareholders would have received 4 Mittal Steel shares and 35 euros for every 5 Arcelor shares they held . Mittal Steel launched a $22.

TOP PRODUCERS OF STEEL (VOLUME) AROUND THE GLOBE in 2005 .

PERCENTAGE OF WORLD STEEL MADE BY TOP STEELMAKERS .

THE CONTROVERSY  Arcelor Management – • The management was extremely hostile to Mittal Steel’s bid • It believed to have been doing the acquisitions and not the other way around • The CEO of Arcelor dismissed Mittal Steel as a “company of Indians”  European governments – • The French Government and the government of Luxembourg was against the deal • The European Union approved of the deal .

Arcelor released a 13 billion Euro merger plan with Severstal. a Russian company .MOVES BY ARCELOR TO COUNTER THE BID  Declaration of dividend – On February 16. Arcelor declared a dividend of 1.2 euros to convince the shareholders of a positive situation under current management  The Russian Angle – To thwart the offer from Mittal Steel.

ROLE OF GUY DOLLE  Analysts believe that Guy Dolle had issues with the personality and management of LN Mittal  Guy Dolle raised several issues about the safety record of Mittal Guy Dolle is not a part of the new ArcelorMittal organization .

THE STANCE OF INDIAN GOVERNMENT  Most Indians believed that the deal was not getting pushed because of Lakshmi Mittal’s nationality minister Kamal Nath  The Indian government raised the issue through commerce  LN Mittal himself felt that there was no case of “racism” here as Mittal Steel was a European company and NOT an Indian one .

THE FINAL DEAL  On 25th June.END RESULT. 2006 the deal finally when the shareholders of Arcelor Mittal Steel’s offer clinched agreed to  Mittal had to considerably sweeten the initial offer-by raising 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 .

the former seat of Arcelor  Lakshmi Mittal (owner of Mittal Steel). including automotive.ARCELOR MITTAL  Arcelor Mittal is now the largest steel company in the world  ArcelorMittal is the leader in major global markets. household appliances & packaging  The company is headquartered in southern Headquarters at Luxembourg city Luxembourg City. a non-resident Indian is the Chairman and CEO . construction.

37 billion .000 employees in more than 60 countries  ArcelorMittal key financials for 2007 show revenues of US$ 105. representing around 10% of world steel output  As of May 17 2008.2 billion  A crude steel production of 116 million tones. the market capitalization of ArcelorMittal was $144. It employs 310.

ADITYA MITTAL CFO Member of the Group Management Board MICHEL WURTH Member of the Group Management Board JOSEPH KINSCH Member of the Group Management Board GONZALO URQUIJO Member of the Group Management Board MALAY MUKHERJEE Member of the Group Management Board .

A STEEL PLANT .

COLD ROLLING MILLS HOT ROLLING MILLS .

DOFASCO COILS ELECTRIC ARC FURNACE .

CONTROL ROOM STOCK CONTROL QUALITY CONTROL QUALITY CONTROL .

ROLLS STOCK SEMI FINISHED PRODUCTS SHEET PILLING STAINLESS STEEL .

underpinned by a consistent set of values: •Sustainability •Quality •Leadership  Company’s goal is to provide the leadership that will transform tomorrow's steel industry .BRAND AND PHILOSOPHY  ArcelorMittal's brand promise is 'transforming tomorrow'.

36 billion to $10.83 billion  Venture into new businesses and market like Luxembourg.2 billion and operating income from $4.THE PROS AND CONS OF THE DEAL According to me the deal has been in favor of both the companies.36 billion  Decreased competition and increased market share  Enlarged brand portfolio  Increase in economies of scale and share value. Liberia and looking to develop positions in the high-growth Chinese and Indian markets  Profit of the company has risen from $3. . Senegal. This can be suggested by the following PROS of the deal –  Increase in revenue of the company from $28.123 billion to $105.746 billion to $14.

it can be said that the deal has been a successful one for both the companies.9 billion As the pros of the deal completely outweigh the cons involved.The CONS of the deal include –  High monetary cost of the target company (Arcelor) which is $32. . its people and the world.

THANK YOU! .

Sign up to vote on this title
UsefulNot useful